Tesco shifts 40,000 workloads from VMware in Broadcom licensing fight
The UK retailer says Broadcom refused to honor VMware support terms after its acquisition, forcing a costly migration with business risks.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
Tesco is moving 40,000 server workloads away from VMware while it fights Broadcom in a UK contract dispute, according to court filings reported by The Register. The case matters because it shows how Broadcom’s post-acquisition VMware licensing changes are colliding with large customers that depend on the software to run core systems.
The UK retail group sued Broadcom in the High Court in 2025, alleging breach of contract, The Register reported. Tesco says it bought perpetual licenses in January 2021 for VMware vSphere Foundation and Cloud Foundation, a VMware Tanzu subscription and support services through 2026, with an option to extend support for four more years.
After Broadcom acquired VMware in November 2023, Tesco says Broadcom would not honor that arrangement, according to The Register’s account of the complaint. Tesco alleged Broadcom tried to charge inflated prices for software the retailer had already paid for and required new subscription licenses before it would sell support for the perpetual licenses.
Tesco, which reported revenue of 73.7 billion pounds, or about $98.7 billion, for fiscal 2026, has begun replacing VMware and Broadcom mainframe products, The Register reported from later court filings. Tesco says Broadcom ended support for its VMware products in January, leaving the retailer to buy third-party support.
Migration schedule carries risk, Tesco says
In a recent filing quoted by The Register, Tesco said Broadcom’s conduct forced it to spend heavily on alternative products with reduced functions and to move on a schedule that creates business risk. Tesco said that even at what it described as an exceptional pace, it would not finish leaving VMware before the end of 2027.
The retailer also says the fast timetable has brought continuing operational and commercial risk, along with cost and disruption, The Register reported. Tesco has identified data security issues because its replacement virtualization software is not compatible with the Veeam and Zerto tools it uses, according to the filings.
Tesco initially sought damages of at least 100 million pounds, or about $133.6 million, from each of Broadcom, VMware and reseller Computacenter, plus interest, The Register reported. The retailer says Broadcom also refused to provide software upgrades or all security updates without subscriptions.
Broadcom denies unfair pricing
Tesco says it rejected at least four Broadcom offers to keep using VMware and Broadcom mainframe technology, according to The Register. One proposal would have charged $23.5 million, or about 17.6 million pounds, for a year of VMware Cloud Foundation 9.0, mainframe software and support.
Tesco said that offer was about 175 percent above what it believed it should have paid for VMware and amounted to a 350 percent increase for mainframe products, The Register reported. A Tesco filing called the pricing “manifestly unfair and excessive.”
Broadcom denied in an amended defense that the price increase was unfair, according to The Register. Broadcom also argued it should not owe damages tied to Tesco’s difficulty finding replacements before support expired because Tesco has since identified substitute products.
The Register reported that the dispute is expected to be heard in court sometime between Nov. 1, 2027, and Feb. 25, 2028, with a trial possible after that. The case adds to wider customer complaints over VMware pricing and support since Broadcom’s takeover, while Broadcom has continued to report success with its VMware strategy among large enterprises.
This story draws on original reporting from Ars Technica.