The Future of Virtualization in a Post-VMware World

Broadcom’s takeover of VMware left customers with price hikes and oppressive subscription requirements, but they now have the opportunity to find workload-based solutions that can deliver better performance and solutions at lower costs.

By: Dave Dimlich
President of SD3IT

The virtualization market has changed a lot in the two years since Broadcom completed its acquisition of VMware, but not in the way many anticipated.

The sky didn’t fall. There was no sudden mass exodus from VMware. The market didn’t collapse. Instead, virtualization is opening up.

Broadcom is gradually losing customers, but it doesn’t seem interested as much in how many customers it has as it is in getting the most out of the customers that remain. For the rest, a broader, more competitive landscape is emerging, giving organizations the opportunity to recalibrate their approach to virtualization, the cloud and infrastructure control. With a range of choices they did not have before, companies are able to better align virtualization strategies with workload requirements, optimize performance and, in some cases, significantly reduce costs.

Disruption of a Different Kind

When Broadcom completed its acquisition of VMware in November 2023, the immediate concern was about licensing and costs, which many customers feared would double or even triple. The move to a subscription-only model eliminated perpetual licenses and forced customers into bundled offerings such as the VMware Cloud Foundation and vSphere Foundation platforms, forcing customers to pay for capabilities they may not need.

At the same time, pricing shifted from per-socket to per-core, with minimum subscription thresholds bumped from 16 cores to 72 cores, disproportionately affecting smaller environments and edge deployments. And stricter renewal requirements have increased support costs.

Fears about price increases and subscription models proved to be well-founded, and the changes for enterprises have been significant. But the overall impact hasn’t been quite as sudden as many predicted. A survey commissioned by CloudBolt, released in January, found that 59% of respondents saw prices rise by more than 25%, but only 14% saw them double.

To be sure, organizations are feeling the effects. Eighty-eight percent of enterprises say the transition continues to be disruptive two years after the acquisition, with price increases (89%) and uncertainty about long-term direction (85%) remaining the top concerns. But significantly, 86% say they are actively reducing—though not abandoning—their reliance on VMware. Organizations shifting away from VMware are doing so on a gradual, workload basis, rather than suddenly dropping VMware altogether.

That approach makes sense. Virtualization is still foundational to modern IT, an essential element of hybrid clouds, workload mobility and infrastructure efficiency. But, spurred by Broadcom’s takeover of VMware, the idea that one platform fits all workloads is beginning to fade. In its place is a more pragmatic model: different solutions for different needs. That shift, while highly disruptive for organizations that have grown comfortable relying on VMware, creates real opportunities.

From Standardization to Optimization

For years, a majority of organizations standardized on a single virtualization platform—namely, VMware. Virtualization provided undeniable benefits for increasing efficiency, making better use of resources, improving uptime and scalability, and, of course, reducing costs by consolidating physical servers. Standardizing on VMware simplified operations, but often at a cost, both financially and in terms of optimizing performance.

Broadcom’s changes to VMware’s operation accelerated a reassessment of that approach. The move to subscription models, bundled offerings and per-core pricing has increased costs for many organizations, especially smaller enterprises, forcing IT leaders to reevaluate long-standing assumptions. Instead of keeping everything on one platform, organizations are now focusing on finding the right platform for specific workloads.

They have a growing number of options. Customers can, for example, find cost savings with alternative hypervisors, particularly those built on a Kernal-based Virtual Machine (KVM), which are gaining traction for environments where saving money is a priority. These platforms often provide comparable performance at a lower licensing cost, making them well-suited for large-scale or non-mission-critical workloads.

Containers and Kubernetes-based platforms are increasingly the right fit for modern applications, and companies can combine VMs and containers in an approach known as container-native virtualization. Lightweight and scalable, platforms such as Rancher Prime, for example, can outperform traditional VMs for certain workloads by unifying the management of containers and VMs.

Likewise at the edge, where resources are constrained and cost sensitivity is high, lighter-weight virtualization or hybrid approaches can deliver better efficiency and performance than traditional models.

Organizations are also investing in platforms that abstract infrastructure management across environments. Solutions like HPE Morpheus, for example, introduce a unified control plane that can manage both VMware-based environments and alternative hypervisors built on KVM. This allows organizations to transition gradually rather than committing to a disruptive, all-at-once migration.

Finding the right platform doesn’t necessarily mandate a change in virtualization environments, however. Although organizations can choose from among a range of options becoming available, core business systems that require stability, mature tooling and deep ecosystem support may still run best in established environments. For many organizations, that can mean maintaining a VMware footprint where it makes operational and financial sense.

Most importantly, a more flexible approach enables organizations to optimize performance by matching infrastructure to workload demands, eliminating unnecessary layers, improving resource utilization and focusing on how performance meets the needs of applications.

Managing the Virtualization Transition

A more flexible approach to virtualization can produce significant performance gains and cost savings, but it also adds complexity. This is exactly the kind of environment where a structured, solution-driven approach delivers value. At SD3IT, our focus is not on pushing a single platform, but on helping organizations design virtualization strategies that align with workload requirements, performance goals and budget realities.

Our approach to virtualization includes server consolidation along with data center integration, ensuring that virtualized solutions work seamlessly with storage, networking and security systems. Our services also include:

• Assessing current environments to identify cost and performance optimization opportunities.

• Designing architectures that leverage multiple virtualization platforms where appropriate.

• Enabling workload placement strategies that improve efficiency and scalability.

• Supporting hybrid control models that simplify operations across environments.

• Delivering end-to-end implementation and ongoing optimization.

When working with an integration partner, the goal is to get better performance at a lower cost without introducing unnecessary complexity or disruption.

Difficult Choices in the Wake of VMware

The transition from VMware is happening slowly, and for many companies it may be difficult to navigate. But perhaps the most important outcome of the past two years is that the virtualization market can become competitive again. Customers are no longer locked into a single path. Vendors are being forced to differentiate on value, whether through pricing, performance, innovation or flexibility.

That can benefit organizations in several ways:

• More pricing leverage and cost control

• Faster innovation across platforms

• Greater alignment between technology and mission needs.

• Reduced risk through diversification.

Rather than dealing with a single dominant player, organizations can build an ecosystem with multiple solutions coexisting and competing.

The virtualization market hasn’t shrunk. It is expanding. Organizations which embrace that reality can build environments that are more efficient, more flexible and better suited to their most critical missions.

About SD3IT

Solution Driven, Designed and Delivered Technology (SD3IT) provides advanced IT solutions that help government and commercial organizations modernize infrastructure, enhance cybersecurity and improve operational performance. With deep expertise across cloud, virtualization and mission-critical systems, SD3IT delivers tailored, scalable solutions that align technology with real-world mission outcomes.