Nutanix, Proxmox and Where the VMware Customers WentThin moat

Broadcom (AVGO) — moat facet

Captive pricing works until the captives find an exit — and the hard part of leaving VMware is now Broadcom's real defence, not the switching costs it advertises.

Broadcom's software strategy is examined as a root threat on its own page: raise prices on customers too embedded to leave, and collect the margin. This page is about the part that threat implies but does not cover — where the customers who did leave actually went.

The exodus is real; the difficulty of actually leaving is Broadcom's genuine defence.

The answer is mostly Nutanix. Its chief executive has claimed roughly 30,000 customers migrated from VMware, with 640 arriving in the first quarter of fiscal 2026 on top of more than 2,700 across fiscal 2025 — the company's strongest new-customer growth in nearly a decade¹. Open-source Proxmox has grown sharply at the smaller end, where Broadcom's enterprise-focused bundles priced many buyers out entirely². Red Hat has captured less of this particular wave, being positioned mainly where containers rather than virtual machines are the point.

Two things temper it. These are a competitor's own figures, and competitors count generously. More tellingly, Nutanix's shares fell on the difficulty of actually executing those migrations³ — which is Broadcom's real defence, stated by the beneficiary: leaving VMware is genuinely hard, expensive and slow, and a customer who announces an intention to migrate may still be paying Broadcom three years later.

Watch VMware renewal rates and software revenue growth rather than migration announcements. The exodus is a story about intent; the renewals are the measurement. Software approaching $27 billion of Broadcom's revenue means even a slow leak is expensive.

Moat trajectory: Narrowing

The VMware customer base is being actively repriced, and by 2026 a genuine alternative ecosystem existed to receive the departures. Nutanix reports its strongest new-customer growth in nearly a decade and Proxmox has grown sharply at the small end. The offsetting fact — that migrations are painfully hard to execute, visible in Nutanix's own results — slows the bleed without stopping it.

The number that tests this moat

Third-party estimate

VMware customers claimed by Nutanix

~30,000 migrations, per its CEO

With 640 in Q1 FY2026 on top of more than 2,700 across FY2025 — a competitor's own figures, and competitors count generously. The offsetting fact is that Nutanix's shares fell on migration execution difficulty, which is Broadcom's real defence. Watch VMware renewal rates and software revenue growth, not migration announcements.

Source: Nutanix management claims reported in the trade press ↗

References

Third-party estimateNutanix claims ~30,000 VMware migrations, 640 in Q1 FY2026 on top of 2,700+ in FY2025; Red Hat is positioned mainly around containers.
Trade-press reporting of Nutanix management claims — roughly 30,000 customers migrated from VMware according to chief executive Rajiv Ramaswami, with 640 VMware customers added in the first quarter of fiscal 2026 on top of more than 2,700 across fiscal 2025, described as the company's strongest new-customer growth in nearly a decade; drivers cited are price increases, forced bundling and the end of perpetual licences; Red Hat is characterised as playing primarily where containerisation rather than virtualisation is the point — FY2025-FY2026 · publ. April 2026 · source ↗
Third-party estimateOpen-source Proxmox VE has grown sharply among smaller organisations priced out of VMware's bundles.
Coverage of the VMware licensing overhaul — open-source Proxmox VE has seen sharp adoption growth, particularly among smaller organisations priced out by Broadcom's enterprise-focused bundles and the end of perpetual licensing — 2026 · publ. February 2026 · source ↗
Third-party estimateNutanix shares fell on the difficulty of executing VMware migrations.
SDxCentral — Nutanix shares fell on the difficulty of executing VMware migrations, indicating that the practical cost and duration of moving off VMware remains a material barrier — 2026 · publ. 2026 · source ↗

Sources

Generated September 22, 2026