Broadcom Admitted VMware Sales Strategy Alienated Clients

The company acknowledged that its shift to subscription-based bundles and internal incentives impacted smaller businesses.

Updated on Sept. 27, 2026 in Business Strategy

Isometric editorial illustration of geometric service blocks with one piece displaced, representing tension in software licensing structures. — Broadcom executives acknowledged that their shift to a subscription-only VMware model and revised sales incentives created friction with small-to-medium-sized business partners. AI Illustration. Upload story photo >

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Broadcom has officially acknowledged that its revised sales strategy for VMware products created friction with small-to-medium-sized businesses. The company previously transitioned VMware from perpetual licenses to a subscription-only model while prioritizing the promotion of its VMware Cloud Foundation platform.

Why it matters

Executives attributed the tensions to new internal sales incentives that favored higher-priced VMware Cloud Foundation offerings over more affordable alternatives. This approach has led to notable friction within the partner ecosystem, including the loss of long-standing reseller relationships.

Broadcom software business generated $8.75 billion in revenue during fiscal Q3 2026. This follows the reported end of a 19-year partnership with Canada-based Members IT Group.

The players

Broadcom

Broadcom is a global technology company that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions.

VMware

VMware is a provider of multi-cloud services for all apps, enabling digital innovation with enterprise control.

Members IT Group

Members IT Group is a Canadian information technology firm that recently lost its long-standing reseller status with VMware.

The details

Company leadership implemented aggressive incentives that directed sales teams toward VMware Cloud Foundation, which was released in 2025. The strategy left many smaller firms struggling to adapt to the new subscription-based bundle structure compared to the previous licensing standards.

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

Market Landscape

This pivot reflects the broader industry move away from perpetual software licensing toward mandatory subscription-based revenue models. By prioritizing VMware Cloud Foundation, Broadcom is aggressively centralizing its enterprise offerings to compete against rival cloud infrastructure providers.

Small-to-medium-sized businesses may face ongoing adjustments to their software procurement budgets due to the shift toward subscription bundles. Clients should prepare for potential changes in reseller support availability as the company recalibrates its platform focus.

The takeaway

The challenges highlighted by the VMware transition underscore the importance of maintaining partner loyalty during major enterprise software restructurings. Businesses dependent on legacy tools should proactively evaluate their software roadmaps to align with vendor-dictated subscription shifts.

What happens next

Broadcom plans to host the VMware Explore conference in Frankfurt in October 2026, where they are expected to announce further details regarding the updated version of vSphere Standard.