Tesco is sprinting to quit VMware and Broadcom despite rapid migration risks

UK retail giant Tesco is replacing VMware with an alternative product and pressing ahead with its licensing lawsuit against the virtualization pioneer's parent company, Broadcom, which will be considered by the UK's High Court no sooner than November 2027. The roots of the dispute are a January 2021 contract that saw Tesco …

[Lon24]

The Screwers and the Screwed

I dislike and don't use Tescos because of its robust and confrontational ways it treats its suppliers. But not this time.

[David Austin]

Re: The Screwers and the Screwed

Agree; not a fan of Tesco, but they have the corporate weight, legal knowhow and European law on their side, on what basically boils down to the simple case of was the 2021 contract extension clause valid or not.

My Gut says Broadcom will settle (Confidentially or not) before court if Tesco will let them, but it sounds like they're up for a fight, and one that may not favour virtzilla.

[I ain't Spartacus]

Re: The Screwers and the Screwed

David Austin,

It sounds like it might be too late for Broadcom to settle now. Once you've forced Tesco to take the risk of moving in a hurry, all you can offer them is money. And they've got plenty of that - so bloody mindedness suggests that they've taken all this pain, why not share it. That would certainly be my attitude, were I in Tesco management. The time for a quiet, confidential settlement was before the deadline - and 19 days before with a complex license offer from a company that's already broken its contractual commitments, doesn't sound like they made much of an offer.

Broadcom have bet they're irreplaceable. Now I guess we get to see if they were wrong or not. I guess they're left hoping for a few high profile cock-ups in these emergency moves to new software - to show just how much they're worth the money. Although even that could end up costing them a lot in court.

It's just a shame the High Court can't expedite the case, given the importance of it. Keeping the big software companies to their contracts is vital for every business in the country now - and the courts should treat is as urgent. A few high-profile losses in court now, could force Broadcom to act more reasonably, and save a lot of companies wasting a lot of effort.

[NoneSuch]

Re: The Screwers and the Screwed

Many out of court settlements occur in the last 48 hours before the trial starts.

There is always a 'no blame' clause as well. "Here's 600 million, but remember, we didn't actually do anything wrong here..."

[I ain't Spartacus]

Re: The Screwers and the Screwed

Many out of court settlements occur in the last 48 hours before the trial starts.

This is true. It's when the reality sets in, and all the stuff your barrister has been banging on about like, "risk of the court deciding against us" starts to really penetrate peoples' brains. If one side has a bang-to-rights case, it's also when the other side start to listen to their professional legal advice, rather than wishful thinking. This is also true in the criminal sphere, when the accused stops listening to bravado and/or their Mum telling them how wonderful they are, and starts listening to their barrister about how much time they're about to spend in prison.

But the later you leave it, the bigger the offer has to be - given the other side have now wasted months of senior management time on coping with completely rebuilding their IT systems, and then on gathering the evidence, building the case and multiple meetings with the lawyers. At which point £600m starts to look like a lot less money. You've just spent that on the new IT system - and certainly in my view I'd like my powerful IT vendors to be a bit afraid of me. People always say how, "it's your fault for falling for vendor lock-in". But even if you've got contingency plans, if you bet on a system that works for you - then you're locked in - even if you've got an escape plan, that leaves you spending valuable time and money on actually using it - and ends up with your systems having changed and you having to retrain your staff. So having a reputation for taking no shit from vendors is worth the pain of the trial, unless you're being offered truly stupid amounts of cash.

[NoneSuch]

Re: The Screwers and the Screwed

"So having a reputation for taking no shit from vendors is worth the pain of the trial, unless you're being offered truly stupid amounts of cash."

If they are offering stupid amounts of cash, then it may be worth saying no and going to trial for the full amount. However, lawyers, being the stout and upstanding citizens they are, will consider taking a massive payday today or maybe a bigger payday later and will take the easy road every time for purely personal gain.

The US DOJ does that all the time. 'Sign this, admitting guilt and a 3 year sentence or we go to trail and you risk taking a 30+ year sentence in maximum security.' The fact they are completely innocent and all evidence is flawed beyond words is lost on them. They just want another coveted "convicted" tick on the case to advance their own careers.

[Snake]

Re: 48 Hours

If that is true, Broadcom to settle just before the court trial begins, that is still good news for the marketplace. You see, Tesco can't place a bet on a possible outcome, they need to know where their logistics systems will be, not where they might be based upon a roll of a die.

So, regardless of prospective outcome, Tesco will move ahead with the migration plans.

Which is great for everyone; with a major corporate player moving into alternatives, those alternatives will have the impetus to improve their offerings, granting that benefit to any other customer investigating the move. Broadcom's competition will grow stronger which benefits all (except Broadcom of course, but can a single person shed a tear for them?)

[ICL1900-G3]

Re: The Screwers and the Screwed

It worked for Handy Andy!

[Anonymous Coward]

Re: The Screwers and the Screwed

Siemens also, they have more revenue than Tesco by about $10Bn, hopefully neither case ends well for Broadcom.

It's not even a difficult decision to choose Tesco or Siemens over Broadcom

[Anonymous Coward]

Re: The Screwers and the Screwed

Tesco, AT&T, Siemens…. These are the big mega deals Broadcom was hoping to abuse and shed the small fry for.

It’s also just not a good corporate reputational look. Legal abuse is a signature trait of people like Donald Trump and Elon Musk.

Schadenfreude writ large.

[TonyHoyle]

Re: The Screwers and the Screwed

TBF in practical terms Broadcom *were* irreplaceable.

Tesco will have incurred significant cost in moving off their platform, and they're targetting next year as being able to do it. A lot of companies would just keep paying.

[Mickey Porkpies]

is this the beginning of the end for VMWARE

Broadcom have a history of maximising investments (buy out) of products whilst running them into the ground. The sooner more large VMWARE hostages move away the sooner they will either sell it and return to normality or lower their ridiculous inflated pricing that puts a massive burden on business. The hypervisor and virtualisation market is catching up and unless you use all of the product you are overpaying and many alternatives are available and viable. When larger users like Tesco migrate it shows it can be done and may make IT Management get off their comfortable chairs and actually deliver innovation - the old "nobody got fired for buying IBM" mentality is costing businesses and if a market dominant player like Broadcom want to exploit their customers so be it, but IT Management needs to step up.

[Lon24]

Re: is this the beginning of the end for VMWARE

It's already dead. Just not buried.

I would assume no sane SysAdmin is going to choose VMware now. And they have all, by now, developed an exit plan for their existing estate. The only problem is getting sign off. Any long term gain is offset by short term cost. More importantly - short term risk which could be a corporate existential and personal career ending. If I was unsure of my support team then getting beancounters to defer and swallow Broadcom's price hikes in the short term which may be preferable to being in the firing line if all does not go to plan.

If I'm going to contract an outside house to do the migration - I'd rather wait and see them use somebody else as their 'guinea pig/learning experience'.

[AMBxx]

Re: is this the beginning of the end for VMWARE

NHS Charity customer of mine has just gone VMWare. Apparently, they don't believe the alternatives do what they need.

Not the bit I work on.

[Cruachan]

Re: is this the beginning of the end for VMWARE

Be interesting to hear what bit that is, or if they've fallen victim to marketing hype.

Only customer I've worked with over the last few years who said they couldn't migrate to Hyper-V for example (which IME a lot of public sector and charities use due to the discounts they get) was running ~300 servers and heavily used some of the cluster balancing features of VMware, but they were looking at the Dell alternatives when I was there. Don't think it was VxRail, IIRC Dell were launching their own HCI product but can't remember the name of it.

[Anonymous Coward]

Re: is this the beginning of the end for VMWARE

Hyper-v has an odd short coming. It can't pass usb software licencing keys through to the guest. Or that's what I've been told by the people that manage our servers for us. Painful as I'd like to just run the software on a server rather then mailing a dongle around.

On the dev machines we are using docker, virtual box and VMware professional.

[Spazturtle]

Re: is this the beginning of the end for VMWARE

USB passthrough can be spotty on VMWare too. The best solution is to just pass the whole USB controller through to the VM.

[Cruachan]

Re: is this the beginning of the end for VMWARE

I'd forgotten about that one as licensing dongles are pretty rare these days (IME anyway). Pretty sure there is/was a 3rd party tool to get around it though, or I have a dim recollection of a license file being placed on a virtual floppy disc in one case.

[herp]

Re: is this the beginning of the end for VMWARE

Look into dongle servers from SEH or Digi - you can then map a dongle over the network to your VM. Has the advantage of not needing to move the dongle between physical hosts. I prefer the SEH devices but both work. Has worked for us with a number of software licensing dongles from different vendors.

[David Austin]

Re: is this the beginning of the end for VMWARE

I'm proud of everyone here - a whole thread of useful dongle advice and discourse, and not a single immature snigger.

[I ain't Spartacus]

Re: is this the beginning of the end for VMWARE

I'm proud of everyone here - a whole thread of useful dongle advice and discourse, and not a single immature snigger.

I'm not! I'm disgusted! Damn it! This is El Reg! If only I still had the IT gravestone icon to use!

Nobody even made a smutty gag about a virtual floppy! God this place has changed!

I'm off to snigger childishly at the Masters of the Universe film. I'd completely forgotten that He-Man had a character called Fisto... I mean, really? I know it was the 80s, but bloody hell! I think I came out of the cinema at least 10% stupider than when I went in, but the film was great fun (if a bit too long).

[Oneman2Many]

Re: is this the beginning of the end for VMWARE

As much as I hate broadcom, VMWare, they aren't going anywhere. Still have the biggest market share and are pivoting to cloud hosting.

What would accelerate their demise is applications modernising and getting off windows / linux and moving to cloud native.

[Anonymous Coward]

Re: is this the beginning of the end for VMWARE

Yes, this is Broadcom's "Ratner" moment on Steroids.

How to lose customers in one easy lesson. This fiasco will be taught on Business Studies courses for decades to come.

You have to be of a certain age to know what a 'Ratner' moment is. Gen-Z need not apply but Wikipedia will enlighten you.

[Jim Willsher]

Re: is this the beginning of the end for VMWARE

I remember his "total crap" moment very well. Commercial foot-shooting.

[Dave Schofield]

Re: is this the beginning of the end for VMWARE

>I remember his "total crap" moment very well. Commercial foot-shooting.

Of course, Ratners is now Signet Group - one of the largest jewelers in the world. They rebranded their shops as H Samuels and Ernest Jones and carried on as normal. Although he was forced out as a result.

[cookiecutter]

Re: is this the beginning of the end for VMWARE

you don't understand the model they are using. they have openly said they're only interested in the top 600 customers and everyone else can screw themselves.

Strategic customers like Trafigura or others that Broadcom as a total business work with, supporting their hardware business. Even Tesco are minnows & don't really provide any sort of quality strategic relationship to broadcom.

I was chatting to a dude at a bank who said that since they use the whole suite of products anyway (nsx, aria, etc etc) the price rise wasn't THAT bad. it's everyone else who was happy with vCenter & vSphere & didn't need the rest of the stuff & are now being forced into buying the entire stack that saw the insane rises

[Richard 12]

Re: is this the beginning of the end for VMWARE

Those bank customers may not understand the model Broadcom are using.

As customers drain away, they cease all development and crank up the rental price. They have to do that because they massively overpaid.

After a couple of turns of the screw, that "top 600" is 300, 150 or fewer, and then they cut their losses and pull the product. The final customers are left with the choice of TUPE'ing the final dregs of the development team, or tearing everything out at six months notice.

It may well make sense to eat the first price rise, but remember that what you're buying is time to make your exit plans. Don't be left holding the potato.

[EvaQ]

Re: is this the beginning of the end for VMWARE

"only interested in the top 600 customers" ... very good point.

Tesco is on the Fortune 500 list ... at position 150-180 or so. Not small in terms of revenue (£70 billion). So only "minnows" for VMware if they bought very little VMware software.

However, if Tesco is one of the 600 customers, an account manager at VMware is not getting his bonus?

[Fruit and Nutcase]

Re: is this the beginning of the end for VMWARE

If Broadcom are feeling revenues are not what they want, they can go after the Raspberry Pi - start increasing the price of the Broadcom chips.

And then there's the Spring Framework - Broadcom could start fiddling with the license

https://spring.io/projects/spring-framework/

[Headley_Grange]

"..VCF is so powerful it quickly pays for itself .."

Then all Broadcom has to do is to contract with Tesco based on this. Define a contract based on the savings they will see and once Tesco has seen those savings then they switch to the new pricing structure. I mean -- Broadcom wouldn't tell fibs about something like that, would they?

[Roland6]

This has been going on for sufficient time for there to be some actual case studies proving this to be the case….

However, I doubt Broadcom will want any meaningful case study being published, as it would need to include actual VMware and VCF prices. Plus the accounting necessary to show that case study organisation’s IT costs including VCF are less than they were under the old VMware licencing….

[Anonymous Coward]

I worked in a company that went all in on lean-six-sigma. The consultancy which did it to us had a model for the savings resulting from the LSS improvements and at the year-end all-hands meeting they got a slot for their slide deck. When they got to the savings someone pointed out that our headcount was 3/4 of our cost base and was higher than when they started so where had the savings come from. Cue much waffling about "cost avoidance". One of the older engineers stood up and said something like; "My wife does that - tells me she didn't buy something expensive she saw in the mall and then, because she's saved all that money, she spends it on something else." The people at the front were very unhappy - apart from the consultants, of course, cos they'd already been paid.

[Our Lord and Savior Rahl]

I'm probably missing something, but that's kinda the point in a business saving money - you get to reinvest it in headcount / other projects / helicopters for the execs etc.

It's not like you just chuck it in a savings account and wait for it to gradually fizzle away in tax, stuff saved one place is generally always reinvested somewhere else.

Apologies if I've completely misread your post

[Anonymous Coward]

Let's see...

1TB of DDR5 from HPE will run you around $70--80K.

Per ESX host.

Let's say you want 2TB of RAM per host.

With Memory Tiering, you can reduce your RAM cost by replacing 1TB of RAM with 2x NVMe drives.

Let's call the savings conservatively at $60K.

Per host.

VCF licensing retails for around $26K per host at 64 cores.

That's what one socket cost under the perpetual model.

Both are list $ of course.

Net it out, and VCF pays for itself and then some when used and architected appropriately.

I am sure they were told, this is not difficult math, but bRo@dc0m BAAAAD amirite???

GTFO of here with the lack of innovation and pricing nonsense. The above is REALITY.

[Anonymous Coward]

No fan of Tesco, but I hope they win this one!

[phuzz]

Broadcom execs have told The Register they have an enormous dislike for providing extended support for old products

Maybe they should have thought of that before they bought VMWare and all their perpetual licenses.

Still, I'm sure the executives that decided to torpedo their own business like this, have all received bonuses and will feel no negative effects

[Lon24]

Unfortunately Broadcom are not stupid. Or they wouldn't be where they are today.

They knew they were killing the product. They also realised (more than the old VMware management?) the enormous lock-in power of the product in the short term. Hence the outrageous immediate hikes to extract as much as possible before most customers/prisoners could escape. II you care not for the product's future then the next three years ROI may sadly, be eyewatering sustaining the share price and the perpetrator's bonus. Hated but do they care?

When VMware is dead and buried Broadcom will simply replace it with other victim(s). The moral of the story is don't get locked in. Start disengaging now while you have time. If Redmond did the same with their products what would you do?

A bonus might be gaining some sovereignty in the process.

[Anonymous Coward]

This is standard operating procedure from Broadcom. They spot something with a large established installed base and dependency; they buy it; they sweat it to extract all the profit from it till its done; they discard and move on to the next opportunity/victim. If its embedded enough they never discard it. They keep a skeleton staff to "support" it and enforce uncompromising license terms without mercy (lots of defunct middleware and mainframe software products they are the patent hogs for). If you use a product and Broadcom sniff around it - start your migration planning immediately.

[Cruachan]

It's a weird choice from Broadcom. I'm sure in the short-term they'll be fine, as they've clearly calculated on enough customers being unwilling or unable (again in the short-term) to migrate.

They're going to get little to no new business though when it's well known in the industry that they think they can behave like Oracle, and their competitors will be aggressively marketing their own products in comparison.

[Robert Halloran]

>> They're going to get little to no new business though when it's well known in the industry that they think they can behave like Oracle, and their competitors will be aggressively marketing their own products in comparison.

They already are; ref any number of PR pieces at this site. The bump in business they're getting from the corp's fleeing VMWare is simply letting them catch up on those niche features VMWare claims you must have and "those alternatives" don't (yet...).

Wonder with all this how much longer Broadcom will be able to squeeze blood from this particular turnip...

[Fred Daggy]

The return of the 80s corporate raider, updated to Tech Raider.

No, it's a logical, if not entirely moral or ethical choice.

VMware build up x billions of capital in the form of goodwill and patents over a decade. That's from satisfied customers, happy Administrators, calm Service Desk personnel, etc. Anyone in the ecosystem that used their own time to build up expertise in VMware.

Broadcom have said, ok, we can buy at $X Billion, but we can get $Y Billion of revenue in the next 5 years. So long as Y > X, profit. They are turning the VMWare capital into Broadcom revenue. Plus the revenue (not a misprint) of extortionate locked-in sales. After 5 years, they will write off VMWare at value zero, having exhausted the good will, flog off the patents to another player and find a new target.

[cookiecutter]

they've literally said they're only interested in the top 600 customers & even tesco is a minnow to broadcom. it has zero strategic value to an international hardware manufacturer like Broadcom. They're just not interested. Tesco can bitch and whine all they like

[Anonymous Coward]

Siemens, AT&T… more minnows ???

[cookiecutter]

not strategic for Broadcom as a whole. firms like Trafigura are obvious as they are huge, private & supply the kind of raw materials that Broadcom uses by the bucket load.

All the 20 year olds who've spent their entire 5 minutes in the industry doing nothing but vmware vsphere bitching about it here don't seem to realise that this is what companies do. why did MS buy Activision for insane amounts of money, only to fire most of the staff & destroy the IP? Same with lots of other firms they've bought? The corporate wide strategy might look crazy to someone looking at JUST one aspect of it, but broadcom have been doing this same playbook for decades so whether we like it or not, it MUST work for them...

concentrate on the top STRATEGIC customers, give them exactly what they want rather than whining 10000s of customers wanting things different colours or constant updates. You get better software that doesn't have screaming people wanting newsl this ilor new that plus if it fits into Larger group strategy that feeds into supplying chips, cards etc, then unimportant firms like Tesco, AT&T, Siemens can whine all they like but are disposable- something firms as arrogant as Tesco aren't used to.

[Robert Halloran]

no skin in this one but..

Given that Broadcom ended up settling with the Deathstar (a former employer..) and given the press these cases are getting, the C-suite types have to wonder if they bit off a bit too much buying out VMWare to squeeze its customer base for a few bucks/quid/euros/... until said customers could migrate off to another VM platform (and at this point the competitors are just getting better with the added business).

Hopefully Tesco & Siemens are able to thump Broadcom in the courtroom and cast further doubt on the wisdom of so thoroughly antagonizing your customer base .

[Jellied Eel]

Re: no skin in this one but..

Hopefully Tesco & Siemens are able to thump Broadcom in the courtroom and cast further doubt on the wisdom of so thoroughly antagonizing your customer base

Also the press room. Tescos and whoever gets the replacement gig publish a white paper showing how a large IT business migrated away from VMWare and how much money they saved in not paying Broadcom. Not my field, so no idea who VMWare's competitors are, or if migration might just mean leaping from one frying pan to another. Or hopefully start to signal a death knell for SaaS and the printer ink model of recurring & ever increasing subscriptions.

[retiredFool]

Re: no skin in this one but..

An interesting ruling by the EU and UK courts might be. "Broadcom, you have shown you fail to honor the contracts of companies you acquire in breach of law. This court finds you have breached those contracts willfully. Damages for the breach are.

1. Divestment of VMWare within 90 days.

2. Refund of all payments made by VMWare customers since the acquisition was announced.

3. You are forever forbidden to acquire any other companies.

[David 132]

Re: no skin in this one but..

Whilst I agree 100% with your sentiments, you might as well add

4. A free unicorn that farts gold glitter.

...for all the realistic hope there is of getting any of those items :(

[I ain't Spartacus]

Re: no skin in this one but..

David132,

As you say, there's no way a court would order all that from one case. They're not able to, they've not seen the evidence. However, after a few high-profile court loses - where they're shown to have acted like this - and their internal corporate emails have been embarrassingly published into the evidence - well next time they try the same trick the Competitions and Markets Authority might well not allow the merger. On competition grounds that Broadcom are likely to destroy the product by ramping up prices and thus reduce overall competition in the market.

So it could have a long-term impact. Even worse, if they're considered to have bought a monopoly and abused it, the CMA could even launch an investigation into current market conditions. That's something it's been less inclined to do, its concentrated more on the mergers side, but it's also starting to build up the ability to do both. Bit of lobbying from Tesco to government about the evil US business taking advantage of us poor souls - similar from Siemens in Europe. The EU Competition Commissioner is far more openly political than the CMA are in Britain, because they're a politician who may still want to make a name for themselves and go back into national politics.

Remember that Google had the Baroso commission desperately trying to get them to do a deal on the specialist search market monopoly investigation. They really didn't want to fine them. Google kept proposing solutions that gave more power and money to Google, the victims of their monoply abuse were literally being asked to pay them money for Google to give them preferential places on Google searches, rather than Google assigning them to themselves, as before... Anyway the new Juncker commission came in, and in order to get support in Germany - they had the backing of Axel Springer (big German media corporation) and thus Google got the big fine stick. Trump, and by extension the US (and in particular big US tech companies), are not popular in Europe. There's political capital to be made by hitting them with the big fines stick.

[anothercynic]

Re: no skin in this one but..

Hit them where it hurts: In the reputation and the wallet, and preferably together.

[retiredFool]

Re: no skin in this one but..

Unfortunately you are correct. But until courts start serving justice that punishes the crime equal to the crime, I don't see bad behavior changing. It boils down to

1. Governments are now less powerful than the corp's.

2. Corp's just bribe the officials to get the action they want. Classic recent example was abc firing kimmel to appease the king so they could get I think it was some merger.

3. Corp's get to be people when it suits them, and they get to be corp's when it suits them. Until the supreme court in the US (or its equivalent elsewhere) treat them specifically as one or the other I don't see it changing. We have no problem in the US putting someone on death row. Corp's on the other hand are too big to fail.

[I ain't Spartacus]

Re: no skin in this one but..

But until courts start serving justice that punishes the crime equal to the crime, I don't see bad behavior changing

retiredFool,

Nobody is accusing Broadcom of committing a crime here. They're going to face Tesco in civil court, for breach of contract. The court is only able to "punish" Broadcom for what they've done to Tesco. If someone else wants restitution, they have to go to court themselves. In fact, the court's job isn't to punish anyone here. The court's job is to enforce the terms of the contract. There are circumstances where a party to the dispute has committed such an obvious breach (and done so knowingly) that the court might up the compensation (exemplary damages) - but this is purely a case about a specific contract.

Big companies are supposed to be big boys and manage their own contract disputes - the courts are there to enforce agreements when one side misbehaves. And make it public, so other companies can learn who not to deal with.

For government to get involved, we're talking about competition law. For which we have the CMA in the UK. If they deem Broadcom's VMWare to be significant market player, then they could look to see if these price rises are an abuse of market power - and force it to stop. But it's a pretty high bar to even start that kind of investigation. As I said elsewhere, this might give Broadcom problems next time they try to buy a big player. Past behaviour can impact on future merger approvals.

Your points 1 and 2 contradict each other though. If corporations were more powerful than governments, then how come you accuse one of only sacking a guy to get what they wanted from a government that they're supposedly more powerful than?

Corporations move faster than governments. And it's much harder to stop something that's been happening for a while, and is now peoples' meal-ticket, than it is to ban something before it happens. Companies also lobby governments. But if a government wants to ban social media for under 16s, there's nothing the companies can do to stop it. Similarly they can avoid complex tax rules by moving themselves around the world, but some governments in large markets can just levy a tax on them, and short of paying Donald Trump to make threats about it - they've so far failed to get one of those governments to stop.

Governments are also much quicker to stop large companies abusing consumers in this way (partly because they're voters) - and some of that is probably because so few modern politicians have experience of normal business. But also, because the law assumes companies don't sign contracts without lawyering up first.

[retiredFool]

Re: no skin in this one but..

I am accusing Broadcom of criminal behavior. Breach can be criminal when,

"If a party enters into a contract without any intention of fulfilling the terms, this may constitute fraud."

Broadcom purchased VMware knowing it had no intention of fulfilling VMware's customer contracts.

I call that criminal as there was intent. And so do others at least under US law. Now customers may prefer to litigate in civil as the burden of proof is lighter. But I don't think anyone thinks broadcom had any intention of letting those legacy contracts stand.

[I ain't Spartacus]

Re: no skin in this one but..

retiredFool,

That sounds like proper barrack-room lawyering. I don't like it, so it must be illegal. I think they're reneging on a contract, but while they have legal advice that says there's a loophole to let them wriggle out of that contract, then they're not acting illegally. A court might rule against them, in which case their behaviour could possibly become unlawful (at least in the UK) which is different to illegal, because still not necessarily criminal.

"If a party enters into a contract without any intention of fulfilling the terms, this may constitute fraud."

As they didn't sign the initial contracts (that was VMWare), the idea that this constitutes fraud is laughably silly.

This is all contract law, which is civil law, and therefore civil penalties - not criminal ones.

[alain williams]

I hope that Tesco ...

fully document and publish their move to the 'alternative product' - this would make it easier for others to learn how to move away from the shark that is Broadcom.

[Michael Strorm]

Mandy Rice-Davies

Broadcom execs have told The Register they have an enormous dislike for providing extended support for old products and a huge preference to shift customers to subscriptions for the company's flagship Cloud Foundation (VCF).

Well they would, wouldn't they?

They argue that that continuing to use old VMware software sold under perpetual licenses is an act of corporate self-harm because VCF is so powerful it quickly pays for itself by improving IT department operations and improving business efficiency.

They're only doing for their customers' own good? *Sure* they are!

(Not that Broadcom would have any business interfering in the business decisions of their customers, even in the unlikely event that they *were* sincere about simply wanting to help.)

[cookiecutter]

civil servants should be fired!

the competition and marketing commission should have blocked this but of course having civil servants that ACTUALLY know what they're working on would be asking too much.

VMWare has been a fundamental technology for government and private sector for years & yet the idiots at the CMC just waved it through, much like the activision purchase by MS & allowing the ARM sale.

stunningly short sighted, dumb and not surprising when you find from Private Eye that the head of the gambling commission left on April, straight into a position as a lead consultant for a new lobbying firm for the... checks notes.... gambling industry.

It would be interesting to see which corrupt asshole has got the brown envelope from broadcom.

On the plus side apparently broadcom are having issues with consultants after having grabbed well known screw ups Computacenter to do the consultancy & they are irritating every vmware consultant in the country with their insane requirements...25 years of VMWARE hands on, design, migration, build etc & apparently I don't have enough experience in virtualisation

[I ain't Spartacus]

Re: civil servants should be fired!

cookiecutter,

The CMA is part of the reason the ARM sale was stopped. Too many regulators were sniffing round that deal, and they would have been investigating for years. If you mean the sale to Softbank, that happened before the CMA even existed (regulation was done by the European Commission back in 2016) - but as Softbank weren't a player in any of ARMs markets - it wasn't a competition issue anyway. That would fall under an industrial policy to stop the sale, something that would have been mostly illegal inside the EU - and still not a matter for a competition authority.

I doubt they had the ability to stop Microsoft buying Activision either. Given that neither of those are monopolies in a very large games industry. Remember that CMA are only legally allowed to operate within their remit, as set down in the legislation that created them. They have to decide on relatively objective terms, and are subject to legal challenge if they obviously start making decisions for reasons other than stopping market abuse from monopolies.

I don't really know the market well enough to know whether they could, or should, have stopped the VMWare sale. Even if VMWare were a monopoly (have market control and over 25-40% of the market share depending on complex criteria), if Broadcom were operating in mostly different markets - it's not actually illegal to have a monopoly. It's abusing it that is. So buying a monopoly is also fine, if you're just going to use it for the nice money. If you can use that monopoly to somehow take power in another market (say the way Google have abused their search monopoly to get a browser monopoly or the way they've used their mobile phone monopoly to dominate mapping). Also if you have a monopoly and start price-gouging. But again, you have to be able to prove in court that there are good grounds to think that's what Broadcom were going to do, you can't just say "we're blocking the deal because they're wrong-uns".

[Anonymous Coward]

What’s that? They’ve chosen something that doesn’t support Veeam and Zerto? Sounds like they should have gone with HPE

[Slim99]

I'd hate to be the CTO at Tesco right now...

I am very interested in learning what the actual replacement will be. I suspect multiple products which don't quite work together as well as promised by their sales people. End of 2027 means this is a 2+ year project, that's a lot of cost and work. It isn't going to work perfectly, and patching/maintenance moving forward is going to cost them too.

On the pricing front, Tesco probably got a massive discount on their licenses before, which Broadcom won't do. So much of the increase is probably putting them back on par with other 'mid size' customer discount levels. I keep saying this, but VMware was sold far too cheap for far too long. Issue now is Broadcom is turning the screws quickly instead of more slowly, and forcing to VCF/private cloud stack. Nutanix/Redhat are not cheaper once you get past the initial 'deal' price at renewal time.

[Anonymous Coward]

Re: I'd hate to be the CTO at Tesco right now...

Cheaper isn't necessarily the goal if the answer removes the risk of it happening again. I would look to OSS tooling with in house or tied support.

[Fido]

Re: I'd hate to be the CTO at Tesco right now...

To set a value on VMware's breach of contact, Tesco has to demonstrate the damages and risks resulting from that breach of contact. The fact that any quickly deployed alternative will not work perfectly is exactly why this went to court.

Said another way, at this point it is not about VMware losing another customer, but how much they have to pay Tesco for breaking the contract.

[Anonymous Coward]

Number 1 customer unfriendly company in IT: Broadcom. They also almost destroyed Brocade when they bought it way back. Strange pricing and priorities. Now they are doing their best to destroy VMware because they are greedy and thinks there are no replacement. I guess they will find out eventually. Customers leaving as quickly as possible.

[Taliesinawen]

The non perpetual VMware licences ?

Tesco signed a 2021 pre-Broadcom deal for perpetual VMware vSphere Foundation and Cloud Foundation licenses plus Tanzu subscriptions, with support through 2026. It sued Broadcom in mid-2025 for breach of contract and anti-competitive behavior.

[Anonymous Coward]

Anyone on here actually make any purchase decisions for an enterprise ?

If you do then you will know that its going to be a long time for VMWare to start losing significant market share.

Like many enterprises we are in the middle of migration, about 50% of 25,000 VM, 5,000 apps on 250 clusters now migrated to either new hypervisor or cloud (mostly on prem cloud) or decommissioned. Of course that is the easy 50% now we are at the hard stuff. Reality is that we are likely to need another year extension and speaking to peers in the industry, most of the ones migrating are in a similar situation.

In terms of cost, I would estimate that taking into account having parallel hardware. additional staff, app modernisation, vendor engagement and everything I am guessing around $100m to $125m would cover everything vs a fraction of that to renew and leave status quo. But the good news for us is that we now have a decent inventory of apps and have reviewed all their lifecycle plans and after this migration is completed we will be fairly stable for the next 3 to 4 years. How many bean pushers would take the choice to migrate if its 3x to 10x the cost of a VM license renewal ?

[Cloudy Day]

You need to get rid of the VMware certified staff

If your organisation employs VMware Certified Professionals you can be 100% certain that they will be trying to derail any plans you have to move away from VMware. They will be operating quietly in the background, coming up with reasons why any move away from VMware ‘just won’t work’

You need to get rid of them ASAP otherwise you will never get off the tech.

[NettBeast]

I've said it before and said it again.

Broadcom is where good companies go to die.

Not a single broadcom aquired company is worth a damn anymore...

NOT A SINGLE ONE.

[Anonymous Coward]

Not a Tesco fan, but here's hoping they sue Broadcom into obilvion.