IBM won’t sell VMware to new cloud customers
IBM’s decision - forced on it by Broadcom’s new partner program policies - opens up a new potential option for customers dissatisfied with VMware licensing changes: OpenShift.
Published on 3rd November 2025
IBM has decided not to offer VMware and VMware Cloud Foundation to new cloud customers, paving the way for it to openly pitch Red Hat OpenShift as a virtualisation option instead.
The move to limit sales of VMware licenses was forced on it by Broadcom, according to an announcement on the status pages for IBM Cloud: “Due to changes to Broadcom’s VMware Cloud Services Provider (VCSP) partner program, IBM is no longer permitted to sell VMware licenses to customers who do not have at least one active VMware Workload running on IBM Cloud before 31 October 2025,” it said.
Tom Howarth, VMware cloud architect with SJ Ultra, said that IBM’s action had been long expected.
“The crux of the issue is the license changes that Broadcom introduced in February, aimed at forcing its partners to use VCF, previously they could use what they wanted and paid only for what they used,” he said.
IBM has acted now because the changes come into effect on October 31. “It was originally meant to kick-off in February but Broadcom gave six months grace,” Howarth said. Existing customers will continue with VMware until contracts run out and then they will be faced with choice, he said.
A shift to OpenShift?
That choice now leaves IBM a clearer path to compete with VMware, according to James Governor, principal analyst with RedMonk.
“Things are pretty straightforward for the managed cloud option — there are two obvious choices. Companies can go with IBM and Red Hat, or choose VMware,” he said, noting that while the company has been a big VMware reseller, “IBM had to ask themselves, ‘How are we going to compete so successfully with them if we are partners?’”
Broadcom has provided that impetus for change with its enforced changes to licensing.
“It’s not a one-on-one battle,” said Governor. “IBM can’t compete feature for feature.” But there will be opportunities in different areas, he said. “We can see a Java battle, a container battle, as well as a cloud battle.”
With its OpenShift solution, IBM won’t be offering a complete replacement of VMware: “It’s not going to be a turnkey option,” he said. But he pointed out that, thanks to its use of OpenShift, IBM could offer enough of an alternative to the expensive licensing demands from Broadcom.
Core licensing demands
While Broadcom’s new VCF license demands will affect IBM, other partners will be hit harder, Howarth said.
“Broadcom are asking for a minimum of 3,600 cores — that’s a demand that is going to hit some of the smaller cloud providers,” he said.
Sovereign cloud providers, with their smaller customer bases, will be particularly badly hit, he said. “Those that are owned by the government, for example, in Netherlands and France, are going to have an element of protection, but private sovereign clouds are going to suffer. The evidence we’ve seen from Broadcom is that costs aren’t going to get lower.”
Governor said that both IBM and Broadcom will have reason to think that they’re coming out on top.
“IBM will be able to attract more customers who want an alternative to VMware,” he said, while thanks to the price increases it has imposed, “VMware will definitely increase revenue, and it doesn’t care if it loses some of the smaller players along the way.”
And, he added, this will ultimately be good for the industry. “There is a lot of inertia in enterprises, where VMware has been the default choice. These moves have forced them into thinking about what they want, which may not be VCF, and, if necessary, to make changes to the way they operate.”
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