Tesco migrates 40,000 workloads off VMware over Broadcom pricing
Original: Tesco moving 40,000 server workloads off VMware amid Broadcom's “abusive conduct”
Why This Matters
Reflects growing customer backlash against Broadcom's post-acquisition pricing practices, signaling broader enterprise software vendor relationship tensions.
UK retailer Tesco is moving 40,000 server workloads away from VMware following allegations that Broadcom raised prices by approximately 175 percent after acquiring VMware in November 2023, according to UK High Court filings.
Tesco, a major UK retail conglomerate with 73.7 billion pounds in annual revenue, filed a lawsuit in the UK's High Court against Broadcom alleging breach of contract. The dispute centers on VMware licensing purchased in January 2021. Tesco acquired perpetual licenses for VMware vSphere Foundation and Cloud Foundation, a Tanzu subscription, and support services through 2026 with a four-year extension option. After Broadcom's November 2023 acquisition of VMware, the company refused to honor the existing agreement and demanded "excessive and inflated prices" for virtualization software Tesco had already purchased. Broadcom also refused to provide support for perpetually licensed software without purchasing duplicative subscription-based licenses. The company stopped supporting Tesco's VMware products in January 2026, forcing Tesco to procure third-party support. Broadcom also reportedly withheld software upgrades and security updates from customers without subscriptions. Tesco's migration to alternative virtualization software with reduced functionality has created significant operational and business risks. The retailer faces additional challenges due to incompatibility between its new software and existing Veeam and Zerto products. If migration proceeds at "exceptional pace," Tesco expects to complete the transition by end of 2027 at earliest. Tesco initially sought at least 100 million pounds in damages from Broadcom, VMware, and reseller Computacenter. One Broadcom offer quoted 23.5 million dollars for one-year VMware Cloud Foundation and mainframe support services.