VMware has long been a cornerstone of enterprise virtualization, powering data centers and private clouds for organizations of all sizes. In 2026, however, the VMware ecosystem looks very different from what it did just a few years ago, and longtime users are starting to consider alternatives.
Major changes following Broadcom’s acquisition have reshaped licensing, pricing, and customer relationships, creating both record financial performance and growing unease among users. Understanding what happened in 2025 and where things are heading in 2026 can help you make smarter infrastructure decisions for your business and customers.
VMware sees record revenue going into 2026
From a financial perspective, VMware entered 2026 in a strong position. Under Broadcom’s ownership, the company streamlined its product portfolio and shifted aggressively toward subscription-based licensing. This move significantly increased predictable, recurring revenue and reduced operational complexity for VMware itself, which was lauded by Wall Street, but not really by anyone else.
Broadcom’s strategy focused on prioritizing VMware’s most profitable enterprise customers, to the detriment of smaller fish. Many legacy offerings were retired or consolidated into bundled subscriptions, encouraging customers to adopt broader VMware stacks rather than individual products.
For Broadcom, it’s clear that at least in the short term, they got their money’s worth with VMware: higher margins, improved revenue efficiency, and strong performance that pleased investors. From a purely financial lens, VMware looks healthy heading into 2026.
Broken customer trust may lead to a decline in user base
While revenue climbed, however, customer sentiment told a different story, as both SMBs and IT professionals felt sidelined by VMware’s post-acquisition changes. Sudden licensing shifts, higher minimum commitments, and the removal of perpetual licenses created unexpected cost increases for organizations that had relied on VMware for years.
Longstanding customers found themselves paying more for features they didn’t need or being pushed into subscription tiers designed for much larger environments. This has eroded trust and led many IT leaders to re-evaluate whether VMware is still aligned with their budgets and long-term plans.
Is VMware becoming untenable for SMBs?
Another concern was reduced flexibility. VMware’s tighter packaging limited customization and made it harder to scale environments incrementally. Businesses that valued predictable costs and gradual growth began looking elsewhere. As a result, 2025 saw a noticeable increase in VMware customers exploring exit strategies, not because the technology failed, but because the relationship model changed.
If this trend continues, VMware may face a gradual decline in market share among SMBs and mid-market organizations, even as enterprise revenue remains strong. Whether or not this strategy is sustainable over the long term remains to be seen.
Alternatives to VMware rising in popularity
The dissatisfaction and negative reactions to company policies grew in 2025, so several VMware alternatives gained momentum going into 2026. Businesses seeking lower costs, simpler licensing, and greater control over their infrastructure have caused the popularity of some competitors to spike.
Open-source solutions
Hyperconverged and open-source solutions have become especially attractive. Platforms like Proxmox VE and XCP-ng offer robust virtualization without the premium pricing or restrictive contracts. For cost-conscious businesses, these tools provide essential features such as high availability, live migration, and backup integration with far fewer licensing headaches.
Cloud-based alternatives
Many businesses are choosing to reduce on-prem virtualization altogether by moving workloads to public cloud or hybrid cloud environments. Services built on AWS, Azure, and Google Cloud allow you to pay only for what you use while avoiding vendor lock-in at the hypervisor level.
Microsoft Hyper-V
Microsoft Hyper-V virtualization technology continues to appeal to organizations already invested in the Windows ecosystem. With competitive pricing and strong integration with Azure, it provides a familiar path forward for businesses looking to make the switch without a complete rearchitecture.
Is VMWare still right for you?
As a managed IT services provider, we’re seeing more clients request virtualization assessments before renewing VMware contracts. Our evaluations help them make informed decisions based on cost, performance, scalability, and long-term flexibility across multiple platforms. In many cases, we’ve found that modern alternatives can meet client needs just as effectively without the baggage that VMware now comes with.Contact Liberty Center One and discover the best virtualization setup for your business’s operational needs, long-term goals, and budget.