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Tesco UK supermarket chain removes 40,000 servers from VMware infrastructure — mass exodus continues due to Broadcom's aggressive subscription model
Ever since buying out VMware in 2023, Broadcom has raised prices for existing customers. Although the play did result in massively increased revenue for VMware, it also triggered a slow but steady exodus away from the platform, as enterprises everywhere balk at the price tags and/or sue Broadcom.
UK supermarket chain Tesco is the latest entity to up and replace VMWare across its fleet of 40,000 servers, a move it expects to complete in 2027, Ars Technica reports.
This marks the largest publicly known migration off the platform in recent years, and arrives against the backdrop of the $134-million (£100m) lawsuit that Tesco filed last year against Broadcom. In the filing, Tesco claims that Broadcom committed a breach of contract by not honoring the perpetual licenses it bought in 2021, and that Broadcom's actions are at odds with multiple competition laws. Tesco also named VMware itself and Computacenter, the reseller, in the suit.
Tesco's story is a familiar one since the Broadcom acquisition. Much like other customers, the supermarket chain had reportedly bought perpetual licenses for vSphere Foundation and Cloud Foundation, plus support services until 2026 with a four-year extension option. In 2023, Broadcom bought VMware and stopped perpetual licensing in lieu of subscriptions.
This resulted in highly elevated pricing figures for Tesco, apparently to the tune of a 175% price hike for VMware and a 350% upcharge for mainframe software. After the 2025 lawsuit, the situation predictably deteriorated further, and Broadcom stopped supporting Tesco's VMware suite, forcing the chain to find an unnamed third party for that job. CEO Hock Tan's shop goes as far as to refuse security updates to customers without subscriptions, too.
There's no word on which software Tesco's systems administrators have selected for the job, though the Ars Technica report says that the choice appears to be incompatible with both Veeam and Zerto, suggesting it's a lesser-known offering. Additionally, TechRadar notes that HP Enterprise just announced it's offering its customers a year's free licensing to Morpheus VM Essentials, along with a $1 license for Zerto migration software. The timing is interesting, as HP is looking to snag former VMWare customers.
Ever since the Broadcom acquisition, VMware has forced subscription bundling for support contracts, effectively doubled per-core pricing, specified a 72-core minimum for purchase (thereby nuking small business setups), added a three-year contract minimum, and enforced penalties for late renewals. Moving an entire server infrastructure off a hypervisor platform is significant. Even still, a few corporations have done so, and others are reportedly considering switching away.
Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals.
The title: "Tesco UK supermarket chain removes 40,000 servers from VMware infrastructure" is incorrect.The source article in ARS Technica states:Tesco moving 40,000 server workloads off VMware ” The key is server workloads not servers.
Broadcom, like so many large companies are using their virtual monopoly (please forgive the pun) to price gouge its loyal customers - greed dictating short term profit over long term sustainability. We can only hope that so many people get peed off with them that they eventually end up shrinking to the size of unsustainable pocket lint.
It used to be the case that large companies understood not to eat away at the hull keeping the ship afloat, but to work with them and with society to improve everyone's lot. They still made boat loads of money, but there was a social conscience. I can only imagine that between Victoria and today's American-style juvenilistic capitalism idiots have taken over the asylum.
I'm guessing Hock Tan's plan is to get as much short-term profit as possible, then when VMWare starts bleeding too many customers and is looking like it's going to start losing money to an unrecoverable point, he will bail on the company to go be CEO of another one by saying "look how much money I made VMWare!" and point to the short-term profit, casually leaving out how that short-term profit destroyed the business.
This is the CEO playbook for the past 15+ years, and it's completely disgusting.
Good for Tesco. Hopefully we'll see some more big players doing this soon.
Maybe if VMware didn't have a solid competitor, they could get away with this. Turns out that ProxMox is a really awesome virtualization platform, and then there's other big players like Citrix that have strong partnerships in B2B and government. Heck, they have a good variety of virtualization solutions (DaaS, virtual apps, etc.) and other networking solutions (pretty much full service offering) that stands to benefit customers that want higher levels of integration and platform consolidation.
Broadcom should have grandfathered in all existing contracts, provide a three or five year grace period for companies to prepare for the change, and then gradually ramp up subscriptions (notice I said "gradually"). That would have been a good-faith effort toward their loyal customers, but nope, the strategy was short-term profits over long-term. There's other ways to generate revenue, such as white glove services, consulting, security and other software bolt-ons, and so on.
he will bail on the company to go be CEO of another one by saying "look how much money I made VMWare!" and point to the short-term profit, casually leaving out how that short-term profit destroyed the business.
This is the CEO playbook for the past 15+ years, and it's completely disgusting.
And I bet he will liquidate his stock-options at the first hint of trouble before leaving.
Unfortunately, they don't care if the product is destroyed, they just want to squeeze money out of the company they purchased while they can and toss it away. But at least it might make people more aware I guess.
