As consolidation reshapes the IT landscape, MSPs face shrinking choice in virtualisation, cloud and security. From Broadcom’s overhaul of VMware, to AWS’s eroding dominance under pressure from sovereignty demands, to a fragmented cybersecurity market primed for consolidation, competition is proving essential for MSPs that want resilience, differentiation and long-term growth.
The Broadcom effect
In the fast-evolving managed services sector, choice is not a luxury, it is the foundation of growth. For MSPs aiming to differentiate and scale profitably, the ability to align with a diverse set of supplier partners is essential. Yet across virtualisation, infrastructure, cloud, and cybersecurity, consolidation, competitive pressure, and growing sovereignty concerns are redefining that essential freedom.
A recent seismic shift was Broadcom’s near $69 billion acquisition of VMware, a turning point that channels felt immediately. What had long underpinned hybrid clouds, virtual desktops, and private infrastructure suddenly became a vulnerability. Many MSPs saw licence costs increase by as much as 500%, as predictable models gave way to subscription and per-core pricing. Workforce cuts followed, halving VMware’s team, and the Partner Connect ecosystem contracted sharply as resellers were quietly edged aside. One analyst warned that Broadcom’s strategy was not about sustaining ecosystems but about extracting “premium profits,” pushing MSPs into an unwelcome “forced evolution” where they had to adapt rapidly or risk falling behind.
Market dominance under scrutiny
This dynamic is not unique to Broadcom. Regulators have turned their attention to broader threats from dominant technology suppliers. Under European Commission pressure, Microsoft was forced to unbundle Teams from Office 365, while Google continues to face antitrust probes into its advertising and mobile ecosystems. These interventions underscore a fundamental truth: when large technology firms consolidate power, the consequences ripple through distributors, MSPs, and the end-clients they serve.
Nowhere is the danger more visible than in cloud. For a decade, AWS appeared unassailable. In 2019, it commanded around 45 % of the IaaS market, but by 2021 its share had fallen to 39 %. By the end of 2024, AWS still led with 37.7 %, yet the trajectory clearly shows a long-term erosion as Microsoft and Google steadily gained ground. This is not a minor fluctuation but a structural shift, driven by customers and partners increasingly unwilling to remain locked into a single provider.
Sovereignty drives new competition
The UK’s Competition and Markets Authority has raised serious concerns about the concentration of cloud power, noting that AWS and Microsoft together control as much as 70 % of the UK market. High egress fees and restrictive licensing make switching prohibitively expensive, especially for SMEs, where the rate of change is under 1 %. For MSPs, this lack of mobility highlights the risks of relying too heavily on just a few dominant suppliers.
At the same time, sovereignty has emerged as a powerful counterweight. Governments and enterprises increasingly demand that sensitive data be stored and processed under local jurisdiction, driving rapid growth in regional sovereign cloud offerings. The global sovereign cloud market was valued at $97 billion in 2024 and is forecast to exceed $630 billion by 2033. In Europe, GDPR and national security concerns fuel this trend, while in the US, government contracts increasingly demand FedRAMP and ITAR compliance. This shift is not simply regulatory—it is an opportunity. MSPs can differentiate by aligning with regional providers and matching clients’ compliance needs.
Cybersecurity: fragmented but consolidating
In cybersecurity, unlike operating systems or productivity suites, there is no single dominant vendor. Instead, MSPs must navigate a highly fragmented landscape. Research from SEI found that in 2025 organisations were managing an average of 83 different security tools from 29 separate vendors, a sprawl that increased costs, created inefficiencies, and raised breach risks, with average incidents costing $4.88 million in fragmented environments.
This fragmentation persists because the sector is highly innovative and crowded. According to Statista, there were more than 1,800 active cybersecurity startups worldwide in 2024, each addressing niche problems such as identity, threat intelligence, or compliance reporting. While this level of innovation fosters rapid product development, it also makes the market ripe for consolidation.
Analysts tracking the sector note that in the past two decades, more than 200 cybersecurity companies have been absorbed into just 11 larger consolidated players. That wave of M&A has reduced choice, often leading to sudden price hikes, altered partner terms, or shifts in vendor strategy that MSPs have little power to influence.
For MSPs, this creates a particularly acute challenge because security is not peripheral, it is central to their value proposition. Selecting a vendor that is later acquired, changes strategy, or raises prices can have immediate consequences for client safety and trust. Supplier consolidation in security therefore carries sharper consequences than in many other IT domains.
Balancing choice and resilience
Forward-looking MSPs are responding by embedding diversification into their strategy. They are building multi-vendor stacks, upskilling staff to work across platforms, and demanding greater openness, from interoperable APIs to more transparent roadmaps. The suppliers that embrace openness and flexibility are positioning themselves as trusted long-term partners, while those that rely on lock-in risk alienating the channel.
Consolidation is not inherently negative. Larger suppliers can deliver global scale, integrated platforms and levels of R&D investment that smaller companies cannot match. However, imbalance creates risk. A marketplace dominated by only a handful of players leaves MSPs with little room to maneuver and even less scope to build distinctive propositions. Preserving competition is therefore essential, both to safeguard innovation and to ensure the channel retains the flexibility it needs.
The bottom line
Ultimately, competition among IT—and especially security—suppliers is not just good for MSPs, it is essential for resilience. It drives innovation, enables customer-specific services, ensures security robustness, and delivers better value. The managed services sector has always thrived on adaptability, but without genuine choice, adaptability becomes compromise. For MSPs committed to growth and differentiation, the message is clear: protect competition, because your ability to innovate and the security of your clients depend on it.
