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At Nutanix .NEXT in Barcelona, VMware and Broadcom got mentioned almost as often as Nutanix itself. A few large customers are daring to brave a VMware-free world, but the complete erosion of ‘Virtzilla’ adoption will take a long time indeed.

Two high-profile customers recently talked about their move from VMware to Nutanix, Computershare and Treasure Island. As different as a fintech company and a Las Vegas casino are, one thing is certain: for VMware, the loss of both customers is unwelcome news. Computershare CTO Kevin O’Connor says he will move 24,000 VMs to Nutanix over the next year. The company currently uses two different hypervisors, but O’Connor received a price estimate for VMware offering that was between 10 and 15 (!) times higher than before. Such figures make for easy choices.

Read more: Nutanix CEO says many VMware customers will switch to Nutanix

CIO at the Treasure Island hotel/casino Andrew Phan drew the same conclusion. “We made the decision to move all of our workloads, including our mission-critical 24×7 environment, entirely to Nutanix when we learned our existing hypervisor pricing would more than double.” Nutanix CEO Rajiv Ramaswami estimates that the usual price increase since the acquisition is 3 to 5 times, with occasional outliers like in Computershare’s case.

This is the vanguard of a 20 percent contingent of the world’s largest enterprises that are set to leave VMware. That’s the conclusion of Naveen Chhabra at Forrester Research to SDxCentral. Note: they are going to start leaving. According to her, customers won’t migrate away overnight, but will instead move out bit by bit. Chhabra says she doesn’t need another five months to reach that conclusion. “It’s happening.” You can see that just by the fact that there were an awful lot of VMware Explore backpacks wandering around the booths at Nutanix .NEXT this week.

Breathing a sigh of relief

These two big customers came to a swift conclusion upon Broadcom taking over VMware. They are the vanguard of the 20 percent of departures that Chhabra predicts. Other parties, by the way, have left far ealier. A few years ago, for example, the American gambling chain Boyd Gaming organized a”bake-off” contest between Nutanix (AHV) and VMware (vSphere) hypervisors. Nutanix was the winner, as CIO at Boyd Gaming Gregg Lowe explained. Now he looks back on that decision with relief, knowing the migration was in time to sidestep the Broadcom saga altogether.

Food company Hero Group, which began migrating from VMware to Nutanix in 2020, have also largely avoided any major issues. Nutanix was already meeting “95 to 98 percent of all use cases” for the company at the time. The motivation for the migration, according to Head of Competence Center Infrastructure Bas Dijkhuizen, was primarily that both the hypervisor and the rest of the Nutanix system could be controlled through a single panel. A “one-stop shop” was preferable to a mix of solutions, because why pay for a VMware license if you don’t have to? After all, one gets AHV for free when one buys into the rest of the Nutanix suite. Customers are free to combine another hypervisor with the rest of Nutanix.

Reading tip: Nutanix and Dell build multicloud solutions together

Dijkhuizen confirms, however, that Hero is still using VMware in certain countries. Not because it can, but because it has to. “Rockwell, with whom we handle OT automation, unfortunately still requires a VMware hypervisor at the moment.”

The sticky strategy

It’s an example of the great stickiness that VMware thrives on within data centers worldwide. Broadcom’s strategy revolves around acquiring parties that customers can’t simply get rid of. VMware is by far the largest player Broadcom has acquired (for $69 billion) and has been a known entity for IT teams for more than two decades. Like Rockwell, countless parties have long-standing integrations with VMware. Forrester Research’s Chhabra talks about an ecosystem that prevents the VMware hypervisor from simply being ripped out of the IT infrastructure. It’s not just the technology, but also the many connections with third party vendors that are essential to the glue mixture which VMware has stuck to data centers over the past few decades. Its challenger Nutanix must continually bring in all kinds of companies to be a viable option for customers at all.

Tip: Liveblog Broadcom/VMware: Broadcom backs down from restricting Security Advisory access

We hear several times during .NEXT that the “switching costs” are inexorably high for many. Although Nutanix has promotions for VMware migrants, the migration is not just a financial burden. Dijkhuizen says his employees took a while to get used to how the Nutanix interface works versus VMware. Nutanix CEO Ramaswami says it is “not a big learning curve. “We don’t want to be a carbon copy of VMware,” he states, implying it’s simply up to users to take the time and learn about Nutanix’s inner workings. A small price to pay compared to the alternative, perhaps.

That’s a temporary problem anyhow, but VMware veterans regularly have more than 20 years of experience with their familiar way of working, so that can lead to some resistance. Dijkhuizen argues that in the end it’s just a matter of convincing internal staff. We interpret this as akin to a switch from Windows to Mac: despite significant similarities, some features are jumbled up in the UI which are disorientating, but never debilitating. In this comparison, by the way, Nutanix is Apple, since it insists on simplicity above all else.

Professional-emotional

An important question is whether the VMware saga has actually given Nutanix a financial boost already. CEO Ramaswami is quite clear about that. “Do we as a team have a big spike in direct business? Not yet. For now, the impact is not that big [on Nutanix revenue]. We have seen a high level of engagement with customers who were concerned and angry. However, many of them signed multi-year deals right before the acquisition. So they are not in a rush.”

We hear the same conclusion from Sander Scholten, Sales Director Netherlands at Nutanix. He believes there will be opportunities for Nutanix to benefit from the VMware acquisition. Sometimes, he says, customers will act “professionally-emotionally,” out of vehement disagreement with Broadcom’s hard direction toward profitability over customer satisfaction.

Also read: Nutanix scales up Project Beacon to cloud-native

But: “This is not a short-term business for us. That’s fortunate, because VMware was and is a great company. Things are obviously going to change under Broadcom, but the software is so deep in customers’ veins that you don’t just switch.” Bundling VMware can already lead to “quick wins,” Scholten says. This is because, for example, customers only use vSphere and now suddenly have to buy all kinds of other bundled solutions in addition. That strategy circumvents Broadcom’s commitments to the EU, among others, against which it promised not to raise prices. Here’s the catch: you don’t need to raise the price of something you’re not going to sell anymore. And out of sheer coincidence: here’s a bundle that happens to include the one thing you want, along with trinkets you’ve got no use for.

Ramaswami thinks each customer has to weigh what the migration will cost them. “The vast majority of current VMware customers are only running vSphere. Of the hundreds of thousands of VMware customers, perhaps only 20,000 are using vSAN or NSX.”

Broadcom legacy

Aside from cost, Ramaswami believes Broadcom’s reputation is also the cause of many concerns. “There is also a longer-term question. What level of innovation will take place? What is support going to look like?” Those are already things Broadcom is fiddling with. For example, it temporarily pulled Security Advisories behind a login screen on its own website, a steep change from it always being accessible via a public VMware link. Admittedly, CEO Hock Tan’s company has conceded in that area, but the new direction is clear, and it’s extremely unfriendly to (particularly smaller) customers.

This also varies by region. Ramaswami cites that he was recently in Japan and spoke to customers there. There, VMware users still largely believed in maintaining the status quo. By now, Japanese customers have also realized that it is time to look for an alternative.

Forrester researcher Chhabra explains that this is only step one. First is to identify the exact “exposure” to VMware infrastructure. “Without that, you’re blindfolded,” she says. That requires communication between the teams manning networking, storage and servers. Chhabra notes that those tend to operate autonomously from one another. Such lack of internal communication benefits Broadcom because it delays the decision to properly leave VMware.

Finally, we return to Boyd Gaming and its CIO Gregg Lowe. In addition to VMware, he made extensive use of CA Technologies software. CA was known for a long time as a company where “software went to die,” with, for example, a solid finger in the pie for essential IT for ancient mainframes. Nevertheless, Lowe felt it still came up with the right innovations back when it was independent. CA Technologies was acquired by Broadcom in 2018 for $18.9 billion. “They stopped innovating from that point on,” he concludes. In other words: Broadcom killed CA, as far as Boyd Gaming’s CIO was concerned. So Lowe’s company, in his view, was lucky to avoid a repeat with VMware. After all, he and his colleagues had already switched. It’s a big question mark when others will be able to do so, no matter how badly they may want to.