Multi-cloud is their big bet
Yes it's not cheap by any means, but the extra abstraction layer gets you the ability to run cloud native workloads on premises, plus have mobility of those workloads between on-prem and multiple clouds - this is worth the money for some folks, though not for everyone.
Credit where due, VMware ease of install and lifecycle management has improved a ton the past few years, for many environments the cost is worth it for the management/ops tools. VCF is a heck of a big footprint for small shops though, they need to come up with some new Essentials like cheaper option that is limited enough to not cannibalize Enterprise sales but still has all the shiny new bits. Wavefront (now Tanzu Observer or something) and CloudHealth have been way under marketed too. Watching with interest.