BROADCOM'S VMware introduced vSphere Express today, a stripped-down virtualization product priced at $9,600 annually for up to 128 cores—a direct acknowledgment that the company hemorrhaged small and medium-sized business customers by force-feeding them enterprise-priced bundles.
The launch reverses a costly strategic misstep. After Broadcom acquired VMware in 2023, the chipmaker consolidated the product portfolio around VMware Cloud Foundation (VCF), a private-cloud platform loaded with features most SMBs don't need. Broadcom's sales team pushed VCF aggressively. Some SMB customers reported that VMware reps told them the prior entry-level offering, vSphere Standard, was no longer available.
The math was simple: VMware abandoned the low-margin, high-volume SMB segment to maximize enterprise ACV. The problem is that abandoned customers start looking at competitors.
"We had too big a focus on VCF," Paul Turner, chief product officer for VCF, said in September, according to Broadcom's own internal signals that the strategy had misfired. The company issued sales incentives to prioritize VCF, and it reduced its channel partner roster and killed plans to move large customers to direct sales.
vSphere Express includes core virtualization features—vMotion for live VM migration and high availability for automated failover—but cannot be centrally managed across instances. That limitation keeps it architecturally separate from more sophisticated deployments, which protects margins on higher-tier offerings. Per-core subscription licensing locks customers into ongoing payment rather than perpetual licenses, a shift that benefits Broadcom's SaaS-style revenue model but conflicts with SMB cost predictability.
Prashanth Shenoy, VP of product marketing for VCF, confirmed the target: "We started listening to a lot of our lower-end customers who didn't really want the VVF but wanted the core virtualization capability."
The pricing floor—$9,600 for even the smallest deployments—still excludes the tiniest organizations. But the real signal is that Broadcom now sees SMB attrition as material enough to reverse course. VMware had not updated vSphere Standard in years. This product exists because the old strategy cost the company share.
