Tesco to Ditch VMware and Migrate 40,000 Virtual Machines

Broadcom has managed to anger the largest supermarket chain in the UK, Tesco, to the point of convincing it to migrate its entire infrastructure to an alternative solution due to price increases reaching up to 350%. This comes from the latest documents emerging from the ongoing legal case filed by the supermarket against Broadcom, Dell (which acted as a distributor), and Computacenter (which was the license vendor).

Tesco Says Goodbye to VMware on 40,000 Virtual Machines

Broadcom's acquisition of VMware has brought significant changes in the company's strategy and how it interacts with its partners and customers. Among these is Tesco, which in 2021 had purchased perpetual licenses for VMware vSphere Foundation and Cloud Foundation, subscriptions to Tanzu, and services related to mainframes. However, in 2025, the British chain sued Broadcom, claiming that the American company had violated the terms of the contract by refusing to provide the agreed support.

Indeed, Broadcom stopped providing support to holders of perpetual licenses, even if they had already paid for it: this is the case for Tesco, which had signed a contract to receive support until 2026 with an option for an additional 4 years.

The supermarket giant, which had a revenue of £73.7 billion (approximately €85.23 billion at the current exchange rate) last year compared to $64 billion (€55.87 billion) from Broadcom, has now reported that it has initiated the migration of its infrastructure of 40,000 virtual machines to alternative solutions, as reported by The Register.

The company did not disclose the name of the solution to which it is migrating its infrastructure but states that it intends to complete the process by the end of 2027 and that "the timing in which this migration must be completed has created and continues to create operational and commercial risks, and with a material ongoing cost and disruptions to its operations."

"In the face of Broadcom's abusive conduct, and given the criticality of virtualization software and mainframe service to its operations, Tesco has been forced to incur material costs to procure alternative solutions with reduced functionality, and to migrate to such software in a manner and on a timeline that creates significant risks for its business," the court documents state. Tesco claims it uses Broadcom and VMware software for order and payroll management, therefore, any issues risk having a very significant impact on its operations (and, in turn, on customers purchasing essential goods from its supermarkets).

The fact that Tesco aims to complete the migration by the end of next year is no coincidence: the trial is expected to go to court precisely by the end of 2027 or early 2028. At that point, Tesco will be able to claim damages based on the actual expenses incurred for migrating to the alternative solution it has chosen, rather than on hypothetical damages.

The supermarket chain has also put in writing one of Broadcom's proposals, in which $23.5 million (approximately €20.5 million) was requested annually for VMware Cloud Foundation 9.0 and mainframe-related services. According to Tesco, the proposal corresponds to a 175% increase from previous costs related to VMware and a 350% increase for the mainframe component, which is why it describes it as "manifestly unfair and excessive."

Broadcom rejects these accusations, as well as Tesco's claim for damages due to the latter's difficulty in finding an alternative before the contract's expiration; it should be specified that, according to Tesco, Broadcom sent an offer only 19 days before such deadline.

Broadcom seems, therefore, to have miscalculated, in this and other cases, believing itself to be irreplaceable and that, as the company told us at Explore 2025, "we raise prices because we have the best existing solution." It remains to be seen what the judge will decide, or if Broadcom will choose to pay Tesco before reaching trial.