A Gartner analyst, Julia Palmer, warned at the IT Symposium in Gold Coast that VMware could lose a sizable portion of its business over the next few years as Broadcom’s ownership and licensing shifts reshape the market. Some customers have already moved away or begun partial migrations, driven in part by changes Broadcom implemented after the acquisition in 2023.
Key concerns include a shift from perpetual licenses to subscription models, the bundling of products into fewer SKUs, and fewer channel partners allowed to resell VMware. The changes are perceived as favoring larger organizations, pushing smaller and mid-size businesses to consider alternatives.
The predicted 35 percent migration is especially evident among customers who access VMware through hyperscalers such as AWS. Broadcom’s policy prevents hyperscalers from reselling VMware subscriptions in some cloud setups, a move Palmer says accelerates cloud-first migrations.
In VMware’s June 2024 blog post, the company argued that these licensing adjustments are intended to standardize sales across environments and provide customers with more flexibility and choice, even as hyperscalers pivot toward direct Broadcom purchases.
Despite the churn, VMware remains a cornerstone of Broadcom’s revenue, with infrastructure software earnings rising about 25 percent year over year to around $6.6 billion in the latest reporting period driven largely by VMware’s subscription model.
Palmer suggested that migration strategies could be gradual—partial migrations in under a year and full migrations stretching to three years—while urging the industry to rethink reliance on hypervisors: “We are all addicted to hypervisors, and that needs to change.”
