virtualization

Supermarket giant has turned to third-party support as court sets date to hear licensing dispute

UK retail giant Tesco is replacing VMware with an alternative product and pressing ahead with its licensing lawsuit against the virtualization pioneer's parent company, Broadcom, in a matter due to be heard by the UK's High Court starting in November 2027.

The roots of the matter are a January 2021 contract that saw Tesco acquire perpetual licenses for VMware's vSphere Foundation and Cloud Foundation products, plus subscriptions to Virtzilla's Tanzu products.

The supermarket giant also signed up for support services and software upgrades until 2026, with an option to extend that deal for four years. Computacenter signed up as a reseller and relied on Dell as the distributor of VMware's products. Tesco also uses some of Broadcom's mainframe software, and wanted to extend support for that too.

Tesco and VMware struck that deal before Broadcom acquired VMware. After the acquisition, Broadcom stopped selling standalone services for customers who did not adopt subscriptions for its software bundles. Broadcom was therefore unwilling to extend support for Tesco's VMware estate.

The supermarket sued Broadcom in mid-2025, alleging breach of contract and anti-competitive behavior.

The case picked up again in late May with a flurry of filings that The Register has just digested.

The new filings reveal that Tesco has decided to quit VMware and Broadcom's mainframe products, is rushing to migrate to alternatives, has turned to third-party support providers for its VMware estate, and alleges Broadcom is abusing its market power.

"Faced with Broadcom's abusive conduct, and given the criticality of virtualization and mainframe software and services to its business, Tesco has been forced to incur material costs to procure alternative solutions with reduced functionality, and to migrate to that software in a manner, and on a timeframe, that creates very significant risks to its business," the filing states.

Those costs include payments for third-party VMware support because Tesco alleges Broadcom stopped supporting the virtualization software on January 29, 2026. The supermarket hopes to be off VMware by the end of 2027 but says that target is its earliest possible date and will require it to work "at exceptional pace."

Elsewhere in the filing, Tesco says "the timeframe in which that migration must be undertaken has created and continues to create operational and commercial risk, and at material ongoing cost and disruption to the business."

The risks aren't abstract: Tesco says it uses Broadcom mainframe software to order products for its stores and process its payroll.

The retailer is also worried about data security and protection because the virtualization product it has chosen as a VMware replacement isn't compatible with the Veeam and Zerto tools it uses.

Rejecting offers

Broadcom appears to have made Tesco at least four offers, including a "Strategic proposal" in July 2024 that covered virtualization and mainframe products.

Another delivered on January 9, 2026, offered separate terms for VMware products and mainframe software – the first time Broadcom dangled discrete deals. Tesco struggled to process it because Broadcom offered the deal just 19 days before the end of its existing agreements.

Two offers arrived in April. Tesco says one proposed charges of $23.5 million (around £17.4 million) for a year of VMware Cloud Foundation 9.0 and Mainframe Software and Support Services. The retailer says that offer represented an increase of "around 175 percent" compared to the prices Tesco believes it was entitled to under its 2021 contract for VMware software and services, and a 350 percent increase for the mainframe products and services.

The retailer described those price hikes as "manifestly unfair and excessive."

Broadcom's amended defence rejects that characterisation, and also Tesco's claim that it deserves damages as it could not find an alternative supplier before its deals expire. Now that Tesco has found alternatives, Broadcom thinks the retailer can't easily point to losses that deserve damages payments.

Other recent filings reveal that the matter is due to be heard in the UK's High Court during a window that opens on November 1, 2027, and closes on February 25, 2028. That doesn't mean the trial will consume all that time – it's an indication of when the court thinks it will have time to consider the matter.

Broadcom has fought other high-profile cases over its licensing changes, most notably with AT&T and Siemens. The telco giant reached a confidential settlement, but the Siemens case is ongoing. On The Reg's reading of Tesco's filings, the retailer appears comfortable with litigating its claims with an argument that Broadcom refused to honor past agreements and that its main defense – it can't support products that don't exist since it reorganized VMware – is weak.

Broadcom execs have told The Register they have an enormous dislike for providing extended support for old products and a huge preference to shift customers to subscriptions for the company's flagship Cloud Foundation (VCF). They argue that that continuing to use old VMware software sold under perpetual licenses is an act of corporate self-harm because VCF is so powerful it quickly pays for itself by improving IT department operations and improving business efficiency.

But those messages aren't landing with some customers. We've reported organizations including Western Union, GEICO, and Computershare moving away from VMware, and even some VMware partners like Rackspace reducing their use of the virtualization giant's wares. We've also just learned that Belgian technical secondary school Scheppers Instituut Wetteren shifted to local contender Whitesky.Cloud to avoid a 400 percent price hike, and made the move without needing any new hardware. ®