The rules of enterprise software procurement have fundamentally changed. For years, small and medium-sized businesses (SMBs) selected software platforms based on features, price, and compatibility. Vendor credibility — the confidence that a supplier would honour its commitments, maintain fair pricing, and respect its customers' long-term interests — was almost assumed. Then came Broadcom's acquisition of VMware, and that assumption shattered.

What followed has become one of the most instructive case studies in modern enterprise technology: a story of pricing shock, broken trust, lawsuits, and a mass migration that is still unfolding. For IT leaders, CFOs, and business owners alike, the VMware situation isn't just a cautionary tale about one vendor. It's a warning about how every enterprise software relationship should be evaluated from this point forward.

The Acquisition That Changed Everything

When Broadcom acquired VMware in November 2023 for $61 billion — the largest enterprise software acquisition in history — the IT industry held its breath.

The anxiety was justified.

What followed was one of the most aggressive pricing overhauls in enterprise software history, leaving organisations that had been running stable VMware environments for years waking up to renewal quotes that bore no resemblance to what they had previously paid.

These changes sparked widespread concern among SMBs and large enterprises alike, with reported cost increases ranging from 150% to over 1,000%.

To put that in context — a business that had budgeted £50,000 for its annual VMware licence could now be facing a bill of up to £550,000 or more. This wasn't incremental change. It was a structural transformation.

What Actually Changed With VMware Licensing

Understanding the specifics matters, because they reveal just how comprehensively the goalposts were moved.

Subscription-based licensing has replaced perpetual licensing. Customers must now pay recurring fees for VMware products rather than making a one-time purchase and owning the software licence perpetually.

The minimum core requirements also shifted dramatically.

Customers can't purchase fewer than 72 licences — VMware's previous minimum licence count was 16, but customers must now buy licences for at least 72 cores.

This single change effectively priced many SMBs out of the market overnight.

The new SKUs bundle products together, meaning a customer who used vSphere alone now pays for vSAN and NSX whether or not they run them.

This approach of consolidating product lines into larger bundles forces customers to pay for capabilities they may not need, inflating per-user costs while vendors claim "more value."

For SMBs specifically, the impact was compounded.

After Broadcom's acquisition, many left due to major price hikes — 3x to 6x increases are common — licence changes, and reduced support quality. The removal of popular SKUs like Essentials also made things worse for SMBs.

Perhaps nothing illustrates the trust breakdown better than the string of high-profile legal disputes that followed the acquisition.

AT&T filed suit in August 2024, accusing Broadcom of seeking to "retroactively change existing VMware contracts to match its new corporate strategy," claiming Broadcom demanded that AT&T purchase unwanted, bundled VMware software subscriptions and refused to honour VMware support services renewal rights.

UnitedHealthcare filed a complaint alleging breach of contract and claiming that a transition to alternative mainframe software would take years. It alleged that Broadcom threatened UnitedHealth with higher prices if UnitedHealth tried to enforce contractual rights through litigation.

These weren't minor disputes.

The AT&T dispute, which revolved around the extension of support services following Broadcom's acquisition of VMware, drew significant attention due to its potential impact on broader enterprise IT support contracts.

When major corporations are resorting to litigation to protect their software rights, it signals something far deeper than a commercial disagreement — it signals a fundamental breakdown in vendor trust.

The SMB Migration Wave: Where Businesses Are Going

The market has responded decisively.

Concerns about the new direction VMware is taking are driving some enterprise customers to consider alternative platforms, and Scale Computing said its new customers have doubled over the past year, thanks in part to Broadcom's changes to VMware sales operations.

Businesses are turning to Proxmox, Nutanix AHV, Hyper-V, and cloud-native alternatives to reduce costs and gain flexibility.

Each serves a different use case:

a mature, open-source virtualisation platform that has become the go-to VMware replacement for many SMBs, with no per-core licensing, strong clustering and backup, and an optional affordable support subscription.

if you are already a Windows Server and Microsoft 365 shop, Hyper-V is included with Windows Server licensing you may already own and integrates cleanly with your existing management and identity stack.

the most "enterprise-proven" direct replacement for those running full-stack VMware Cloud Foundation, with its AHV hypervisor being a primary beneficiary for teams seeking a migration experience that mirrors VMware's maturity.

The recommended approach is to pilot with non-critical workloads first and run the target platform in parallel with VMware on a subset before committing to a full migration.

Why Vendor Credibility Must Now Drive Every Software Decision

The VMware situation has accelerated a broader shift in how SMBs and enterprises evaluate software vendors.

As the complexity of third-party ecosystems continues to grow, maintaining control over vendor risks is becoming a defining factor in enterprise security — and the right vendor risk management approach ensures not just visibility but accountability.

Software companies build trust and credibility by demonstrating product quality, security, transparency, expertise, and consistent customer value. In competitive markets, buyers compare multiple providers before making purchasing decisions.

But the VMware episode has raised the stakes considerably — buyers aren't just comparing features anymore. They're scrutinising ownership structures, acquisition histories, and pricing philosophies.

A weak reputation or limited third-party validation can discourage a buyer from championing a supplier internally

— and in the post-VMware landscape, that internal scrutiny is more intense than ever. Vendor credibility now encompasses pricing transparency, contract integrity, support quality, and the demonstrated willingness to treat customers fairly even after the ink has dried.

Practical Tips: How to Protect Your Business From Vendor Lock-In

Whether you're currently a VMware customer or simply evaluating your enterprise software strategy, these steps will help you reduce risk and make decisions grounded in vendor credibility.

1. Audit your current vendor contracts immediately.
Review all enterprise software agreements for clauses that allow unilateral price changes, forced bundle upgrades, or altered support terms. Engage legal counsel if necessary.

2. Diversify your infrastructure stack.
Avoid single-vendor dependence wherever possible.

Vendor lock-in not only limits flexibility but also exposes businesses to risks associated with sudden price changes, service disruptions, and lack of innovation.

3. Run a parallel workload pilot before committing to any migration.

Pilot with non-critical workloads and run the target platform alongside your current solution on a subset of operations before committing to a full migration.

4. Assess vendors on credibility, not just capability.

In practice, "credibility" spans due-diligence and risk controls (security, compliance), performance history (delivery, service), references and certifications, and an audit trail that stands up to scrutiny.

Apply this framework to every major software vendor.

5. Insist on contractual pricing protections.
Negotiate multi-year price caps, guaranteed renewal terms, and explicit protections against forced bundle migrations before signing any enterprise software agreement.

6. Monitor vendor ownership changes.
When a vendor you rely on is acquired, immediately review what the acquiring company's track record looks like with previous acquisitions. History is the most reliable predictor of future behaviour.

7. Evaluate open-source alternatives as a strategic option.
For virtualisation,

Proxmox VE offers a compelling zero-licence-cost model, which is highly attractive for SMBs.

Open-source doesn't mean unsupported — it often means freedom.

Conclusion: Trust Is the New Feature Set

The VMware story is not over.

By 2026, the initial shock of Broadcom's acquisition has transitioned into long-term migration cycles

, and thousands of businesses are still navigating the fallout. But the most important lesson isn't about virtualisation platforms or licensing models — it's about the nature of trust in enterprise software relationships.

Features can be replicated. Prices can be negotiated. But once a vendor demonstrates that it is willing to retroactively alter contracts, force unwanted bundles, and price out the very customers that built its ecosystem, credibility cannot be easily restored. In 2026 and beyond, vendor credibility is not a soft consideration — it is a hard business requirement.

Ready to reassess your enterprise software strategy in light of the changing vendor landscape? Whether you're evaluating VMware alternatives, renegotiating contracts, or building a more resilient IT infrastructure, our team can help you make decisions that protect your business for the long term. Get in touch today to book a free consultation.