At a Glance:

  • After Broadcom completed its acquisition of VMware in November 2024, the industry expected a massive customer exodus, but the actual situation was far less dramatic than predicted. However, according to a survey by CloudBolt Software of 302 North American IT decision-makers, a more cautious trend of gradual footprint reduction is accelerating.
  • 86% of respondents said their organizations are actively reducing their VMware footprint. Slightly more than half plan a phased, partial migration approach, gradually reducing dependence rather than launching a full-scale migration.
  • "Two years ago, the market was full of reflexive speculation and worst-case scenario predictions. Fear has cooled, but pressure remains, and most teams are taking pragmatic steps to build pricing power and optionality—even if, for some enterprises, that means acknowledging that some workloads will never leave VMware," said Mark Zembal, Chief Marketing Officer at CloudBolt, in a press release accompanying the February 17 report.

Deep Dive:

Two years ago, when Broadcom completed its $61 billion acquisition of VMware, the industry expected a massive customer exodus from the traditional virtualization provider. But those large-scale migrations did not happen—at least not all at once. Instead, a more moderate and potentially more far-reaching trend is emerging: a slow, deliberate unwinding of dependence on VMware, a scenario Broadcom seems to have anticipated from the start.

As a follow-up to its 2024 baseline survey, CloudBolt found that industry panic has given way to pragmatic adaptation. The cloud cost management software company noted that enterprises need time to digest the profound changes to VMware's product line, pricing structure, and partner programs. Most customers are constrained by contracts and infrastructure and cannot easily walk away.

As Broadcom streamlined VMware's vast portfolio into a few bundles, replaced perpetual licenses with subscription models, and pushed adoption of VMware Cloud Foundation private cloud, costs rose—but not as much as some had expected. In 2024, 73% of organizations had expected VMware costs to more than double under Broadcom, but only 14% actually reported cost increases exceeding 100%. The more common increase range was 25% to 49%.

Cost is not the only pain point. One respondent told CloudBolt: "The shift from perpetual licensing to all-or-nothing subscription bundles turned our predictable capital expenditures into volatile operating expense liabilities." Another respondent said: "In certain enterprise cases, we observed cost increases of 400% to 700%." CloudBolt found that usage costs remain a key concern, with 85% of IT leaders basing their VMware strategies on expectations that prices will rise in the future.

One respondent noted: "Unwinding a decade of process dependency takes 18 to 24 months. This horizontal abstraction is far more complex than a standard cloud migration." Complete exits are extremely rare—only 4% of respondents have fully migrated away from VMware. About two-fifths of respondents said they continue to use VMware while scaling down.

CloudBolt's findings suggest Broadcom's strategy is working as CEO Hock Tan envisioned. The tech giant was not seeking to retain all customers but was prepared to absorb customer attrition to maximize revenue from large organizations. Broadcom's software segment revenue grew 26% year-over-year to $27 billion in fiscal 2025, driven primarily by "strong adoption of VMware Cloud Foundation," Tan said on the December earnings call. Although AI-driven hardware sales remain Broadcom's dominant business, software accounted for 42% of its fiscal 2025 revenue.

However, the aftermath of the acquisition remains disruptive. CloudBolt's report shows that while 60% of respondents expressed greater confidence in their current VMware strategy than in 2024, nearly two-thirds admitted to adjusting their strategy at least twice since the deal closed. Among customers planning migration, nearly three-quarters chose public cloud infrastructure, far outpacing those moving to other hypervisors. Hyper-V and Azure Stack were secondary destinations, with SaaS alternatives ranking third. CloudBolt noted: "Organizations are not finding an easy way out." Key obstacles include migration complexity and risk, higher-than-expected costs, and technical limitations.

VMware strategy has become an increasingly prominent board-level issue. 41% of respondents said CEOs and CFOs are applying greater pressure due to concerns over VMware costs, risk, and platform flexibility. "The panic phase is over. Now it's the execution phase: reducing dependence, managing the dual reality of transition, and building optionality before the next renewal decision tightens the window and budget," said CloudBolt CEO Rod Squires.

CloudBolt's findings point to a long-term reshaping of the virtualization market. The report cites Gartner analysis suggesting VMware's market share could decline from roughly 70% in 2024 to about 40% by 2029. The data indicates that dramatic exits are unlikely to drive this decline. Instead, as organizations gradually migrate workloads across successive renewal cycles, this shift—and the accompanying channel partner opportunities—will emerge incrementally.