Broadcom is reversing course on VMware's pricing strategy, planning an updated vSphere Standard edition after the company's aggressive push toward expensive, subscription-based bundles triggered an exodus of small and medium-sized customers.
The retreat exposes a fundamental business model miscalculation. When Broadcom acquired VMware, it eliminated perpetual licenses and pivoted sales incentives heavily toward VMware Cloud Foundation (VCF), a private cloud bundle loaded with features most SMBs neither needed nor could afford. Sales representatives pushed VCF aggressively, with customers reporting they were told vSphere Standard was no longer available.
Paul Turner, VCF's chief product officer, acknowledged the strategy had tilted too far. "We had too big a focus on VCF," Turner said. "We corrected this."
The numbers behind the retreat are damaging. VMware has not updated vSphere Standard since 2022. An updated vSphere arrived only with VCF 9 in 2025—a signal that Broadcom had deprioritized the entry-level product entirely. Turner attributed that to security improvements in VCF, but the real reason was economic: new sales incentives made VCF's higher price point more attractive to Broadcom's compensation structure.
Ram Velaga, president of Broadcom's Infrastructure Software Group, offered the strategic rationale: VMware wanted VCF positioned as a cheaper and simpler alternative to public cloud services. Introducing a low-cost virtualization product "could have distracted" customers from that narrative, Velaga said.
What Broadcom failed to anticipate was that SMBs had neither the budgets nor the roadmap urgency to migrate upmarket. Instead, they left.
The damage to relationships is now severe and likely irreversible for many customers. Dean Colpitts, CTO of Canadian managed services provider Members IT Group, terminated a 19-year VMware partnership after Broadcom cut MITG from its reseller program. "Broadcom has burned all the bridges," Colpitts said. "Even if the new vSphere Standard is easier to migrate to, Broadcom has already shown both customers and channel partners they can't be trusted."
That erosion of trust has opened the market to competitors. Sumit Bhatia, author of an analysis on VMware's transition under Broadcom, said: "Three years of neglect, quote refusals, and VCF-only sales tactics have already pushed many SMBs toward Nutanix, Proxmox, and Hyper-V." The shift accelerated in online channels: on Reddit and industry forums, departing customers expressed skepticism that a late-stage product release could rebuild confidence.
Broadcom is scheduled to reveal details about the updated vSphere Standard in October at VMware's Explore conference in Frankfurt. The timing—more than two years after the acquisition—underscores how far the company fell behind on reading its own market. Rebuilding that market share will require more than a new product tier. It will require proof that Broadcom has decoupled sales incentives from customer fit, a shift that requires both cultural change and margin discipline—neither easy when acquisition economics demand growth.
