VMware news: 35% less workload in 3 years, Tesco lawsuit, but strong sales

VMware [English]Time for some news on VMware by Broadcom and a look at the VMware paradox. According to an analysis, VMware will lose 35% of its workload in three years as customers jump ship. British supermarket giant Tesco is suing VMware, which is generating negative publicity. And yet VMware by Broadcom is still raking in huge profits.

VMware will lose 35% of its workload in 3 years

Here in the blog, numerous articles have been published detailing how VMware has been treating its customers and partners since its acquisition by Broadcom. Dizzying price increases for customers and mass resignations of VMware partners are casting a negative light on the provider.

In my blog post VMware Explore 2025: Visitor numbers drop to a quarter; VMware for submarines I reported that the recent in-house exhibition in the US suffered a sharp drop in visitor numbers – the first signs of the impact of Broadcom CEO Hock Tan's business policy are becoming apparent.

The Register recently published an article entitled VMware to lose 35 percent of workloads in three years – some to its friends at 'proper clouds'. The article quotes Julia Palmer, Vice President of Research at Gartner, who predicts that by 2028, up to 35% of today's VMware workloads will run on a different platform. Some of today's VMware customers are being pushed to take this step by their own trusted hosting partners.

Gartner forecast with reasons for the decline

Palmer made her statement on September 10, 2025, at the Gartner Symposium in Australia. Palmer pointed out that Broadcom's VMware division had recently adjusted its licensing program so that hyperscalers could no longer sell VMware subscriptions to users of their hosted VMware services. Instead, customers must purchase directly from Broadcom and use license portability rights for any VMware infrastructure they host in hyperscale clouds.

Palmer interprets this decision as meaning that VMware does not consider hyperscalers to be strategic partners. And hyperscalers no longer see VMware as a partner either and are trying to convince customers to switch to alternatives. Palmer therefore believes that VMware will lose up to 35% of its current workload over the next three years. Her statement: Hyperscalers will use their relationships with VMware customers to promote the benefits of public clouds.

Gartner advice is partial migration

However, Ms. Palmer advised against migrating all workloads from VMware at the symposium. Her reasoning: no competing provider offers a superior platform. And a complete migration would take three or more years. Instead, Palmer recommended identifying which applications are ripe for modernization and migration to a new platform, and migrating those—a task that can take up to a year.

Palmer recommends that VMware users considering a switch first consider Nutanix. Although prices are not much lower than those of Virtzilla, the Nutanix platform is comparable to VMware. And Nutanix offers powerful migration tools.

As a second alternative, Palmer suggests public clouds as a migration destination. However, she points out that Infrastructure-as-a-Service is not suitable for every virtualized workload and can be costly.

Azure Local (On-Prem-Cloud-in-a-Box) ist laut The Register nur dritte Wahl von Palmer. Dazu gibt es eine große Einschränkung: der größte unterstützte Azure Local-Cluster umfasst nur 16 Hosts, zu klein für viele VMware-Anwender. Alternativ kann Hyper-V unter Windows Server eine weitere Wahl zur VMware-Ablösung sei. Allerdings sein Microsoft laut Palmer "nicht begeistert", da man die Anwender auf Azure haben möchte.

Red Hat Virtualization is Palmer's last choice. "It's the only option that VMware considers competition," Palmer is quoted as saying. But she advises VMware users to exercise extreme caution before considering OpenStack or KubeVirt. This is because only a few companies would have the necessary management skills.

I found the Gartner analyst's statement that customers who want to switch away from VMware solely to avoid Broadcom's high licensing costs should refrain from doing so interesting. Instead, she recommended that they should take the opportunity to modernize their applications and switch in this context.

Nevertheless, revenues are (still) rising

In September 2025, Broadcom presented its quarterly results for the third quarter of fiscal year 2025. Revenue was $15.952 billion in the third quarter, an increase of 22 percent over the same period last year. Net income was $4.140 billion. Now Broadcom is more than just VMware.

The Register took a closer look at the figures in its article Broadcom admits it's sold a lot of shelfware to VMware customers. The VMware purchase is paying off for Broadcom. Broadcom CEO Hock Tan explained that the company's 10,000 largest customers have purchased VMware Cloud Foundation (VCF) (although not all customers have implemented this stack).

According to Hock Tan, 90 percent of large customers have subscribed to VCF, but not all customers use VCF in production. The background to this is that VCF is a bundle of many products needed to create a private cloud. If VMware customers only use some of these products, Broadcom is selling a lot of so-called shelfware that sits unused on the shelf. In my opinion, this is not a good basis for the future if VCF is not really being used by customers.

Now, Hock Tan wants to convince medium-sized users of the advantages of VCF in a new sales initiative. To this end, the next 20,000 to 30,000 medium-sized companies are being targeted. The Register interprets this as something that should please the competition. Many VMware customers have been forced to sign up for VCF subscriptions in order to gain time to migrate to other platforms.

Tesco sues VMware

Tesco ist eine große britische Supermarktkette, die in der Vergangenheit sehr stark auf VMware zur Virtualisierung gesetzt hat. Tesco erwarb Januar 2021 unbefristete (Perpetual) Lizenzen für vSphere Foundation und Cloud Foundation von VMware sowie Abonnements für die Tanzu-Produkte von Virtzilla. Gleichzeitig schloss Tesco einen Vertrag über Supportleistungen und Software-Upgrades mit einer Laufzeit bis 2026 ab.

Tesco is a large British supermarket chain that has relied heavily on VMware for virtualization in the past. In January 2021, Tesco purchased perpetual licenses for VMware's vSphere Foundation and Cloud Foundation, as well as subscriptions for Virtzilla's Tanzu products. At the same time, Tesco signed a contract for support services and software upgrades with a term until 2026.

This is all evident from court documents relating to Tesco's lawsuit against VMware, which The Register quotes from after reviewing them in this article. The lawsuit also claims that Tesco's contracts with VMware include the right to software upgrades. However, Broadcom is refusing to upgrade Tesco's perpetual licenses to the new Cloud Foundation 9.

The lawsuit also involves Computacenter as a reseller, whom Tesco trusted when purchasing the software licenses. The lawsuit also mentions the problem that Broadcom does not provide all security updates and other fixes to users who do not purchase a subscription. Tesco insists that the contracts entitle it to these updates.

Teco suggests that VMware by Broadcom's behavior could "jeopardize food security in Ireland and the UK." It will be interesting to follow the outcome of the lawsuit. The whole thing sounds a bit like "many enemies, much honor." The Register sums it up in this comment: "VMware is back in court. Customer relationships rarely go so wrong." There's nothing more to add to that.

VMware news: 35% less workload in 3 years, Tesco lawsuit, but strong sales

VMware will lose 35% of its workload in 3 years

Gartner forecast with reasons for the decline

Gartner advice is partial migration

Nevertheless, revenues are (still) rising

Tesco sues VMware

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