It’s time, I think, we had a real chat about something that has a lot of IT leaders scratching their heads: the Broadcom takeover of VMware.
It’s been quite the shake-up, no? For many organisations, the deal has left them unsure about what comes next. So, if you’re feeling a little lost in the shuffle, you’re certainly not alone!
This piece is here to cut through the jargon, explain what’s really going on, and, more importantly, explore what your options might be…
The big changes: Broadcom’s new rules
One of the most significant shifts in the takeover has been the move away from perpetual licences. For years, customers could purchase VMware products outright, run them for as long as they liked, and then pay separately for support or upgrades when it suited them. Well … that model is gone. Broadcom has made it clear that the future is subscription-based, with products often bundled together in packages that may or may not reflect the needs of smaller organisations.
This switch really gathered pace in 2024 and, as a result, many businesses are seeing their costs soar. Some reports cite renewal prices going up five to twenty-five times, while certain European customers have faced rises of over one thousand per cent (yes, you read that correctly!).
For small and mid-sized businesses, these kinds of increases are a shock to the system. They simply cannot be absorbed without major budgetary implications. Even larger enterprises, with deeper pockets and stronger negotiating power, are beginning to question whether this is a sustainable relationship.
It is not just the pricing model that has shifted. Support contracts have also been restructured. While that might not sound disastrous, anyone who has dealt with critical IT issues knows that timely support can make all the difference between a minor blip and a costly outage.
Since Broadcom seems firmly committed to this new direction, hoping that things will revert to the familiar VMware experience of the past is probably not realistic. For many organisations, the conclusion is becoming clear: the way they have always used VMware is no longer viable.
The wider reaction
The industry, as you can imagine, is not taking this lying down. Businesses of different shapes and sizes are exploring their options and reacting in very different ways:
- Large Enterprises
Large organisations are, for the moment, coping with the increased costs. They have the budgets to absorb the initial shock, and many have long-term contracts in place that buy them some breathing space. But make no mistake, they are not entirely happy. Many CIOs and CTOs are already mapping out exit strategies and considering what their infrastructure might look like without VMware in the future. They know that if costs continue on this trajectory, even their considerable budgets could start to feel the squeeze.
- Small-mid businesses (SMEs)
SMEs have far less room to manoeuvre. For them, the cost increases are simply unsustainable. As a result, they are actively hunting for alternatives, and quickly. Open-source solutions are drawing attention, as are options that fit neatly into Microsoft-centric environments. For SMBs, the focus is often on solutions that are more affordable, easier to manage, and flexible enough to scale with growth without draining resources.
- Cloud providers
At first glance, cloud-based VMware solutions like VMware Cloud on AWS, Azure, or Google Cloud might seem like a way to sidestep the problem. However, the reality is less rosy. These offerings are still subject to Broadcom’s licensing model, so they do not offer the escape hatch some hoped for. It is still Broadcom’s game, only played on someone else’s cloud infrastructure.
- Alternative vendors
Perhaps the most interesting development has been the rise in attention towards alternative vendors. Companies such as Nutanix, Red Hat, and Proxmox have seen a surge of interest. Each offers enterprise-grade virtualisation capabilities with pricing models that, in many cases, are more attractive than VMware’s new structure. Even HPE is offering an alternative with HPE Morpheus VM Essentials.
This is a reminder that VMware is no longer the only show in town when it comes to virtualisation and infrastructure management. The market’s opening up, and customers are voting with their feet.
Why this matters for business leaders
So far, we have looked at what has changed and how the industry is responding. But let’s bring it back to what this means for business leaders. After all, technology is not just a back-office function anymore. The way your organisation manages its infrastructure has direct implications for resilience, customer experience, compliance, and innovation. When any vendor makes sweeping changes like this, it really is a strategic issue.
If your organisation relies heavily on VMware, you need to understand the financial and operational impact of Broadcom’s new approach. Rising costs could squeeze budgets, limit investment in other areas, or even put growth plans on hold.
Support changes could also affect your ability to maintain reliable systems. And if your competitors are quicker to adapt to more cost-effective alternatives, you could find yourself at a disadvantage.
What are your options?
The good news is that organisations do have options. You are not locked into one path, even if the changes feel overwhelming. Here are some routes businesses are considering:
- Renegotiate and reassess Larger enterprises may find they have room to renegotiate terms with Broadcom. While not everyone has the same bargaining power, it is worth reviewing your contracts, understanding exactly what you are paying for, and seeing whether there are more cost-effective bundles that still meet your needs.
- Hybrid approaches Some organisations are adopting a hybrid model, continuing to use VMware for critical workloads while beginning to explore alternatives for less critical systems. This spreads the risk and creates an opportunity to test new platforms without a full-scale migration all at once.
- Explore alternatives As above, Nutanix, Red Hat, Proxmox (and others) are increasingly viable options. Each comes with its own learning curve, but the potential cost savings and operational benefits can make the transition worthwhile. The key is to match the vendor’s strengths with your business needs rather than chasing the latest trend.
- Cloud-native strategies For organisations with a cloud-first strategy, it may be the right moment to accelerate that journey. Moving workloads into cloud-native environments, designed from the ground up for scalability and flexibility, could reduce reliance on traditional virtualisation altogether.
A time for reflection
Broadcom’s acquisition of VMware has brought uncertainty, disruption, and for many, frustration. But it has also created a moment of reflection.
Too often, organisations fall into a pattern of renewing licences with little thought because it feels easier than making a change. The current shake-up forces everyone to take a step back and ask some important questions.
- Are we getting real value from our VMware investment?
- Do the costs align with the benefits we receive?
- Is there a smarter, more cost-effective way to achieve the same outcomes?
By asking these questions (or discussing them with your trusted service provider), organisations can make more deliberate, strategic decisions about their IT infrastructure.
Remember, while the changes may feel forced upon you, they can also be the trigger for innovation and improvement.
Final word
The fuss around Broadcom and VMware is more than industry gossip; it’s a genuine shift with tangible consequences for businesses of all sizes. While the new rules may have left many organisations frustrated, they also present an opportunity to re-evaluate, adapt, and potentially improve.
Business leaders who take the time now to understand the landscape, weigh their options, and chart a clear course forward will be far better placed than those who simply hope things return to how they were. Because one thing is clear: the old VMware model is not coming back.
