IBM Cloud stops signing and seeking new customers for its VMware service

Blames Broadcom’s licensing changes that haven’t caused other hyperscalers to pull the pin

IBM has announced it will stop marketing its VMware on IBM Cloud service to new customers.

In a notice posted on Tuesday, Big Blue explains “Effective 31 October 2025, IBM Cloud will no longer sell VMware on IBM Cloud offerings to customers who do not have at least one active VMware Workload running on IBM Cloud before that date.”

IBM says the decision is necessary due to Broadcom’s licensing plans.

“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,” the notice states.

That’s probably a reference to the VMware licensing change Broadcom announced in August and which requires those who use Virtzilla’s wares in in a hyperscale environment to acquire their licenses directly from Broadcom, instead of from their preferred cloud operator.

Broadcom made that change because it now offers bring-your-own licensing that allows customers to acquire rights to use VMware software and apply them on-prem or across multiple supported clouds.

Partners like Google, Microsoft, Oracle, and AWS continued operating their cloudy VMware services after that change and remain happy to recruit new customers.

IBM appears to have taken a different approach, but other than mentioning Broadcom’s licensing changes doesn’t explain why in its notice or FAQ.

Big Blue says existing customers “may continue to use and expand their VMware environments” but won’t be able to order a cloudy VMware offering beyond those they already use. Customers of IBM’s VMware Cloud Foundation (VCF) as a Service offering will also be unable to expand workloads to new regions or resource pools or move between on-demand and reserved consumption models.

At the time of writing VMware still lists IBM as a hyperscale partner.

But IBM hasn’t featured in analyst firm Gartner’s ranking of the top IaaS providers for five years – Amazon, Azure, Google, Alibaba and Huawei top the charts. Alibaba has also shut down its VMware service. Huawei never had one.

The Register fancies that Broadcom won’t miss IBM too much, and Big Blue won’t mind either. The reason for our assertion is Red Hat’s OpenShift, the platform that underpins IBM’s hybrid cloud practice and which recently enhanced its server virtualization and private capabilities. OpenShift is now a better direct competitor for VMware’s Cloud Foundation (VCF) platform, and analyst firm Gartner believes Broadcom sees it as the only real competition for VCF.

Microsoft’s Azure Local and AWS’s Outposts have some overlap with VCF, but don’t compete in terms of offering a platform that offers developers infrastructure-as-a-service spanning VMs and containers. Nor does Oracle’s Cloud at Customer. Google is mostly nowhere with private clouds.

“Historically, IBM has been one of the largest users of VMware (for its customers),” independent analyst Michael Warrilow told The Register. Warrilow has previously written that the recent licensing changes are "yet another example of Broadcom shutting down ways to use VMware without purchasing a fixed-term license. Moreover, it is yet another example that demonstrates Broadcom's disregard for VMware's pre-acquisition partner ecosystem."

IBM Cloud’s VMware customers now face a choice: Stick with a platform that limits their options or look elsewhere.

Analyst firm Gartner thinks many were already pondering the latter option, as it recently predicted VMware will lose 35 percent of the workloads it manages now in three years, many of them to hyperscalers. ®