Proxmox: The Enterprise Virtualization Solution Rising from VMware's Ashes

The VMware Crisis: How Broadcom Changed Everything

In late 2023, when Broadcom completed its $69 billion acquisition of VMware, few could have predicted the seismic shift that would follow. What began as a major consolidation in the enterprise software market quickly evolved into one of the most controversial licensing overhauls in recent memory—leaving thousands of businesses scrambling for alternatives to a platform they'd relied on for decades.

The changes have been nothing short of dramatic. Organizations that had comfortably managed their virtualization infrastructure with VMware suddenly found themselves facing price increases ranging from 800% to an astounding 1,500%. AT&T famously reported being quoted a 1,050% price increase on their renewal. Small and mid-sized businesses running vSphere Standard—previously an affordable entry point—now face annual costs that have increased by 10x or more.

But the pricing isn't the only issue. Broadcom has fundamentally restructured how VMware licenses work, eliminating approximately 8,000 individual product SKUs and consolidating them into just two primary bundled offerings: VMware Cloud Foundation (VCF) and vSphere Foundation. Gone are the days when you could purchase exactly what you needed. Now, organizations are forced into enterprise-grade bundles that include features like NSX networking and vSAN storage—components they may never have requested or needed.

The Small Business Squeeze: From Affordable to Impossible

Perhaps the most painful aspect of Broadcom's strategy is its disproportionate impact on small and mid-sized businesses. Unlike large enterprises that might already utilize multiple VMware products and could potentially benefit from bundling, smaller companies typically relied on standalone solutions like vSphere Essentials Plus—a product that Broadcom has now discontinued entirely.

The situation became even more dire when Broadcom announced in early 2025 that they would implement a minimum 72-core license subscription requirement, up from the previous 16-core minimum. While the company ultimately backed down from this policy after fierce customer backlash, the announcement signaled something far more troubling: Broadcom has openly shifted its focus toward "global enterprises," effectively announcing that smaller customers' needs are no longer a priority.

For businesses running modest virtualization environments—perhaps a handful of hosts supporting their essential applications—the math simply doesn't work anymore. A small company with three dual-processor servers that previously paid $15,000 annually for vSphere licensing might now face bills exceeding $150,000 per year. These aren't operational improvements or additional capabilities; they're simply the new cost of maintaining the status quo.

The transition from perpetual licenses to subscription-only models adds yet another layer of financial pressure. Organizations that had purchased perpetual licenses and only paid for annual support now face recurring subscription fees that reset annually at Broadcom's discretion. Miss your renewal anniversary date? Be prepared for a 20% surcharge on top of already inflated prices.

Enter Proxmox: Open Source Meets Enterprise Virtualization

As the VMware crisis unfolded throughout 2024 and into 2025, IT professionals began seriously evaluating alternatives. Among the options—including Microsoft Hyper-V, XCP-ng, and various cloud-native solutions—one platform has emerged as particularly compelling for organizations seeking to maintain control over their infrastructure: Proxmox Virtual Environment (Proxmox VE).

Proxmox VE is an open-source virtualization platform that combines virtual machine management (using KVM), container technology (with LXC), and software-defined storage in a single, integrated solution. What makes Proxmox especially attractive in the current environment is its licensing model—or more accurately, its lack of restrictive licensing. Proxmox VE is free to download and use, with all core features including high availability, live migration, clustering, and storage replication available without any license fees.

This isn't a stripped-down "community edition" with essential features locked behind a paywall. Organizations can deploy Proxmox in production environments with full clustering, high availability, and enterprise storage features without spending a dime on licensing. The only paid component is optional enterprise support and access to the enterprise repository for more thoroughly tested updates—a far cry from VMware's mandatory subscription model.

Proxmox Architecture and Core Capabilities

At its core, Proxmox VE is built on Debian Linux and leverages mature, battle-tested technologies. For virtualization, it uses KVM (Kernel-based Virtual Machine), the same hypervisor technology that powers major cloud providers like Google Cloud and AWS. For containers, it integrates LXC (Linux Containers), enabling lightweight virtualization for Linux workloads that need less overhead than full VMs.

The platform offers a comprehensive web-based management interface that provides centralized control over multiple nodes in a cluster. From this single interface, administrators can create and manage virtual machines, allocate resources, monitor performance, configure networking, and handle storage across the entire infrastructure—no separate management appliances or complex licensing for management tools required.

Virtual Machine Management

Proxmox supports a wide range of guest operating systems, including Windows, Linux distributions, and BSD variants. VMs can be configured with various virtual hardware, including multiple CPUs, generous RAM allocations, multiple network interfaces, and diverse storage configurations. The platform supports both IDE and VirtIO drivers, with VirtIO providing near-native performance for supported operating systems.

Live migration—the ability to move running VMs between hosts without downtime—is included as a standard feature. This capability is essential for maintenance windows, load balancing, and ensuring optimal resource utilization across a cluster. Unlike VMware's vMotion, which requires specific licensing tiers, Proxmox provides live migration out of the box.

High Availability and Clustering

For organizations building resilient infrastructure, Proxmox's high availability features are particularly noteworthy. The platform supports clustering of up to 32 nodes in a single cluster, with automatic failover capabilities that ensure VMs remain running even if a host fails. The HA manager monitors all VMs configured for high availability and automatically restarts them on healthy nodes if their host becomes unavailable.

This clustering is achieved through the Corosync Cluster Engine, which provides reliable group communication and quorum management. Unlike some enterprise solutions that require witness servers or complex quorum configurations, Proxmox makes cluster setup relatively straightforward, with the web interface guiding administrators through the process.

It's worth noting that while Proxmox's high availability implementation is robust and production-ready, it operates differently than VMware's vSphere HA. Proxmox focuses on ensuring VMs restart on healthy nodes after a failure, with restart times typically measured in seconds to minutes depending on VM size and configuration. VMware's implementation includes some additional features like VM Component Protection and Proactive HA. For many organizations, particularly those where brief interruptions are acceptable during hardware failures, Proxmox's approach provides the essential protection needed without the enterprise licensing costs.

Storage Flexibility: ZFS, Ceph, and Beyond

One of Proxmox's strongest features is its flexible approach to storage. The platform natively supports multiple storage technologies, allowing organizations to choose the best fit for their needs and budget:

ZFS: Enterprise Storage Without Enterprise Costs

Proxmox includes native support for ZFS, a sophisticated file system and volume manager that brings enterprise-grade features to standard hardware. ZFS provides built-in data integrity verification, automatic repair of corrupted data, efficient snapshots and clones, and inline compression and deduplication. For organizations building storage on direct-attached disks, ZFS offers capabilities that would typically require expensive SAN hardware.

Ceph: Software-Defined Distributed Storage

For environments requiring distributed storage across multiple nodes, Proxmox integrates Ceph, a software-defined storage solution that creates a resilient storage pool from the disks across your cluster. Ceph provides data redundancy through replication or erasure coding, automatic data rebalancing as nodes are added or removed, and self-healing capabilities that automatically restore data redundancy after failures.

While configuring and tuning Ceph requires expertise, it eliminates the need for separate SAN hardware, reducing both capital costs and infrastructure complexity. For organizations building private cloud environments, Ceph provides the distributed storage foundation that enables truly cloud-like infrastructure.

Traditional Storage Integration

Proxmox also supports traditional storage protocols including NFS, iSCSI, and SMB/CIFS, allowing organizations to integrate existing SAN infrastructure or NAS devices. This flexibility means migrating from VMware doesn't necessarily require replacing your entire storage infrastructure—existing investments can continue to provide value.

Building a Virtual Private Cloud with Proxmox

The concept of a Virtual Private Cloud (VPC) has traditionally been associated with public cloud providers like AWS, Azure, and Google Cloud. However, for many organizations, a private cloud built on owned infrastructure offers compelling advantages: complete control over data and security policies, predictable costs without per-hour charges, compliance with data residency requirements, and the ability to customize infrastructure to specific needs.

Proxmox provides an excellent foundation for building private cloud infrastructure that rivals public cloud capabilities while maintaining the control and cost predictability of on-premises deployment. When combined with proper planning and implementation, Proxmox can deliver a robust virtual private cloud environment suitable for production workloads.

Network Virtualization and Isolation

Proxmox supports advanced networking features including VLANs, bridges, bonds, and Open vSwitch integration. This allows organizations to create isolated network segments for different applications, departments, or security zones. While Proxmox doesn't include network virtualization as sophisticated as VMware NSX out of the box, it provides the foundational networking tools needed for most private cloud deployments.

For organizations requiring more advanced software-defined networking, Proxmox's open architecture allows integration with solutions like Open vSwitch and various SDN controllers, providing flexibility to implement the networking model that best fits your requirements.

Backup and Disaster Recovery

Proxmox includes integrated backup capabilities through Proxmox Backup Server, a dedicated backup solution designed specifically for Proxmox environments. It supports incremental backups, deduplication to minimize storage usage, encryption for data protection, and verification jobs to ensure backup integrity. The backup solution is itself free and open source, eliminating another licensing cost that adds up quickly in VMware environments.

For comprehensive disaster recovery, organizations can replicate Proxmox backups to remote locations, configure cross-site replication of storage, or implement automated failover to secondary sites. While this requires more manual configuration than turnkey disaster recovery solutions, the flexibility and cost savings often justify the additional planning effort.

Proxmox in Production: What You Need to Know

While Proxmox offers tremendous value and capability, organizations considering migration from VMware should understand both its strengths and areas where it differs from the VMware ecosystem:

Management and Monitoring

Proxmox's web interface is comprehensive and well-designed, but it takes a different approach than vSphere's vCenter. Each Proxmox cluster has a distributed management structure where each node can serve as a management interface. This eliminates single points of failure in management but requires administrators to adapt to a somewhat different workflow.

Third-party tools like Prometheus and Grafana can be integrated for more sophisticated monitoring and alerting. While this requires additional setup compared to VMware's integrated vRealize suite, it provides flexibility to create monitoring dashboards tailored to specific needs.

Features Not Yet Equivalent to VMware

Distributed Resource Scheduler (DRS), VMware's automatic load balancing feature, doesn't have a direct equivalent in Proxmox, though it's on the development roadmap. Currently, administrators need to manually balance workloads or use third-party automation tools.

Fault Tolerance (continuous availability through active-active VM mirroring) isn't available in Proxmox. Most organizations find that proper high availability with quick failover meets their needs, but applications requiring zero downtime may need to implement HA at the application layer.

VMware's ecosystem of partner integrations and certified hardware is vast after decades of market dominance. Proxmox's ecosystem, while growing rapidly, is smaller. However, the platform's use of standard Linux technologies means it works well with most modern hardware and many existing tools.

The Skills Factor

Proxmox is built on Linux (Debian specifically) and leverages Linux technologies throughout. Organizations with strong Linux expertise will find Proxmox intuitive and powerful. Those coming from Windows-centric environments may face a learning curve, though the web interface abstracts many Linux details for common tasks.

This skills consideration cuts both ways: while there's initial learning required, Linux expertise is widely available and valuable across many technologies. Investing in building Proxmox expertise simultaneously builds capabilities applicable to container orchestration, cloud platforms, and modern DevOps practices.

The Migration Path: Moving from VMware to Proxmox

For organizations facing VMware's untenable licensing costs, migration to Proxmox represents a significant project but one that's entirely achievable with proper planning:

Assessment and Planning

Begin by thoroughly documenting your current VMware environment: VM inventory with resource requirements, network configurations and dependencies, storage layouts and performance requirements, backup and disaster recovery procedures, and any VMware-specific features currently in use.

This assessment helps identify potential challenges early and allows for realistic project planning and timelines.

Pilot and Testing

Rather than attempting a wholesale migration, establish a Proxmox pilot environment to validate the platform for your specific needs. Start with non-critical workloads, test performance and functionality, validate backup and recovery procedures, and train staff on Proxmox management before expanding to production systems.

Migration Execution

VMs can be migrated from VMware to Proxmox through several methods including converting VMware VMDK disk files to formats supported by Proxmox, using open-source tools like virt-v2v for conversion, or performing fresh installations in Proxmox and migrating data at the application level.

For organizations concerned about migration complexity, this is where working with an experienced managed virtual private cloud provider like Falcon Internet can provide tremendous value. Expert guidance through migration planning, hands-on assistance with conversion and testing, and ongoing support as you adapt to the new platform can accelerate timelines and reduce risk.

Falcon Internet's High-Availability Managed Enterprise Cloud

While Proxmox provides an excellent platform for building private cloud infrastructure, not every organization has the in-house expertise or desire to manage virtualization infrastructure directly. This is where managed cloud solutions become particularly valuable.

Falcon Internet's Virtual Private Cloud offering provides enterprise-grade infrastructure built on proven technologies like Proxmox, delivering the benefits of private cloud infrastructure without the operational burden. Our managed approach includes high-availability architecture with redundant hosts and storage, 24/7 monitoring and support by experienced engineers, regular updates and security patches, backup management and disaster recovery capabilities, and performance optimization and capacity planning.

This managed model allows organizations to escape VMware's licensing trap while avoiding the operational complexity of managing virtualization infrastructure in-house. You gain the cost predictability and control of private cloud infrastructure with the convenience of managed services.

Our team has extensive experience helping organizations migrate from VMware to modern, cost-effective infrastructure. We understand the challenges of maintaining business continuity during transitions and can design migration strategies that minimize risk and downtime. Whether you need a fully managed private cloud or consulting assistance to build your own Proxmox environment, we can help.

The Economics: Total Cost of Ownership Comparison

When evaluating the move from VMware to Proxmox, the economics are compelling. Consider a modest three-host cluster, each with dual 16-core processors (96 cores total):

VMware vSphere Foundation: With per-core licensing under Broadcom's new model, this environment might cost $80,000-$150,000 annually depending on negotiated rates and required features. This doesn't include management tools, backup solutions, or advanced features like DRS and enhanced HA capabilities.

Proxmox VE: Core platform licensing: $0. High availability: $0. Live migration: $0. Clustering: $0. Integrated backup: $0. Optional enterprise support (recommended for production): approximately $3,000-$5,000 annually.

The savings are substantial—potentially $100,000 or more annually for even modest environments. For larger deployments, the differential scales accordingly. These aren't theoretical savings; they're real reductions in operational costs that can be redirected toward business initiatives rather than virtualization licensing.

It's true that there are costs beyond licensing to consider: potential hardware investments if VMware-specific features were compensating for older hardware, staff training on Proxmox administration, and time investment in migration planning and execution. However, even accounting for these transition costs, most organizations find that ROI on migration is measured in months rather than years.

The Broader Trend: Open Source in the Enterprise

The migration from VMware to Proxmox is part of a larger trend toward open-source infrastructure in enterprise environments. Organizations have increasingly recognized that open-source doesn't mean compromising on capability or support. In many cases, open-source solutions now match or exceed their proprietary counterparts in features, performance, and reliability.

This shift has been accelerated by vendor behavior like Broadcom's VMware licensing changes. When proprietary vendors leverage customer lock-in to impose unreasonable cost increases, they inadvertently drive adoption of alternatives that might have otherwise faced skepticism. The VMware situation has caused many IT leaders to question their reliance on any single vendor for critical infrastructure and evaluate more open, flexible approaches.

The success stories are accumulating. Organizations across industries—from small businesses to large enterprises—are finding that Proxmox-based infrastructure meets their needs while providing better economics and greater flexibility. As the Proxmox community grows and the ecosystem matures, the platform continues to close any remaining feature gaps with VMware.

Looking Forward: The Future of Private Cloud Infrastructure

The virtualization landscape has fundamentally changed. VMware's dominance, once seemingly unassailable, has been shaken by Broadcom's aggressive licensing strategy. This disruption, while painful for many organizations, has created an opportunity to reassess infrastructure strategies and embrace alternatives that may better serve long-term needs.

Proxmox represents a mature, capable platform that's ready for enterprise deployment today. Its open-source foundation provides transparency, flexibility, and freedom from vendor lock-in. The absence of restrictive licensing removes a major cost burden and source of business uncertainty. And the active development community ensures continued innovation and improvement.

For organizations building virtual private cloud infrastructure—whether on-premises or in partnership with a managed provider like Falcon Internet—Proxmox offers a path forward that balances capability, cost, and control. It's not about settling for "good enough" in the face of VMware's pricing; it's about embracing a platform that may actually be better aligned with how modern infrastructure should work.

The VMware crisis has been a catalyst for change. While change is rarely comfortable, it often leads to better outcomes. Organizations forced to reconsider their virtualization strategies are discovering that freedom from vendor lock-in, substantial cost savings, and flexible, open infrastructure are all within reach. Proxmox is proving that you don't need to compromise capability to achieve these benefits.

Taking the Next Step

If your organization is grappling with VMware's licensing changes, you're not alone, and you have options. Whether you choose to build Proxmox infrastructure in-house, partner with a managed provider, or explore a hybrid approach, the key is to start evaluating alternatives now rather than waiting until your renewal deadline creates pressure and limits options.

At Falcon Internet, we've helped numerous organizations navigate this transition. Our Virtual Private Cloud solutions provide enterprise-grade infrastructure without enterprise-grade licensing costs, and our team can guide you through assessment, planning, and migration whether you're moving to our managed platform or building your own environment.

The future of virtualization infrastructure is more open, more flexible, and more cost-effective than the VMware-dominated past. Proxmox is at the forefront of this future. The question isn't whether alternatives to VMware are viable—they clearly are. The question is whether you'll take advantage of this moment of disruption to build infrastructure that better serves your organization's long-term needs.

To learn more about how Falcon Internet can help you escape VMware's licensing trap and build robust, cost-effective virtual private cloud infrastructure, contact our team today. Your infrastructure strategy shouldn't be dictated by vendor licensing games—it should be driven by your business needs and technical requirements. Proxmox, with the right implementation partner, makes that possible.