VMware’s Fall & The Cloud Tax
Originally published on LinkedIn February 14, 2025
How badly are enterprises getting squeezed by public cloud?
AWS recently reported over 60% gross margins—no surprise to many of us. We saw it coming. The “cloud-first” ideology can make perfect sense for SMEs, but for large enterprises with IT infrastructure and talent, it was always a trap.
We now have mature open-source tools covering automation, virtualization and containerization, it’s all slashing costs and giving us real flexibility. What’s left? Convenience, risk aversion... and vendor lock-in.
The Best Strategy Was Always a Hybrid One:
Run predictable, stable workloads on your own, well utilized private cloud.
Use public cloud for bursts, peak loads, temporary high-density computing and edge cases.
When using public cloud, go fully containerized to maintain freedom to move where compute, cost, and security are best aligned.
Keep collaboration tools (email, chat, video conferencing, etc.) in the cloud—it’s lightweight, convenient, no point wasting time with that.
Encrypt your data. Do not trust a cloud provider. Not your keys, not your security. BYOK.
The Worst Choice? A Full Cloud Migration.
Moving legacy apps to the cloud without containerization turns you into a hostage—permanently exposed to subscription price hikes (because that 60% margin has to come from somewhere, and spoiler alert: it’s coming from you).
And now it’s not just public cloud. Look at VMware.
Broadcom took over and wasted no time screwing over VMware customers. Perpetual licenses? Gone. Your ability to run infrastructure on your own terms? Gone.
Instead, you’re being forced onto their bloated subscription model, paying indefinitely for software you already own. And let’s be honest, this was always the play. Buy a company with deep enterprise penetration, kill off flexible licensing, and squeeze customers. Great business.
If you’re still locked into VMware, this is your warning sign to start looking at alternatives like Proxmox, OpenStack, or even bare metal Kubernetes before you get squeezed even harder.
Reversing bad cloud decisions is hard. By the time you realize you’re overpaying, you’ve lost your infra, your licenses, and your people. A repatriation project only makes sense when running workloads on-prem is at least 60-70% cheaper than your cloud bill—and that might take another year or two to materialize.
What Can You Do Now?
Ignore IT ideology—follow the facts. Private clouds run 40-50% cheaper than being extorted by public cloud providers.
Unblock investment in your infrastructure and empower your Private cloud team. Even an average on-prem solution beats AWS’s 65% margin tax—and with AI-driven design, execution and automation, you have no excuse not to build cheaper and smarter than ever.
Start your VMware exit strategy. Broadcom isn’t stopping. Explore Proxmox, OpenStack, or bare metal alternatives before you’re trapped in yet another subscription racket.
And most importantly - protect your talent.
Oh, and have you noticed? Big cloud providers barely talk to their enterprise customers anymore. AI is their new best friend, and corporations? Just another line item on their monthly, ever-increasing subscription invoices.
Enjoy.