What Happened to VMware, Inc.?

VMware, founded in 1998, established itself as a leader in virtualization technology, revolutionizing data centers with its ESXi hypervisor and vSphere platform. For decades, it was a cornerstone of enterprise IT infrastructure, known for its broad product portfolio and extensive partner network.

The landscape dramatically shifted when Broadcom announced its intent to acquire VMware in May 2022 for approximately $61 billion in cash and stock, totaling around $69 billion including assumed debt. After 18 months of regulatory review across various global regions, the deal officially closed on November 22, 2023. Following the acquisition, Broadcom delisted VMware from the NYSE and reorganized the company into four divisions: VMware Cloud Foundation, Tanzu, Software-Defined Edge, and Application Networking and Security.

Broadcom's strategy for VMware, consistent with its prior acquisitions like CA Technologies and Symantec's enterprise security business, focused on streamlining operations, prioritizing high-margin enterprise customers, and shifting to a subscription-based model. Less than three weeks after closing, on December 11, 2023, Broadcom announced the discontinuation of all VMware perpetual licenses and support-and-subscription (SnS) renewals, moving exclusively to subscription-based offerings. This change, along with a consolidation of thousands of SKUs into a few core bundles like VMware Cloud Foundation (VCF) and vSphere Foundation (VVF), and a per-core licensing model with a minimum of 16 cores per CPU, significantly altered the cost structure for many customers. Reports from customers and industry analysts, including Gartner, indicated typical cost increases ranging from 300% to 400%, with some organizations facing increases as high as 1,200%.

The partner ecosystem also underwent a drastic transformation. In January 2024, Broadcom terminated VMware's long-standing partner program, moving to an invitation-only model and significantly reducing the number of resellers and Cloud Service Providers (CSPs). This left many smaller partners and customers feeling overlooked and uncertain about future support and access.

As of 2026, Broadcom has continued to push its vision for VMware, particularly focusing on VMware Cloud Foundation (VCF) as the central platform for private cloud, data-driven, and AI-intensive applications. VMware Explore 2026, held in August-September, showcased new initiatives like the VMware AI Factory, new Private AI services, and validated AI models on VCF. However, customer sentiment remains largely negative, with a January 2026 Gartner survey reporting that 76% of IT leaders and CIOs have a negative outlook toward Broadcom's ownership, up from 33% in 2024. Many organizations are actively exploring or migrating to alternatives, though large-scale migrations are complex and can take years. Broadcom's strategy appears to be yielding strong financial results for the parent company, with VMware revenue contributing to Broadcom's overall growth, even as customers reduce their VMware footprint to manage costs. A recent development in September 2026 saw VMware discontinue its SmartNIC firewall due to disappointing customer demand, indicating a continued refinement of its product focus under Broadcom.