VMware: Past, Present, and Our Future

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Our previous post took a look at Broadcom’s history and its recent, intensifying patterns of behavior with making acquisitions and squeezing them dry, and how this is affecting customers and entire industries. One particular acquisition, that of VMware, has caused a greater wave than any before. It acts as a key example in displaying the shifts occurring in the realm of the Cloud. The general consensus regarding Broadcom’s takeover of the cloud and virtualization titan has been that moving away from reliance upon either business as soon as possible is a major priority, though certainly not a simple one. In this post, we will look into VMware’s conception, their path to becoming both highly trusted and utilized, Broadcom’s entrance and changes to VMware as we knew it, and what some roads going forward might look like for us all.

Who is VMware?

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VMware had their start in 1998, with their first product, VMware Workstation, being launched in 1999. It was used to set up virtual machines (VMs) on one physical machine and use them along with the host machine simultaneously. Two years later, they would release the products GSX Server and ESX Server, bringing them into the server market as well. These two areas have been the foundation of what VMware focuses on, provides, and excels at, continuing to develop them over the years and meeting the needs of hundreds of thousands of customers.

In 2002, they received a patent for their invention, solidifying their placement in the markets, and the following year brought many a change for the company. VMware released vMotion, which allows real-time transferal of a VM on a given host to another, without downtime. They also released vCenter which provided management of VM environments from one interface. Additionally, they opened an office in England and stepped into the worldwide market. Many eyes were on VMware, and many saw their potential.

EMC² (EMC, for simplicity) acquired VMware in 2004 and made an initial public offering of nearly 38 million shares, bringing VMware into the public market as well ¹. Major change settled down for a few years after, with focus set on delivering and improving on the unique services and products provided by VMware. This was rewarded in 2009 with a Wall Street Technology Innovation Award in the software category, further cementing their position as a prominent provider of solutions. However, in the end of 2015, change was once again upon VMware as Dell announced that it will acquire EMC. This led to extensive restructuring within VMware, with positions being realigned, some executives resigning, and an entire set of US-based development teams being fired ^{2 3}.

Around five years after the takeover completed, the juggling of VMware continued with Dell spinning off VMware to shareholders. Just a year after, in 2022, Broadcom announced its intentions to acquire VMware. The transaction closed in the end of 2023, and Broadcom reorganized VMware into four divisions and relocated to their headquarters a mere half hour drive away. VMware Cloud Foundation, Tanzu, Software-defined Edge, and Application Networking and Security were the the four divisions. In 2024, KRR acquired the End-User Computing (EUC) division of VMware, which evidently Broadcom had no intention of keeping given its absence in the aforementioned divisions.

Now, that all is lovely, but it does not really explain why VMware grew to the size and desirability that it did. What VMware provided to customers was, at its heart, efficiency and ease. VMware has continually made a point of solving their customer’s problems, whether big or small. Their foundational product allowed for more effective use of one’s hardware (and therefore money) via VMs, with multiple operating systems using the chips’ cores. They had good timing by providing a solution to a large problem at the time, and their solution was a reliable one. VMware’s vMotion fixed the issues of downtime by making it but a memory; live migration of workloads could be done with nary a hiccup to be seen. If you had VMware in your pocket, you knew you were covered. Not only that, but VMware’s products are notoriously easy to pick up and use, making training and management a breeze. All VM management can be done in one area by way of vCenter, and if anything goes wrong with the hardware it is easy to troubleshoot. Their support has been lauded as fast and accessible, without it mattering if one’s business is a big or small customer.

No one could compare to VMware; if they matched strength one area, they fell short in another. They even made a point to make it easy to transition to being their customer, which certainly did not hurt their standing. While competitors rose, stayed afloat, or fell, none could dethrone VMware’s monopoly of the sweet spot between price, effectiveness, efficiency, flexibility, and reliability. None, it seems, but VMware itself, who is now kneeling to an even greedier king.

Broadcom & Changes

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As per usual in Broadcom’s tried and true methods regarding acquisitions, layoffs came quickly. In 2023, VMware had stated that they had over 38,000 employees, and as of January 2025 that number was down to 16,000 ⁴. Job loss during restructuring is not unusual, but the degree to which VMware is doing so, under Broadcom, is notable and likely part of their new strategy. It focuses on the existing top 600 customers, making savings by aiming marketing and sales to mainly target those customers, thereby reducing spending and workforce. They are happy to let around 100,000 customers trickle away over time, because they don’t spend as much ⁵.

This strategy is further reflected by their choice to raise the minimum number of cores required for VMware licenses from 16 to 72 per command line ⁶. That’s quite a jump, and essentially introduces a hidden price increase due to the implications for a customer’s hardware. Specifically, this heavily affects smaller businesses who are not interesting enough to Broadcom. This has, understandably, been met with less than favorable responses and Broadcom later tried to appears small and medium businesses with a new payment tier aimed at them ⁷. How thoughtful.

Broadcom has excitedly spoken about its “planned multi-billion-dollar investment in R&D and customer support” that VMware should benefit from ⁸. Interestingly, in that same document, they say that with their developments they are aiming to create more customer choice by making it more difficult for customers to get trapped with larger cloud providers. Perhaps there is an increase in R&D, with Broadcom’s CEO Hock Tan saying they are increasing development of Broadcom’s Tomahawk Ethernet switches ⁹. However, it may be more true that R&D is being reduced overall as little-to-none of that R&D—as well as sales and marketing—will focus on smaller customers. Hock Tan also so helpfully commented that “[t]hese R&D investments are very aligned with the roadmap of our three hyperscale customers” regarding a race involving XPU clusters ¹⁰.

This, too, is not unexpected. CA and Symantec, two previous acquisitions of Broadcom, spent around 17% of revenue on R&D pre-Broadcom, which went down to 14% post-Broadcom ¹¹. As for sales and marketing, there was a slightly bigger change. They previously spent around 29% of revenue on these areas, and under Broadcom that dropped to a mere 7%. What is happening to VMware isn’t a first occurrence, simply the most recent (and currently largest) entry in Broadcom’s seemingly ever-expanding list.

As with their claims of increasing R&D, it is questionable whether their investment in customer support will actually improve that support at all. Broadcom did not have a great reputation for customer support, so VMware’s downturn in support is a natural regression ¹². Not only are they difficult to contact, with a complete inability to contact VMware directly for support, but the customers have also complained that those supposed to be assisting them are not experienced or much help at all. A specific customer described being directed to the IT distributor Ingram Micro after being told they aren’t a large enough business to warrant direct support, and having to wait a week or more between responses ¹³. Furthermore, some customers have reported a flat out increase in support costs, with some noting up to 450% more expense ¹⁴.

If that seems like an excessive raise in price, buckle up. As the VMware acquisition was becoming a reality, Hock Tan answered the frequent questions of intended price raises with a simple “no” ¹⁵. In 2024, Ars Technica reported some customers claimed 300% price increases ¹⁶. AT&T was offered a 1,050% price increase, and filed a suit against Broadcom, though this has since been settled outside of court ¹⁷. European customers reported raises between 800% and 1,500%, according to ECCO and CISPE who awarded Broadcom a Red rating in their February 2025 report^{18 19 20}. “Red” in this case means critical and insufficient progress has been made regarding Broadcom’s “unfair software licensing practices” ²¹. The largest reported raise thus far has been 2,000%, as reported to Spinnaker ²². Existing customers face a 20% increase of the price of the first year of subscription if they do not renew their subscription licenses on the anniversary date ²³. If these changes were unintentional, that is a legendary slip-up. However, when a partner of a children’s hospital charity communicated with Broadcom over the changes, he received the response that “with these changes, VMware is not for everybody” ²⁴. He also said that VMware used to give discounts to educational and nonprofit organizations, but Broadcom has ended that. Unfortunately, with no easy alternatives, the charity has had to take the 600%-800% price increase.

Broadcom is partially justifying these changes by adding to the amount of software that customers have access to, but this is forced upon customers rather than voluntary. By bundling together products into set packages, they reduce customer choice and impose higher direct and indirect costs. For example, the aforementioned core increases and the implications on hardware cost. While Broadcom will probably manage to make the products work together in closer harmony, customers will still be required to modify their setups to accommodate for software they may not ever use. The company’s CTO insisted on the software’s value and encouraged customers to just use more of the components ²⁵. It seems an odd stance to take, given the juxtaposition with the principles of cloud-computing, like flexibility and efficiency.

Similarly, Broadcom locks customers into set-year subscription licenses with pricing that does not account for how much usage will actually occur ²⁶. In order to pressure customers with existing and expiring perpetual licenses into agreeing to all these changes, Broadcom has been sending cease-and-desist letters to these customers. Some customers who received these cease-and-desist letters do not even fit the criteria of having used updates past the license expiring date ²⁷. As of Broadcom’s takeover, these perpetual licenses meant that the software can continue to be used, just without support. Yet, now those license holders are being coerced into obtaining subscription licenses, and regular security patches, minor patches, and fixes can only be used with one of those licenses. Perhaps this also was not intentional, as Hock Tan said “nothing about the transition to subscription pricing affects our customers’ ability to use their existing perpetual licenses” and that customers “can continue to receive maintenance and support by signing up for one of [Broadcom]’s subscription offerings” ²⁸. Though, it does not sound particularly perpetual.

On the other hand, a real mistake seems to have been made in the misunderstanding that Broadcom has removed VMware products. This is not true. Broadcom has simply moved the products into a bundle subscription, although they did end the free version of ESXi ^{29 30}. The software is, of course, still existing and part of a paid bundle, without the limitations set on the free version ³¹. Also, despite rumors, Carbon Black hasn’t been divested (at least, as of the time of writing), though some businesses units were divested, like the aforementioned End-User Computing being sold to KRR ³².

All in all, these changes have been impactful. Unfortunately for Broadcom, they might not have the desired effect. Hock Tan had said they will “provide greater profitability and improved market opportunities” for channel partners, though after looking at the numerous changes, it seems greater profit may be found by evacuating VMware’s seats as quickly as possible ³³. Broadcom may bring innovation, profit, and customer choice to the market, true, but it seems unlikely that it will be to their front doorstep in the long run. Rather, competitors may arise more quickly due to the increase in demand and the desire to have a reliable, flexible, and efficient solution once more.

What happens now?

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While none of these developments were particularly surprising, with Cloudbolt’s survey of 300 IT leaders showing every single one of them expected price raises, that does not change the fact that it has left many customers in search of feasible alternatives, as soon as they can be found ^{34 35}. However, swapping from VMware is not a simple solution. As previously noted, there simply are no competitors doing what VMware does on the same level as VMware itself. This means that extra consideration is needed, with finding alternatives that may look quite different in how they function. In turn, there are implications on capital, training, implementation, maintenance, flexibility, reliability, security, costs, and so on. It is not just a headache, it is a migraine.

As Broadcom’s acquisition and its effects have set in, businesses are finding rather creative solutions (or partial pivots), to the problems they now face as a result. Telefónica Germany, a broadband, landline, and mobile communications company, is actually still using VMware, but managed to get around the Cloud Foundation price hike (for now) by obtaining second-hand perpetual software licenses for around 2,500 of their virtual servers ³⁶. They are making use of third-party support via Spinnaker, and presumably putting in security measures due to the software not being patched. It’s not perfect, but for now, it seems to be working. Another example is Rackspace, a cloud computing company, who have turned to Platform9’s Private Cloud Director for some workloads ³⁷. Their choice is understandable, as Platform9 have also created a tool specifically to aid with migrating VMware implementations. Sounds familiar, doesn’t it?

The aspects that made VMware so beloved are what we believe customers should gain when paying for a product, and conveniently they align with the benefits of using open-source software. Complete data ownership and integrity, freedom to use or not use software with no hidden traps or time locks, flexibility in how many resources need to be dedicated to a service, rock-solid reliability and security, expert support and easy training, cost efficiency, and perhaps most importantly, trust. One of the most ideal parts of the VMware acquisition for Broadcom is how the customers are effectively trapped and kept ransom by closed-source solutions that they cannot move away from easily. Open-source software prevents this type of circumstance by its very nature, allowing for an ease of mind when preparing for the amorphous future.

These reasons are why Dolysis has open-source software as such a strong part of the foundation in what we provide. If you succeed, we do too. We are not reliant upon squeezing as much money out of customers as possible, but by being efficient, effective, and intelligent in how we work with you to provide just what you need, and just as much as you need. If this sounds like something for you, or you just want to learn more, get in contact with us.