Broadcom Just Posted Record Earnings. Here’s What They’re Not Telling You.

Broadcom reported earnings this week. Record revenue. $19.3 billion in Q1. VMware bookings exceeding $9.2 billion in total contract value. VMware ARR growing 19% year-on-year.

On paper, this looks like a company executing flawlessly on one of the most aggressive acquisitions in tech history.

But I’ve spent the last several months in rooms with Fortune 100 CIOs, enterprise IT leaders, systems integrators, and partners who are living through this transition—and the story on the ground looks nothing like the story in the earnings call.

The number behind the number

Broadcom wants the VMware story to read like clean conversion and simplification. That deserves scrutiny.

They eliminated every other purchasing option. They took 8,000 SKUs down to four. If you wanted to stay on VMware—and most enterprises didn’t have a realistic short-term alternative—you moved to subscription pricing.

That’s not adoption. That’s compliance.

It’s like saying 100% of your customers chose the only item on the menu. Technically true. Strategically misleading.

I sat at a dinner last week with a room full of Fortune 100 CIOs and senior IT leaders. Every single one of them uses VMware. Not one of them has fully embraced it. Not one. They’ve all moved to subscription because they had to. But the sentiment in that room wasn’t satisfaction. It was skepticism—and it was deeper than I expected.

What the data actually shows

CloudBolt recently surveyed 302 IT decision makers—director level and above at companies with 1,000+ employees—to benchmark what’s actually happening two years into the Broadcom-VMware era. This wasn’t a poll of CloudBolt customers. Nobody was steering toward a specific answer. The questions were simple: what happened, what did you expect, and what are you doing about it.

The apocalypse narrative from 2024 was largely overstated—at least as an initial event. In 2024, most respondents expected VMware costs to more than double. The reality? Only 14% actually saw that kind of increase. The most common increase landed around 25-50%. Painful, but not catastrophic.

But here’s what nobody on Broadcom’s earnings call mentioned: 86% of respondents are actively reducing their VMware footprint. Only 4% have fully moved away. And 63% have changed their strategy two or more times.

This isn’t a mass exodus. It’s a slow, deliberate unwind. And it matches exactly what I’m seeing in the field.

Skepticism is higher now than before

You’d think two years in, the dust would have settled. It hasn’t. If anything, skepticism has intensified.

Why? Because enterprises have now lived through at least one contract negotiation cycle under Broadcom. They’ve explored alternatives and learned the hard truth that there is no one-for-one replacement for VMware. And they’re staring down the next renewal with less leverage than they had a year ago.

One survey respondent put it bluntly: “This is 1,000% pressure. It could mean your job.”

41% told us executive pressure has intensified since the acquisition. Not lessened. Intensified. And the decision window is real. The people who moved early have options. The people who waited are now making decisions under more scrutiny with less time.

Here’s what I keep hearing in every room I walk into: “What does the next renewal look like?” Nobody knows. And that uncertainty is doing more damage than the price increases themselves.

Because here’s the thing—a lot of these customers are locked into three-year or five-year deals right after the acquisition, trying to get ahead of the escalation. Now they’re approaching the end of those terms. And the questions I’m fielding are all variations of the same fear: if they integrated deeper into VCF because they were forced to buy the full bundle anyway, did they just put themselves in a worse position for the next negotiation?

That’s real. That’s not a survey stat. That’s a CIO looking me in the eye and asking me what I think.

The frozen middle

Here’s what doesn’t show up in any earnings report. A huge segment of VMware customers are stuck in what I’d call the frozen middle.

They’re not moving to Nutanix. They’re not migrating to the public cloud. They’re not doubling down on VCF. They’re frozen—evaluating options, running pilots that don’t go anywhere, stretching hardware into its sixth or seventh year because the economics of every alternative look uncertain.

I talked to an enterprise recently with hundreds of applications sitting on legacy infrastructure. Stuff that was never prioritized for modernization. Some of it has been running for over a decade. The subject matter experts who built some of these systems have literally retired—or worse. Moving those workloads isn’t a quarter-long project. It’s a multi-year undertaking that requires people, budget, and organizational will. Three things in short supply right now.

And the compounding problem? The partner ecosystem that used to help navigate VMware’s world has been gutted. I talk to VMware partners who are facing pressure from both sides—customers demanding answers they don’t have, and a Broadcom organization where every relationship they’d built over years has been wiped out. The people who knew the ins and outs were laid off. So enterprises are making the most complex infrastructure decision of the decade with fewer trusted advisors than ever.

When I talk to systems integrators, the bias is obvious. A Nutanix partner will tell you Nutanix is crushing it. An AWS partner will tell you public cloud is the answer. That’s not dishonest—it’s just their lens. The reality is messier. The organizations I’m working with aren’t picking one destination. They’re routing workloads across multiple landing spots and trying to figure it out as they go. 63% changing their strategy two or more times tells you everything.

The AI wrinkle nobody’s talking about

Broadcom’s earnings call was dominated by AI. Understandably—their AI semiconductor business grew 106% year-on-year. And Hock Tan made a point of saying that VMware Cloud Foundation “cannot be disintermediated or replaced” as an abstraction layer for AI workloads.

But here’s what I heard from that room full of Fortune 100 leaders: they want to run AI workloads on-prem because cloud is extraordinarily expensive for those use cases. The economics make sense. Until they look at what their private cloud is built on.

It’s built on the same platform whose future cost structure is completely unpredictable. The same platform where they don’t know what the next renewal looks like. The same platform creating all this uncertainty.

So they’re caught in a trap: The economic argument for on-prem AI is compelling. But the foundation they’d build it on is the very thing making them nervous. That’s not a recipe for confidence. That’s a recipe for more freezing.

And by the way—buying AI hardware right now is exorbitantly expensive on its own. RAM costs are through the roof. So even if you solve the software question, the hardware procurement timeline adds another three to six months of uncertainty. These leaders are stacking unknowns on top of unknowns.

What I’m telling customers

I’m not telling anyone to panic, and I’m not telling anyone to pretend everything is fine. Here’s what I’m seeing work in practice:

1. Start with workload qualification, not vendor selection.

The organizations making real progress aren’t picking one destination and sprinting. They’re qualifying applications, going back to vendors, figuring out what runs where. Public cloud is the most common target at 72%, but it’s rarely the only one. Nutanix, Hyper-V, Red Hat, Kubernetes, SaaS replacements — diversification is happening in real time.

2. Use your leverage while you have it.

We’re approaching end of quarter right now. Contract negotiations over the next three weeks will be better than four weeks from now. Partner relationships matter. Early renewals can shorten your exposure window. And the vendors competing for your workloads are increasingly willing to incentivize your exit — some are close to buying out contracts. That won’t last forever.

3. Talk to partners, even if they’re not your VMware partner.

If you don’t have the enterprise leverage to negotiate directly with Broadcom, work through partners who deal with VMware every day. They know how to push back and reclaim some of that leverage on your behalf. That’s one of the most underutilized tactics I see.

4. Don’t underestimate the people problem.

The teams managing your current infrastructure are the same teams being asked to evaluate alternatives, run pilots, and maintain production. I’ve lived through large-scale migrations. I’ve led teams through cloud migrations where engineers were playing double duty—building in Azure while maintaining on-prem—and that was five or six years ago when teams were bigger. Operations has gotten leaner since then. That dual reality is unsustainable without deliberate planning.

5. Build optionality into everything.

The organizations that locked into a single strategy early are the ones who’ve had to pivot multiple times. The ones building in flexibility—keeping their options open across multiple landing spots—are the ones in the best position.

The bigger picture

Broadcom is going to keep posting strong numbers. When you consolidate an install base into two SKUs and eliminate alternatives, the financials will look great for a while. But financial performance and customer health are two very different things.

The real story isn’t in the earnings report. It’s in the 86% who are quietly, methodically reducing their dependence. It’s in the 63% who’ve already changed their strategy more than once. It’s in the frozen middle that doesn’t show up in any investor presentation. And it’s in the rooms I’m sitting in, where the people responsible for these decisions are asking questions nobody on Broadcom’s earnings call is answering.

The numbers Broadcom reported this week are real. But so is the ground truth. And the gap between them is where the real story lives.

If you’re navigating this transition right now, I want to hear from you. What’s working? What’s stuck? What surprised you? We’re running a series called VMwhere? Therapy Thursdays—a no-pitch, open discussion space for practitioners, partners, and enterprise leaders who are living this day in and day out. No recordings. No product pitches. Just real talk.