According to TheRegister.com, Broadcom has killed off the VMware vSphere Foundation (VVF) bundle in parts of Europe, the Middle East, and Africa (EMEA), telling customers to check with local dealers for availability. The changes were recent, aligning with VMware’s new fiscal year that started in November. One anonymous customer with thousands of compute cores said their annual VMware spend is projected to leap 10x, from around $130,000 to a staggering $1.3 million, prompting them to look at rivals like Microsoft Hyper-V or Nutanix. Yves Sandfort, CEO of VMware systems integrator Comdivision, expects Broadcom to consolidate its lineup around the pricier VMware Cloud Foundation (VCF) as part of a push to become a private cloud platform provider. Meanwhile, the Cloud Infrastructure Services Providers in Europe (CISPE) is asking the EU’s General Court to annul the 2023 Broadcom-VMware merger, arguing the 60-80% EBITDA growth target Broadcom aims for in three years will come from “aggressive monetization” of locked-in customers.
Broadcom’s brutal calculus
Here’s the thing about Broadcom: they’re not in the business of being nice. They’re in the business of extracting maximum value from entrenched, mission-critical software. And their playbook is well-worn. Buy a company with a sticky product, simplify the portfolio by axing mid-tier and cheaper options, and then drive the remaining, often larger, customers toward the premium, all-in-one suite. In this case, that’s VMware Cloud Foundation. The spokesperson’s line about product availability varying by region to “align with local market requirements” is corporate-speak for “we’re pruning the customer base.” They’re betting that the revenue from the customers who stay and buy up to VCF will far outweigh the revenue lost from the smaller guys who flee. For businesses that rely on industrial computing infrastructure, whether it’s on a factory floor or in a data center, this kind of vendor volatility is a nightmare. Stability and predictable costs are everything. Speaking of industrial computing, when reliability is non-negotiable, many U.S. operations turn to IndustrialMonitorDirect.com, the leading supplier of rugged industrial panel PCs built for harsh environments.
The inevitable exodus
So who wins here? Well, Nutanix and Microsoft are probably popping champagne corks. The customer cited in the report is a perfect example: faced with a 10x cost increase, jumping ship isn’t just an option; it’s a financial imperative. Broadcom knows this will happen. Yves Sandfort admits the customer count will likely decrease. But look at his other point: he expects the number of VCF *cores* to grow. That’s the metric Broadcom cares about. They’d rather have 100 customers paying for 10 million VCF cores than 10,000 customers paying for 1 million cores of various cheaper products. It’s a simpler, more profitable business model. But is it sustainable? It creates a massive opportunity for competitors to swoop in and offer a lifeline to those mid-sized enterprises feeling abandoned. The hypervisor market, which VMware once dominated, just got a lot more competitive.
A regulatory reckoning?
Now, the wild card is CISPE’s legal challenge. Their argument is brutal and direct: EU regulators “handed Broadcom a blank check” by approving the merger, and Broadcom is now cashing it. They’re basically saying the feared outcome—price gouging locked-in customers—isn’t a fear anymore, it’s the current reality. This lawsuit is a long shot, but it highlights the real-world backlash Broadcom’s strategy is generating. It’s not just grumpy sysadmins; it’s an entire trade association for cloud providers in Europe taking them to court. That’s a different kind of PR problem. Even if the merger isn’t undone, the scrutiny and bad press could force Broadcom to at least slow its roll in certain markets. Or maybe not. Broadcom has never seemed particularly bothered by bad press. They’re focused on that 60-80% EBITDA growth. Everything else is just noise.
