Broadcom has admitted to placing excessive focus on VMware Cloud Foundation (VCF) following its acquisition of virtualization firm VMware, a strategy that priced out many small-to-medium-sized businesses. The shift toward subscription-based bundles and the discontinuation of perpetual licenses created affordability barriers for SMBs, who found VCF’s feature set and cost prohibitive for their needs.
Paul Turner, chief product officer of VCF, acknowledged the issue to The Register, stating that sales incentives had encouraged the sales team to aggressively promote VCF while sometimes misleading customers about the availability of more affordable options like vSphere Standard. Broadcom plans to release an updated version of vSphere Standard in the coming months, with additional details expected during VMware’s Explore conference in October. The previous version of vSphere Standard has not been updated since 2022, despite VMware releasing VCF 9 in 2025.
The damage to customer relationships appears substantial. Dean Colpitts, chief technology officer of Members IT Group, a Canadian managed services provider that was removed from VMware’s reseller program after 19 years of partnership, stated that his company will not conduct future business with VMware. Similar sentiments appear across online forums, with customers expressing skepticism that the updated offering will reverse their decision to switch to competitors.
VMware’s rivals, including Nutanix, Proxmox, and Microsoft Hyper-V, have capitalized on customer dissatisfaction. Industry analysts contend that restoring market confidence will require more than product updates, including stable pricing structures, transparent licensing terms, and demonstrated long-term commitment to the SMB segment. The challenge for Broadcom lies in proving that such commitments will not be reversed once customers’ switching costs increase.
Despite the SMB exodus, Broadcom’s software business has performed strongly since the VMware acquisition, generating $8.75 billion in revenue during fiscal Q3 2026, representing a 29 percent year-over-year increase. The significance of the SMB market to Broadcom’s broader strategy remains unclear.
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