Broadcom’s VMware Overhaul: Goodbye SMBs and MSPs, Hello Enterprise

VMware has long been the trusted foundation for virtualization, used by enterprises and small businesses alike for secure, scalable infrastructure. But since Broadcom’s $69 billion acquisition of the company, that’s all changing. And small and midsize businesses, as well as many long time MSP partners are feeling the sting. 

In a sweeping restructuring, Broadcom dramatically changed the pricing structure raising the minimum vSphere core purchase from 16 to 72 cores forcing most smaller customers to pay 3x to 5x costs including features they do not need. Broadcom also eliminated perpetual licenses moving to a subscription only model favoring larger customers.  

The overhaul does not stop there. Broadcom has begun cutting ties with much of VMware’s long-standing partner ecosystem. That includes eliminating the Registered Partner tier, removing hundreds of MSPs, and terminating partner agreements with just 60 days’ notice in the past few weeks.  

This isn’t just a change in policy. It’s a fundamental pívot. VMware has become an enterprise-only solution, leaving smaller businesses scrambling to find support, new tools, and replacement platforms on short notice. Broadcom’s decision to make such dramatic changes reflects their strategy in fully optimize their $69 Billion investment into acquiring VMware and start seeing the returns now.  

Here’s What’s Changing 

Broadcom’s overhaul includes: 

• Skyrocketing costs: VMware’s new pricing structure mandates steep vSphere core purchase minimums. Often 3x to 5x more expensive than prior options. VMware licenses now require a minimum purchase of 72 cores—up from the previous 16. This means SMBs with modest infrastructure are forced to pay for far more capacity than they need.  

• Subscription-Only Model: Broadcom has eliminated perpetual licenses, replacing them with subscription-only options. This shift from a one-time CapEx model to a recurring OpEx model removes long-term cost predictability and forces ongoing payments. 

• Bundled Offerings: VMware’s previously modular products are now only available in bundled packages. SMBs must pay for features they may not use, further inflating costs. 

• Termination of SMB-Focused Partners: Many Managed Service Providers (MSPs) and smaller resellers have received 60-day termination notices, effectively ending their ability to sell or support VMware products. 

• Support Restrictions: Customers with legacy perpetual licenses are no longer eligible for support renewals, patches, or security updates unless they transition to subscriptions. 

• Hefty renewal penalties: Miss a contract renewal date? Expect severe reinstatement fees and zero flexibility. 

• An enterprise-only focus: Broadcom’s new model explicitly targets large enterprise deals, leaving SMBs with fewer choices and greater risk. 

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While Broadcom claims these changes are about “streamlining” and improving quality, industry observers see it differently. A recent EU report called the new model “ethically flawed,” with tactics that lock in large customers, drive out competition, and leave smaller organizations vulnerable. 

Avoid Interruptions 

If you’ve relied on VMware for years, this sudden change could put your infrastructure and your business at risk. And with little warning, the pressure is on to respond quickly or face serious interruptions in your operations. 

At TMCG, we believe every business deserves stability and strategic clarity, not surprises. We’re already helping clients navigate this disruption with plans designed to preserve uptime, minimize risk, and avoid overpaying for tools that no longer fit. 

Don’t Wait to Act 

If you feel uncertain about your VMware situation and are fearful of the financial impact coming when it is time to renew your VMware licensing and need to find a viable solution, now is the time to act. TMCG can help you: 

• Evaluate your current VMware exposure and future risks 

• Identify cost-effective virtualization and cloud alternatives such as private cloud, Hyperconvergence, Azure or other cloud infrastructure platforms and M365 using Teams, SharePoint and OneDrive.  

• Plan a smooth, secure transition—without sacrificing productivity or compliance 

You’re not alone—and you’re not out of options.  

Let’s talk now, before renewal deadlines and platform changes force your hand. 

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