Drastic changes have been taking place since Broadcom completed its acquisition of VMware on November 22. The company plans to say goodbye to a huge number of customers, while partner programs are being discontinued without notice.
Last week, it was revealed that a majority of VMware’s CSPs are being let go by Broadcom. A “Termination Notice” had already been sent to VMware partners in late December, in which Broadcom announced it would begin a new partner program starting Feb. 5. The current deals had swiftly been cancelled unilaterally, after a months-long radio silence.
The Register discovered that a separate memo had been put out alongside Broadcom’s Termination Notice. The VMware Partner Connect Program is to be abolished, with Broadcom’s Expert Advantage Partner Program replacing it. The new offering is invite-only, designed to serve only the most lucrative customers. Broadcom now serves the 2,000 largest VMware customers without partner interference.
Imminent departure of hundreds of thousands of customers, over 2,000 partners
A roundup from Computable (Dutch article) reveals that a massive exodus of VMware partners and customers is imminent. Of the 4,000 current partners, less than half would remain and “at least a few hundred thousand” customers are expected to be shown the exit door. The 120 global distributor count looks set to be reduced to a little more than a dozen by Broadcom.
It’s unclear as of yet what the European VMware channel network will look like. However, the rules for qualifying partners, distributors and customers isn’t necessarily going to match what applies in the United States. In the U.S., the minimum target is said to be an annual revenue of $500,000, but this does not necessarily apply to European partners.
Either way, Broadcom’s drastic policy fits with its past history. After the acquisitions of Symantec and CA Technologies, a similarly drastic cost-cutting process took place, involving the departure of less profitable customers and partners. However, those companies were significantly smaller than VMware, so fewer parties were affected than in the current changes.
End of perpetual, higher costs
There is still much uncertainty among partners, distributors and customers. What is known, however, is that perpetual licenses have been abolished. We spoke with SoftwareOne in December about the changed offerings. In addition to the removal of a perpetual option, no new deals could be struck in their place. For SoftwareOne, it was impossible to achieve an “end of year” sprint in sales at the end of the year, as is customary.
Read more: VMware kills off perpetual licenses, only subscriptions remain
Either way, the end user may end up choosing for a competing offering. Nutanix CEO Rajiv Ramaswami predicted in October that VMware customers should be worried about the Broadcom acquisition. Higher prices lie ahead for those who remain, while much of the customer base is set to evaporate.
VMware split up
Broadcom has already split up VMware and divided it into four divisions. One of them still bears the VMware name: Cloud Foundation headed by Krish Prasad.
Meanwhile, the future of Carbon Black and the former VMware EUC lies elsewhere. Recently, investment firms EQT AB and KKR & Co showed an interest in EUC. Thomas Bravo is also said to be considering a bid. The value is estimated at $5 billion including debt, reports Bloomberg.
Carbon Black is said to be valued at $1 billion. However, no concrete bid for EUC and Carbon Black has been made.
Read our liveblog on the latest developments surrounding Broadcom’s VMware acquisition: Liveblog Broadcom/VMware: Broadcom to get rid of hundreds of thousands of customers
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