The recent acquisition of VMware by Broadcom is causing serious issues for its customers and providers, including Dell, the former owner of VMware. According to reports from The Register, Dell is facing significant challenges in selling its VxRail hyperconverged systems, which were previously developed in collaboration with VMware.
When Dell owned VMware, the company launched VxRail, a hyperconverged device that integrated Dell hardware with VMware’s top-notch software. This system was targeted at medium and large enterprises looking for scalable and efficient infrastructure. However, following the sale of VMware to Broadcom, the situation has drastically changed.
Since the acquisition, Broadcom has implemented significant price hikes on VMware products, affecting not only end customers but also providers and the distribution channel as a whole. Dell, in particular, has halted the sale of VxRail systems due to the lack of a new distribution agreement with Broadcom. This means that Dell cannot resell VMware software packaged in their VxRail systems, which poses a significant obstacle given that hardware and software integration is the key feature of VxRail.
Furthermore, Broadcom has made changes to the orchestration code necessary for installation on hyperconverged systems, and VxRail does not meet the new requirements set by Broadcom. This further complicates the possibility of Dell continuing to offer these systems.
In response to these difficulties, a Dell spokesperson told The Register: “Broadcom is an important and valued partner to Dell Technologies, and we will continue to provide value to our customers and partners who choose Broadcom and VMware solutions.” However, this statement does not clarify the specific issues nor provide an immediate solution to the current situation.
The origin of VxRail dates back to Dell’s intention to compete with Nutanix, a pioneer in the hyperconverged infrastructure market. Without the competition from VxRail, Nutanix now faces a more favorable landscape. The company reported a 17% year-over-year revenue growth for the third quarter of fiscal year 2024, reaching $524.6 million, despite recording losses of $11.6 million. The situation with VMware customers, the rise of artificial intelligence, and the increasing investment in native cloud solutions are factors that Nutanix views optimistically.
Rajiv Ramaswami, CEO and President of Nutanix, acknowledged that some new deals are taking longer than expected to materialize. For example, he mentioned an eight-figure deal with a Fortune 50 financial services company that took two years to close, although ultimately for a higher amount than anticipated. Despite these challenges, Ramaswami expressed confidence in Nutanix’s future prospects.
In summary, the sale of VMware to Broadcom is reshaping the hyperconverged systems market, presenting both challenges and opportunities for the companies involved. Dell and other providers will need to adapt to the new market conditions while seeking new ways to deliver value to their customers.