Key Points
- Broadcom’s VMware Acquisition Pays Off: Broadcom’s $15 billion Q2 2025 revenue, up 20% YoY, shows the VMware purchase was a good move, with the infrastructure software unit (including VMware) growing 25% to $6.6 billion.
- Customers Face Price Hikes with VCF Shift: 87% of VMware’s top 10,000 customers have moved to the subscription-based VCF model, which is priced higher than the old licensing approach, leading some to explore alternatives due to 150-500% price increases.
- Long-term Considerations for Customers: Organizations are advised to assess if VMware’s vision aligns with their future plans, particularly regarding cloud, AI, and vendor lock-in, with some expected to stay and others to leave depending on their goals.
Broadcom’s VMware Acquisition Proves Lucrative, Despite Customer Concerns
In a recent earnings report, Broadcom revealed a 20% year-over-year revenue growth, reaching $15 billion in Q2 2025, with net income soaring 124% to $4.95 billion. This success is partly attributed to its VMware acquisition, which has boosted the infrastructure software business unit’s revenue to $6.6 billion, up 25% from the previous year. This unit’s revenue has nearly doubled since the VMware purchase, highlighting the acquisition’s value to Microsoft’s competitor in the cloud and virtualization space.
VMware’s Loyalty and the Shift to VCF
When Broadcom acquired VMware, there were concerns about how the company would manage the product portfolio and partner relationships. However, VMware’s loyal customer base has helped maintain its position as a critical data center control plane for many organizations. The shift to the VMware Cloud Foundation (VCF) private cloud bundle has been a key strategy, with 87% of top customers now on board. This subscription model, which Microsoft’s Azure competes against in the cloud market, simplifies product options but introduces significant price increases for some customers.
Customer Concerns and Potential Exodus
While Broadcom CEO Hock Tan highlights the success of VCF, some customers face 150-500% price hikes, prompting them to consider alternatives. Microsoft’s Azure and other cloud services may benefit from this shift as customers explore more affordable options. Analyst Matt Kimball notes that while large organizations are likely to carefully evaluate their options, smaller ones may have already begun migrating away from VMware due to the pricing changes.
Looking Ahead: Cloud, AI, and Vendor Lock-in
As customers weigh their future with VMware, they’re advised to consider:
- Alignment with Future Vision: Does VMware’s strategy match their own, particularly concerning cloud and AI integration, where Microsoft is a key player?
- Vendor Lock-in: Will adopting VCF make it difficult to switch vendors, a critical concern in today’s openness-focused IT landscape, where Microsoft’s openness with Azure is an advantage?
- Openness and Flexibility: Is VCF designed with the openness that aligns with their business needs, or will it limit their ability to adapt to emerging technologies like AI, where Microsoft is investing heavily?
As the Microsoft ecosystem continues to evolve with Windows Server, Azure, and AI innovations, VMware’s ability to retain customers will depend on addressing these concerns and demonstrating value in a competitive market. Broadcom’s success with VMware is clear for now, but the long-term loyalty of its customer base will be the true test.
Read the rest: Source Link
Don’t forget to check our list of Cheap Windows VPS Hosting providers, How to get Windows Server 2022, Try Windows 11 Pro for Workstations & browse Windows Azure content.
Remember to like our facebook and follow us on twitter @WindowsMode.
Discover more from Windows Mode
Subscribe to get the latest posts sent to your email.
