VMware has given the world ‘the greatest gift of all’ through its pricing changes and far-reaching adjustments to partner licenses, Chief Commercial Officer Judson Althoff said during an online event for the company’s partners.
He was referring to how Broadcom, VMWare’s new owner, has cut its portfolio and terms for customers and partners. With the price changes (in most cases price increases), the jettisoning of many partners and saying goodbye to thousands of customers, business for Microsoft’s cloud migration services is great. There is even a boom, Althoff said.
Althoff stated at the Microsoft Customer and Partner Solutions (MCAPS) event that everyone wants to get off VMware and into the public cloud. Despite cloud migration not really being a ‘cool’ topic, the CCO said, it is one of the places to make money.
For example, Althoff pointed to AVS (Azure VMware Solution), a special offering to “get customers unlocked out of the VMware pricing challenges they’re having, and/or even bring their own licenses to the cloud.”
Taking VMware license to Azure
In response to Althoff’s statement, a VMware spokeswoman told CRN that “Broadcom has always believed that when customers have flexibility and choice, they win.” That would be one of the reasons customers can indeed bring their VMware Cloud Foundation (VCF) licenses with them to AVS. Customers can also use these licenses in their own data centers in addition to Microsoft’s. When customers want to switch between on-prem and AVS, they can, too. And if they want to leave AVS again, they also keep their license.
Both Microsoft COO Althoff’s statement and VMware’s reaction are remarkable. In Microsoft’s case, it’s actually an attack on VMware, which is still widely used. VMware’s response is also peculiar because they mention ‘flexibility’ now. That is precisely what new owner Broadcom seemed to want to get rid of since the takeover. Trimming the fat, offering clarity, and market-based pricing was the news of the day.
Alternatives to VMware
Is VMware by Broadcom cautiously backtracking? Significant changes following the acquisition and subsequent grumbling by customers have prompted several private and public cloud providers to explicitly offer their products as alternatives. However, most take care not to burn their bridges with VMware, as many customers still have contracts with that company and a large part of their infrastructure is hosted there.
VMware is by far the largest player acquired by Broadcom (for 69 billion dollars) and has been a regular for IT teams for more than 20 years, not only because of its technology but also because of its many connections to other vendors; VMware has stuck itself to countless data centres over the past decades.
Tip: VMware customers want to migrate away – not all of them can
Private cloud or even devirtualization
Yet HPE, among others, has chosen to add virtualization as a feature to its private cloud offerings. Nutanix, too, sees some large enterprise players turning their backs on longstanding VMware and looking for alternatives, if that’s a real possibility. In other cases, devirtualization is actually an option.
VMware’s quarterly revenue fell by 600 million dollars in the second quarter of this year, so perhaps customers are indeed voting with their feet. However, there have also been significant cost savings: after rounds of layoffs and reducing VMware’s offerings, costs went from 2.3 billion dollars a quarter to 1.6 billion. Broadcom expects that figure to reach 1.4 billion by the end of 2024 and even expects opportunities for further savings toward the 1.2 billion mark.
The question ahead is: Will VMware by Broadcom also make money by attracting customers rather than by making cuts?
Also read: Scale CEO: “Shocking” VMware saga offers an opportunity to approach IT differently