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VMware Under Broadcom: Challenges, customer impacts and choices

Broadcom's VMware strategy faces scrutiny due to market reaction, regulatory challenges, and strategic shifts impacting its management.

Many of you will be aware of Broadcom’s ambitious acquisition of VMware on 22nd November 2023, valued at $69 billion, comprising $61 billion of equity and the assumption of $8 billion of debt.

Broadcom has been facing much scrutiny regarding the acquisition and management of the global IT company specializing in cloud computing and virtualization technology. Initially, the deal was celebrated as a strategic move for them to diversify and strengthen their software portfolio, complementing the existing semiconductor business. However, recent developments have cast doubt on the viability and future relevance of this strategy.

The challenges

Concerns mainly revolve around price increases, changes in business models, and the impact on competition and innovation in the market.

Price increases and subscription models

The acquisition has sparked significant resentment surrounding major price increases for VMware’s products and services.[1] Customers fear that the Broadcom cost rises are to recoup its huge investment, based on their history of post-acquisition price hikes to boost profitability.[2]

Broadcom is known for its strategic acquisitions. Moreover, the company is renowned for its aggressive strategy and subsequent changes causing significant dissatisfaction among the customer base of the acquired businesses, not only affecting its market position but also its customer retention in the future.

In a report commissioned by Cloudbolt software and Amazon Web Services, Wakefield Research conducted a survey involving 300 companies entitled “CloudBolt Industry Insights Reality Report: VMware Acquisition Aftermath”[3]. Due to Broadcom’s history with big acquisitions like Symantec and CA Technologies 32% of people are considering leaving VMware This indicates that a significant portion of VMware’s customer base are looking to alternative solutions due to the increased costs and rigid contract terms.

The customer displeasure is compounded by Broadcom’s shift from perpetual licenses to subscription-based models, which has lead to higher long-term costs and placed additional financial burden on customers. A User Group Town Hall session in March, reported increased charges of 500 and 600 percent[4] and complaints have poured in about the untenable price hikes associated with this model. This new structure is seen as less predictable and more expensive, causing yet more unease amongst VMware’s existing client base.

Business models

Broadcom has made significant changes to VMware’s business model, eliminating free products, and terminating perpetual licenses. This shift pushes all VMware software solutions into bundled offerings like VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF), aiming to streamline offerings but disrupting existing customer agreements and expectations.

These alterations also reflect Broadcom’s strategy of aggressive cost-cutting and restructuring following acquisitions, probably already impacting VMware’s investment in research and development and altering its customer support structure. These modifications have also disrupted VMware’s established customer relationships and affected the quality of service and innovation that clients expect.

Competition and innovation in the market

The impact on competition and innovation is a major area of concern. Broadcom’s acquisition strategy typically involves leveraging acquired companies to extract maximum financial returns, often at the expense of innovation. There is a fear that VMware’s ability to innovate and compete in the rapidly evolving cloud computing and virtualization markets will be greatly hampered. This is what would lead to a slowdown in new product development and a reduction in competitive pressure, thus allowing rivals to gain market share.

Broadcom’s focus on profitability and the restructuring of VMware’s product lines have already created opportunities for competitors. Nutanix, for instance, has seen increased interest and market activity, particularly with its AHV hypervisor and its partnership with Cisco. This competitive landscape is evolving rapidly as customers reassess their virtualization needs.

The EU Concerns

The European Union has raised serious concerns about Broadcom’s recent licensing amendments for VMware products, prompting an antitrust inquiry fuelled by complaints from numerous EU business users and a trade group. The EU is investigating whether these changes might restrict competition and hinder innovation within the European market, reflecting typical regulatory scrutiny accompanying large mergers. This scrutiny poses significant hurdles for Broadcom as it works to operationalize the acquisition.

At the heart of the EU’s inquiry is whether Broadcom’s actions could unfairly limit the flexibility and choices available to VMware’s current and future customers. This investigation is critical because VMware has historically thrived on its broad compatibility and flexibility, factors crucial to its dominance in enterprise IT environments. Any perceived reduction in these attributes could potentially alienate VMware’s user base, leading to enduring strategic repercussions.

Internal challenges

Broadcom’s acquisition strategy also faces internal challenges. Market experts are questioning the integration plan and the potential cultural and operational clashes between Broadcom’s hardware-focused business and VMware’s software-centric approach. This scepticism is further fuelled by mixed signals regarding product and service continuity for existing VMware customers.

Alternative solutions

The inevitable response to these uncertainties has seen an increase in activity of software and service alternatives.

Competitor products like Nutanix are gaining traction and benefiting from the disruption.[5] A report by TechRadar[6]  states that many ex-VMware customers are going open-source. It cites a community survey with more than 700 respondents, revealing that only 18% of the respondents are staying with VMware. Open-source solutions like KVM-based and Xen-based hypervisors[7] are the preferred choices for more than two-thirds (70%) of all respondents.

Third-party service providers, like Rimini Street[8] and Origina[9], are also profiting and stepping in to fill potential gaps, offering support, security, and consulting services for VMware products.


The unfolding situation with Broadcom and VMware illustrates the complexities inherent in large-scale tech acquisitions, where strategic goals must align with maintaining customer trust and regulatory compliance. To successfully realize the strategic benefits of the acquisition Broadcom must address customer apprehension, manage potential business model adjustments, and sustain VMware’s competitive edge and innovation momentum. As the company navigates the EU’s concerns and refine its strategy, the technology community and its client base will be closely watching how these developments unfold.

For those navigating the complexities of VMware licensing and renewals in this evolving landscape, ITAA are here to assist. While we may not influence pricing, our expertise can help you optimize your requirements, sense-check decisions, and clarify licensing terms. Contact us to ensure you are making informed choices and maximizing the value of your VMware investments.


[1] After 114 days of change, Broadcom CEO acknowledges VMware-related “unease” | Ars Technica

[2]. Broadcom – 39 Acquisitions – Tracxn

[3] VMware Acquisition Aftermath | CloudBolt

[4] Broadcom says VMware to grow revenue fast, all year • The Register

[5] Nutanix simplifies your migration from VMware



[8] Third Party Support for VMware from Rimini Street | Rimini Street


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