Broadcom Admitted VMware Sales Strategy Alienated Clients

The company has planned an update to its vSphere Standard product after shifting incentives toward higher-tier bundles.

Updated on Sept. 27, 2026 in Business Strategy

Isometric editorial illustration of a single enterprise server cabinet in a clean data center aisle, representing software licensing structures. — Broadcom plans to update vSphere Standard after acknowledging that sales strategies focusing on premium VMware Cloud Foundation bundles alienated smaller business partners. AI Illustration. Upload story photo >

Live Poll

Do you trust companies that switch to subscription models to prioritize your needs over theirs?

Broadcom acknowledged that its recent transition to subscription-based VMware bundles alienated small-to-medium-sized businesses. The move follows reports that sales teams prioritized VMware Cloud Foundation, which launched in 2025, over lower-priced alternatives.

Why it matters

Internal sales incentives drove a focus on premium VMware Cloud Foundation platforms, often at the expense of smaller partners and clients who previously relied on simpler licensing models. This shift caused friction in the channel, exemplified by the loss of long-term reseller status for firms like Members IT Group.

Broadcom's software business reported $8.75 billion in revenue for fiscal Q3 2026, supported by a strategy that centralized sales on VMware Cloud Foundation. This change impacted long-standing partners, including Members IT Group, which lost its reseller status after 19 years.

The players

Broadcom

A multinational semiconductor and infrastructure software developer that operates through aggressive acquisition and integration strategies.

Members IT Group

A Canadian technology services firm that operated as a VMware reseller for 19 years before its partnership status was terminated.

The details

Broadcom transitioned VMware products from traditional perpetual licenses to mandatory subscription bundles. Sales representatives were incentivized to push the higher-priced VMware Cloud Foundation rather than entry-level offerings. Consequently, vSphere Standard remained without an update since 2022, creating a gap in options for smaller operators who did not require the complexity of the enterprise-grade Cloud Foundation suite.

2022 marked the last update to vSphere Standard.
A new VMware Cloud Foundation version arrived in 2025.
Broadcom software business generated $8.75 billion in revenue during fiscal Q3 2026.
Updated details are expected in October 2026 at the VMware Explore conference.
An updated version of vSphere Standard is scheduled for release in the coming months.

Market Landscape

Broadcom's admission marks a tactical pivot following the industry-wide friction caused by the VMware licensing transition. This update attempts to address the competitive void left by the deprecation of accessible, non-enterprise software tiers.

Small-to-medium-sized operators should monitor the release of the updated vSphere Standard to determine if it restores a viable entry point for their infrastructure needs. Organizations currently tied to higher-cost subscription bundles should evaluate if this pending release warrants a renegotiation of their software licensing commitments.

The takeaway

Large-scale software providers often prioritize high-margin enterprise products, but operator backlash can force a strategic return to accessible entry-level options. Monitor the upcoming vSphere Standard release to assess if it aligns with your operational scale and IT budget requirements.