Scale CEO: “Shocking” VMware saga offers an opportunity to approach IT differently

A migration should go beyond "rip & replace"

Scale CEO: “Shocking” VMware saga offers an opportunity to approach IT differently

Broadcom’s acquisition of VMware has caused whirlwinds in the IT industry. Smaller customers and partners can’t afford the new price of admission and must look for an alternative. Scale Computing is one such alternative, led by co-founder and CEO Jeff Ready. What’s his take on the VMware saga? And what does Scale have to offer for those looking to jump ship?

With increased prices and undesirable bundles, VMware’s offering is becoming untenable for many. That’s no surprise to Ready, as Broadcom’s decision-making is essentially a repeat of what it did after it had acquired CA Technologies (2018) and Symantec (2019). “Broadcom optimizes for short-term profits. They raise prices, get rid of the middlemen, and cut costs on things like R&D.”

The big difference this time is that VMware is everywhere. CA and Symantec, by contrast, were a niche product or relatively easy to replace, respectively. Ready comments that VMware’s market share has made it almost a monopoly. In addition, the company is “sticky”: it’s hard to get rid of VMs running mission-critical workloads, while an organization’s IT staff may have been using VMware exclusively for decades. Regardless, many simply have to jump ship. Partners because they’ve been cut off, customers because they’re unable to pay up.

Tip: VMware revenue drops by 600 million, but Broadcom is hopeful

Ready calls the situation “shocking” and voices his clear displeasure with how Broadcom has acted. He says Broadcom’s decision to take VMware customers direct ━ removing the partners that served those customers from the equation ━ is a “nice way of saying you’re going to steal those customers.” Based on conversations with them, he learned early on that various large partners were losing thousands of customers. Smaller parties have already been thrown out of the VMware chain.

Ready estimates that the average price increase for VMware customers is by a factor of 3x to 4x, with multiple outliers to sixteen times the previous price. We have heard similar estimates, although some large users with broad VMware deployments are actually getting a better deal. The latter, of course, is the only change to pricing Broadcom likes to cite. “It has a big impact for mid-sized businesses, non-profits and schools in particular. Many of those had special discounts, and those are gone,” Ready says.

A great opportunity

It may be difficult to actually migrate off VMware, but there are plenty of alternatives to migrate to. Nutanix is the most obvious one, even though it clearly focuses on HCI and requires customers to change their infrastructure choices to make full use of their offering. Just ripping out the vSphere hypervisor and buying Nutanix AHV is not even possible, it’s bundled with the rest of the Nutanix platform. Meanwhile, Scale Computing is also an option. It’s already a solution that organizations may be running in edge environments alongside VMware in their datacenter ━ more on that later. It does work as a VMware alternative, with a hypervisor based on KVM and an HCI setup that promises to be more lightweight than Nutanix’s. Before diving into Scale Computing’s offerings, we’d like to know: what impact is Ready seeing on Scale’s business?

“We have been a VMware alternative for sixteen years. Even though we have grown and are experiencing success, it has been a big challenge. You are going up against an opponent that is extremely well-known and has been used by organizations for decades.” Now that the deck have been reshuffled at the hands of Broadcom, business at Scale is better than ever. Demand has surged by a factor of two to three. “As a VMware alternative, I think it’s fantastic. We’ve seen a big shift in how people look at their IT environments and at alternatives,” said Ready. “I expect that to continue. We’ve had to alter our plans for 2024 and beyond.”

Reading tip: Red Hat lures potential VMware escapees with migration discounts

This is a major difference when compared to Nutanix, which has yet to see the VMware exodus turn into a financial boon visible on balance sheets. Its CEO Rajiv Ramaswami told us at Nutanix .NEXT that the business impact so far is “not that big”. However, Nutanix targets bigger companies for its customer base through its partner network. Meanwhile, Scale, as the name suggests, scales down to SMBs. Whereas major companies may have signed up for several extra years of VMware right before the Broadcom acquisition closed, smaller organizations may be more nimble. The huge influx of potential customers even overwhelmed Scale for a time, but things are running smoother now. This is despite the fact demand is still on the up every month.

The move to Scale

Scale is trying to make sure customers and partners can all make the leap. The “VMware Rip & Replace” program allows them to swap out their IT infrastructure with discounted Scale services. If the old hardware is incompatible with Scale software, there’s a trade-up program to replace the infrastructure inexpensively.

More importantly, those with, say, six months or a year remaining on a VMware contract can already start using Scale at no additional cost. This is known as the “Seamless Switch” program. Ready explains that this methodology was copied from the security world, where switching is more ad hoc than infrastructure decisions normally allow for. Normally, a potential VMware customer can only be snapped up whenever their contract expires. An organization with about 1,000 employees and an IT team consisting of five people is not likely to switch halfway through such a contract and hardware cycle. Telling management that you have to migrate off your current product isn’t something many IT teams will want to do regularly. “That’s personally embarrassing if nothing else,” Ready said, which has led to Scale Computing to come up with a solution.

Why this generosity toward both customers and partners? One may see the compensation as a subsidy of sorts, as making an infrastructure switch isn’t easy. It can take a lot of time and effort, with staff having to be retrained and hardware needing to be recertified. A migration could even meet cultural resistance, as staff may be as familiar with VMware as they are to the back of their hand. In order to meet such challenges, Scale is trying to ensure the migration is as smooth as possible, contrasting sharply with Broadcom’s harsh stance.

Once arrived at Scale Computing

As mentioned, many organizations may already have Scale Computing running. That’s because it’s a prominent player for edge solutions. “Edge” just means “any computing resources outside the datacenters” here, as Ready points out. This is a part of IT infrastructure where VMware, for example, is too heavy a solution. Putting up a full-fledged VMware environment on the hardware stack inside a distribution center is something many IT professionals have first attempted, because according to Ready, that’s the first thing they usually try. It’s familiar territory, despite the fact it’s unsuitable for the specific use case. As soon as they figure that out, they may reach out to Scale.

Also read: HPE offers VMware alternative with enterprise-grade KVM in HPE Private Cloud

Scale Computing is scalable to miniscule “edge boxes,” which can be placed incognito in a corner of a branch office, somewhere in a truck or inside a factory hall. The company has been offering such hardware for years: one example is the introduction of the HE150 in 2019. The play here is to offer a quiet and compact piece of kit which requires little electricity. On top of that, “At the edge, you often have limitations around form factor, consumption and noise. Those limitations matter. You can’t have a café with a server that sounds like a helicopter taking off.” In addition, an Internet connection is not constantly needed: a local installation of the Scale software works autonomously and has all the necessary features to be on its best behaviour. In case of malfunctions, it even has the ability to “self-heal”.

Thanks to AI self-diagnoses, the Scale software solves virtually all IT problems by itself. This self-healing functionality is core to the product, and it’s made possible thanks to an AIOps model called AIME (Autonomous Infrastructure Management Engine). AI self-healing has been in constant development internally since Scale Computing was founded in 2007. Given almost all IT problems involve pattern recognition, this is a perfect opportunity to leverage AI. Along with co-founders Jason Collier and Scott Loughmiller, Ready knew AI was important to IT “before it was cool”. The AI model in question effectively goes through the same steps that an IT worker would do to troubleshoot. The success rate now sits at 99 percent. On Scale’s dashboard, one may see problems pop up only for them to disappear of their own accord.

The move to edge has been going on for years, so an organization may already be considering shaking up its IT infrastructure to respond to this shift. However, the Broadcom saga is accelerating these plans. The question, “What is your edge strategy?” is now a lot more important to answer. “When we talk to customers about Scale, VMware is the acute problem. But it’s about making that move with an edge roadmap in your pocket for the next few years.”

Conclusion: a new reality

The VMware situation was the initial rationale for our conversation with Jeff Ready. Still, it’s important to consider not only what you’re jumping off from, but also exactly where you’ll land. Customer reviews, many of which can be found on Scale Computing’s own website, are very positive about the product. There’s support ready to help with any question about Scale, even if there’s no acute problem. Not all customers have realized this, Ready states. Anyone unsure about anything in their Scale deployment should reach out. It is the advice given here and will continue to be the case.

Not everyone agrees on exactly what will happen to VMware. Promises from Broadcom about big R&D investments aside, there is little evidence to suggest that innovation is high on their agenda. Profitability for the VMware by Broadcom division is the priority. By contrast, Ready is positioning Scale as a company that continuously innovates and continues to do so. For example, no one talked about the edge in 2007, but this is now a spearhead for Scale Computing’s product. The company is responding to what the industry is asking for, or that’s what it’s claiming with fairly robust evidence to boot, anyway.

Ready believes that the development of edge solutions is something that customers will no longer expect from VMware. That perception of a lack of innovation has been informed by conversations with stakeholders and by Broadcom’s past history. We understand from other quarters that there are indeed positive stories to tell about Broadcom’s VMware plans at some point in time, but we’ve yet to reach said moment. For Scale and other VMware alternatives, however, it makes sense to assume 1) Broadcom’s previous behaviour will continue and 2) that whatever plans Broadcom presents, it’ll be too expensive for many.

Those who want to tie the knot now and go for a VMware alternative will be welcomed with open arms by Scale. The current promotions show that that is the case. In the long term, once the VMware dust settles, we will have to see who has proven to be the go-to alternative. It’s now up to Scale to continue to meet rising demand, a challenge to which it seems to be somewhat accustomed by now. By capitalizing on long-term trends (the rise of the edge) and sudden shifts (Broadcom/VMware), it seems to have found a winning formula.