Last year in late 2023, Broadcom completed the acquisition of VMware for a value of around 70 billion euros, marking one of the biggest technological operations in history. This transaction has caused a stir in the industry, especially in the distribution channel and partners of the cloud and virtualization company, where it has led to significant changes that the channel is reacting to.
While Broadcom has made significant changes in VMware, the company has emphasized its commitment to the channel, although raising serious doubts about the major changes in the rules of the game. In fact, the chip company has stated that it will continue to work with its partners to offer innovative solutions to their customers. However, in practice, changes have been implemented that have not been well-received, causing some to even consider seeking alternatives, as many worldwide have confirmed that they are migrating, and it is not always easy.
###Changes in the channel driven by Broadcom
Broadcom’s intention in acquiring VMware was to strengthen its commitment to the cloud. However, the company’s management has made a U-turn with several key points:
###Portfolio Reduction
Broadcom has streamlined VMware’s product portfolio, eliminating some redundant offerings and consolidating others. This has impacted channel partners who specialized in the eliminated solutions, leaving them without key products or forcing them to migrate to more expensive solutions.
###New Business Models
Broadcom has introduced new business models for the sale of VMware products, including new partner programs and pricing structures. This has forced partners to adapt and restructure their businesses. Among the most concerning changes are:
– **End of Perpetual Licenses**: Broadcom has eliminated VMware’s perpetual licenses, focusing on a subscription model. The disappearance of the free version of ESXi and the VMware Essentials perpetual license, which was initially less than 600 euros and then about 80 annually for 3 compute nodes, has given way to a minimum cost of around 4,500 euros annually to service 3 nodes.
– **New Subscription Models**: Subscription models for VMware vSphere and VMware Cloud Foundation have been introduced, including short and long-term options and usage-based licensing.
– **Price Increases**: VMware subscriptions have seen price increases, impacting users who relied on perpetual licenses.
– **Changes in License Renewal**: Renewal policies have changed, requiring users to carefully review the terms of their contracts.
###Increased Focus on the Cloud
Broadcom has placed a greater emphasis on VMware’s cloud solutions, which has concerned partners interested in traditional virtualization solutions. Additionally, other partners have been compelled to invest in training and certification for these new technologies.
###Uncertainty about the future
Following the acquisition, there is significant uncertainty about VMware’s channel’s future. Some partners fear that Broadcom will reduce its dependence on them or even eliminate them altogether to centralize channel control. Highlights include:
– **Resale Restrictions**: Broadcom has imposed restrictions on the resale of VMware licenses, making it difficult for channel partners to sell licenses as they did before.
– **Partner Programs**: New partner programs with different levels of benefits and requirements, which are not always favorable.
– **Limited Communication**: Broadcom’s lack of clear communication has generated more uncertainty and concern among partners and end-users.
###Consequences for partners
The changes implemented by Broadcom have had serious consequences for some former VMware partners, affecting them on several fronts:
– **Revenue Loss**: The elimination and consolidation of products have led to a revenue decrease for some partners.
– **Increase in License Costs**: Changes have also resulted in a significant increase in license costs, especially with the disappearance of perpetual licenses.
– **Need for Investment**: Partners who wish to continue selling VMware products need to invest in new training and certifications, which can be costly.
– **Increased Competition**: The entry of new partners into the VMware cloud market has increased competition, making it difficult for existing partners to maintain their market share.
– **Uncertainty**: The lack of clarity about the future has generated great concern among partners.
###Has Broadcom Killed VMware for the Masses?
As Broadcom implements these changes, many users and partners are seeking alternatives to VMware. Solutions like Proxmox are gaining popularity among those looking for a more affordable and less restrictive option. Proxmox offers an open-source virtualization platform that allows users to have more control and flexibility, without the additional costs associated with VMware’s new business models.
In conclusion, as Broadcom continues with its strategy, the technology community is closely watching. Broadcom’s decisions may have transformed VMware from an accessible and popular option to a more exclusive and expensive one, leading many to seriously consider alternatives like Proxmox for their virtualization needs.