In a bold move that rocked the tech world, Broadcom announced its intention to acquire VMware for a staggering $61 billion in May 2022, a decision finalized in November 2023. The acquisition has sent ripples through the industry, greeted with mixed feelings. Analysts and stakeholders alike are pondering the ramifications, particularly given Broadcom’s track record with CA Technologies and Symantec, where strategic shifts and operational overhauls were the orders of the day. This history of transformation leaves VMware’s extensive ecosystem of customers and partners bracing for potential upheavals. Concerns bubble up around possible price hikes, shifts in licensing models, and the future pace of innovation and support—all painting a picture of uncertainty and sparking a dialogue on what the Broadcom era might herald for VMware’s storied legacy in the tech sphere.
This blog will delve into the complex dynamics of Broadcom’s acquisition of VMware, shedding light on the strategic changes, their implications for customers and partners, and exploring paths beyond VMware. By providing clarity amidst the prevailing uncertainty, we aim to equip you with the knowledge and insights to navigate this new ecosystem confidently.
Broadcom’s Strategic Shifts: The VMware Landscape Transforms
In the wake of Broadcom’s acquisition of VMware, the tech landscape is quickly adapting to a series of strategic changes that mark a significant departure from VMware’s traditional business practices and moving towards a future that aligns more closely with Broadcom’s vision of profitability for investors and shareholders. These changes not only redefine VMware’s operational and strategic blueprint but also directly impact how customers and partners engage with VMware’s offerings.
Impact on VMware’s Organizational Structure
The changes have begun to reverberate through VMware’s organizational structure. So far, there are reports of layoffs (nearly 3,000 employees, and growing) and the consolidation of sales and support teams have underscored a drive towards efficiency and cost control. For Broadcom, these moves are strategic levers designed to optimize VMware’s operations and align them with broader corporate objectives. However, for many within VMware’s ecosystem, including its crucial network of partners, these changes have introduced a layer of uncertainty, raising questions about the level of support, innovation, and partnership they can expect moving forward.
Partner Program Overhaul: Termination of VMware Partner Agreements
A particularly stark manifestation of Broadcom’s strategy has been its decision to cancel VMware partner agreements. This abrupt cancellation announced to partners has thrown VMware’s extensive partner network into disarray, with many left uncertain about their future with the company. This move to an ‘invitation-only Broadcom Advantage Partner Program’ has new revenue commitments and could push longstanding VMware partners to consider alternative business relationships. This environment of doubt and uncertainty is further exacerbated by the announcement that, effective April 30, 2024, the ability to transact as a VMware Cloud Services Provider, under the VMware Partner Connect Program, will come to an end.
Moreover, there are talks of Broadcom’s plan to end service-provider agreements and to divest the End-User Computing (EUC) division, underscores a significant shift in how Broadcom envisions its relationship with VMware’s partner ecosystem.
Reorganizing and Downsizing VMware’s Product Portfolio
The changes also affect the very core of VMware’s product and service offerings. Broadcom has streamlined VMware’s portfolio, focusing on high-value areas that promise to bolster the bottom line. This streamlining process has led to the discontinuation of certain products and a reshuffling of service priorities, leaving some customers scrambling to reassess their IT infrastructures and future plans.
As an example, VMware’s flagship offerings for server and storage virtualization – vSphere and vSAN – have been consolidated into two primary bundles: VMware vSphere Foundation (VVF) and VMware Cloud Foundation (VCF). While vSphere is available in Standard and as Essentials Plus Kit editions, vSAN is only available with VVF and VCF bundles either within the bundle or as add-on licenses based on the required raw capacity. The shift towards phasing out perpetual licenses and imposing new minimum purchase of cores or capacity per CPU has sparked diverse reactions. IT buyers are critically assessing the long-term financial implications, given Broadcom’s ambitious goal to nearly double VMware’s profitability within three years.
- Consolidation into Bundles: The introduction of bundles such as VVF and VCF has led to discontinuing the sale of individual products outside these bundles (see VMware EOL announcement). This includes popular tools like Aria Suite (formerly vRealize Suite), NSX network virtualization, and vSAN, which are now accessible only as part of or as separately-licensed add-ons to these consolidated VVF and VCF packages.
- Pricing Adjustments: The restructured bundles are set to increase overall costs for most existing vSphere customers. Besides the transition to subscription-only licensing, any time-bound vSphere license requires a minimum of 16 cores to be licensed for each CPU it is used on. These strategic shifts underscore Broadcom’s focus on profitability, potentially compromising customer flexibility. The bundled offerings, while simplified, may not align with every customer’s needs, leading to an inadvertent increase in expenses for functionalities that were previously standard.
- Challenges with vSphere: The ramifications of Broadcom’s restructuring are particularly pronounced for users of vSphere. Over 10 licensing options have been discontinued, compelling many vSphere customers to either switch to vSphere Standard or upgrade to the new VVF or VCF bundles. This transition could drive their costs beyond allocated budgets for any expansion or change.
- vSAN Surprises: The reduction to just one vSAN edition (from previously five) and the new capacity-based pricing, exclusive to VVF and VCF bundles, are expected to significantly increase costs, forcing customers to pay for additional, unneeded, software features.
- VVF mandates a minimum license of 8 TiB per CPU.
- In contrast, VCF’s model is more inclusive, requiring a minimum of 16 cores per CPU, with each core license already covering 1 TiB of vSAN raw capacity.
Evaluating the Ripple Effects: Critical Questions in the Minds of VMware Customers and Partners
As we delve deeper into the consequences of Broadcom’s strategic overhaul of VMware, it’s crucial for both customers and partners to assess the implications on their operations and relationships. The broad-reaching changes introduced pose a series of pressing questions.
|Questions From VMware Customers
|Questions From VMware Partners
These questions amplify the worry and concern within the VMware community and is a call to action urging a strategic reassessment of their reliance on and future with VMware.
Braving the Tempest: Your Path Beyond VMware, with DataCore
As VMware’s landscape undergoes significant shifts, DataCore SANsymphony offers a beacon of hope and flexibility for those caught in the storm. It presents a viable, cost-effective alternative to vSAN, especially appealing to VMware customers seeking flexibility without the burden of unnecessary bundling. SANsymphony’s unique ability to craft a highly available HCI cluster with just two nodes, coupled with its deep integration into the VMware ecosystem, offers a tailored solution that breaks free from the constraints VMware hardware compatibility list (HCL).
DataCore’s approach is refreshingly hypervisor-agnostic, accommodating a seamless transition from VMware vSphere/ESXi-based HCI setup to other platforms such as Microsoft Hyper-V, Citrix Hypervisor, Red Hat Virtualization, Proxmox Virtual Environment, etc. Plus, HCI clusters can be seamlessly scaled out to segregated deployments, providing unmatched flexibility for evolving infrastructures. This level of support ensures that organizations can consider VMware alternatives and pivot according to their strategic needs without being tethered to a single vendor’s ecosystem. The hardware-agnostic nature of SANsymphony further reinforces this flexibility, allowing for a diversified and adaptive IT environment.
As VMware customers and partners contemplate their next steps amidst VMware’s strategic shifts, DataCore SANsymphony stands ready to support their journey, ensuring a smooth sail towards a future of efficient, optimized virtualization infrastructure. Whether maintaining VMware infrastructure or transitioning to a new hypervisor, DataCore provides the tools and flexibility needed to navigate these changes confidently.