Broadcom’s $61 billion deal to buy VMware has shaken the tech world¹. This big move, finalized in November 2023, is changing how companies think about cloud computing and software. But what does this mean for the future of tech, and how will it affect businesses?

Key Takeaways

• Broadcom’s buyout of VMware has caused big changes, leading to higher costs for VMware users.
• The end of free ESXi and new licensing rules might make it hard to find skilled VMware workers.
• Companies are looking at new ways to avoid these problems, like moving to public cloud or using other solutions.
• The deal has also made some products less portable in the cloud, and changed how managed service providers work.
• There are worries about government oversight and the tech market getting smaller because of this deal.

Substantial Cost Increases for Existing VMware Customers

The Broadcom acquisition of VMware has led to a big jump in pricing for VMware virtual machines. Broadcom changed VMware’s old points-based licensing to a new White Label program. This has caused cost increases of up to 15 times for many existing VMware customers².

This sudden price rise has made some big companies, like Computershare, look at other virtualization platforms like Nutanix. They want to avoid the high licensing costs under Broadcom’s new rules². Non-profit organizations, like a British university, are also seeing big price hikes. They could see their VMware subscription costs go up by as much as 1250%³.

Sudden Hikes in VMware Virtual Machine Pricing

Broadcom’s change to VMware’s licensing has hit customers hard. A future price for a VMware hypervisor could be 10-15 times higher than before, reports say². This big price jump has made many companies rethink their virtualization plans. They are looking for cheaper and more flexible options.

Major Enterprises Exploring Alternative Options

Big companies are now looking at other virtualization platforms because of these high costs. For example, Computershare is moving thousands of VMware virtual machines to Nutanix. This is because they want to avoid the high licensing costs from Broadcom². This move shows that companies are looking for better, more affordable virtualization solutions.

“Broadcom’s acquisition of VMware has significantly disrupted the virtualization landscape, forcing enterprises to reassess their cloud migration strategies and explore alternative platforms to mitigate the impact of skyrocketing VMware pricing.”

Abrupt Discontinuation of Discount Programs

Broadcom’s buyout of VMware has caused big waves in the tech world. They have stopped discount programs that helped non-profits afford VMware virtual machines⁴. For groups like the London Grid for Learning (LGfL), this news came just before they had to renew. They were forced to pay more for subscriptions and look for other options⁴.

This shows how hard it is for groups that count on VMware. They need pricing that’s more flexible, like what cloud providers offer.

Non-Profit Organizations Facing Inflated Renewal Costs

Non-profits are hit hard by the loss of discounts⁴. VMware’s prices have gone up a lot. Now, these groups face high renewal costs that could hurt their budgets and operations⁴.

They must now rethink their tech plans and find cheaper ways to meet their needs.

Transition to Subscription-Based Licensing Models

Broadcom’s move has pushed the industry towards subscription-based VMware models⁵. The company is changing more VMware licenses to subscriptions. This change is making it hard for customers to budget and plan⁵.

This shift is causing more uncertainty and trouble for VMware users. They must figure out how to manage their tech spending under new rules.

“The discontinuation of discount programs has had a particularly harsh impact on non-profit organizations, which often operate on tight budgets.”

Broadcom’s acquisition of VMware has had significant industry impact, including

Broadcom’s buy of VMware has shaken the enterprise software world. It has brought big changes and disruptions to the virtualization and cloud computing fields⁶. Now, VMware has a new White Label Program with just one SKU, VMware Cloud Foundation⁶. The partner network is also expected to shrink, with fewer than 3,500 VMware cores managed by MSPs⁶.

Broadcom aims to make VMware’s pricing and licensing simpler⁶. Moving to a subscription model is now a top goal⁷. This change is making many companies rethink their virtualization and cloud plans. They are looking for new solutions and ways to move to keep costs down and stay flexible⁶.

The deal has also opened up new chances for MSPs to work together and reposition themselves⁶. Smaller MSPs are advised to focus on better customer service and team up with others to stay ahead in the new VMware world⁶.

As the enterprise software industry goes through these big changes, companies need to think carefully about their virtualization and cloud plans. They should make sure these plans are cost-effective, flexible, and work well with the changing VMware world⁶⁷.

“The Broadcom-VMware acquisition represents a significant shift in the enterprise software landscape, posing both challenges and opportunities for organizations and service providers alike.”

Product Suite Consolidation and Cloud Portability Concerns

The deal between VMware and Broadcom has changed VMware’s product lineup a lot. Broadcom has made VMware’s products simpler, focusing on a few main categories. This has raised worries about VMware Cloud on AWS⁸.

Fewer VMware Product Offerings Under Broadcom

With Broadcom at the helm, VMware has cut down its software range to just three main products⁹. Now, customers have fewer VMware options. Many niche products have been dropped, and VMware’s SaaS products will stop working by December 2023⁹.

Uncertainty Surrounding VMware Cloud on AWS

Broadcom has changed how VMware Cloud on AWS is sold and priced. They’re not letting AWS or its partners sell VMware Cloud on AWS anymore. Also, old licenses can’t be moved to the cloud⁸. This has made moving to AWS more appealing, as it offers more flexibility and is cheaper.

The changes in VMware’s product lineup and the unclear future of VMware Cloud on AWS have made many customers rethink their plans. They’re looking at other cloud options for better flexibility and savings.

“The changes in VMware’s portfolio and the limitations on VMware Cloud on AWS have forced us to explore cloud migration alternatives that provide more flexibility and cost-effectiveness.”

The changes in VMware’s product lineup and the unclear future of VMware Cloud on AWS have left many customers reevaluating their plans. They’re looking at other cloud options for better flexibility and savings⁸.

Shifting Dynamics for Managed Service Providers

The managed service provider (MSP) world has seen big changes after Broadcom bought VMware for $61 billion¹⁰. Now, Broadcom is focusing on a few top partners, leaving others to find new ways to work together¹¹. This change is both tough and full of chances for MSPs, who need to rethink their plans, improve how they serve customers, and maybe even join forces with others to grow.

Consolidation of VMware Partner Ecosystem

Broadcom’s big move has cut down the number of VMware partners. Only twelve are now in the Broadcom Pinnacle Partner program, needing to spend a lot with Broadcom¹¹. These top partners get the best deals and support, making it harder for smaller MSPs to compete.

Strategic Repositioning and Collaboration Opportunities

MSPs need to rethink what they offer, how much they charge, and how they connect with customers. Working closer with VMware’s remaining partners can help MSPs stay strong and get better support. For smaller MSPs, joining forces with others might be a smart move to grow and offer more services.

The VMware partner world is changing fast, bringing both challenges and chances for MSPs. By adjusting their services, teaming up with VMware partners, and maybe merging with others, MSPs can come out stronger in the cloud computing world.

Licensing and Pricing Model Transformations

Broadcom’s takeover of VMware has brought big changes to how VMware sells its products. Now, there’s a simpler VMware White Label Program instead of the old complex Partner Connect program. This change makes it easier for customers to get what they need¹².

The new pricing is based on SKUs, with a focus on VMware Cloud Foundation (VCF). This move to subscriptions offers more flexibility and predictability for businesses¹².

Transition to Streamlined VMware White Label Program

• Broadcom has cut down VMware’s products to just four main ones after the buyout¹².
• The new “license per core” pricing could make costs much higher for companies with many servers¹².
• About 2,000 big accounts are now handled by Broadcom directly. This might mean less support for smaller resellers and more audit risks¹².

SKU-Based Pricing for VMware Cloud Foundation

The new pricing for VMware Cloud Foundation is based on SKUs. This is meant to make costs clearer and more predictable for customers. But, some companies are seeing their costs go up a lot, with support costs increasing by up to 450%¹².

The London Grid for Learning, for example, saw their costs jump by 268% compared to their old VMware deals¹². Many IT service providers are now looking at other cloud options, like AWS, for better prices¹².

“Regularly conducting a comprehensive license audit is advised to assess VMware usage and identify optimization opportunities under the new licensing model. Developing a transition roadmap is also recommended to smoothly shift to Broadcom’s subscription-based licensing model.”

The changes in VMware’s licensing and pricing offer both challenges and chances for companies. The new White Label Program and SKU-based pricing for VCF aim to make things simpler. But, the risk of higher costs is making some look at other cloud options¹²¹³.

Impact on Existing Supplier Relationships

The Broadcom-VMware deal has changed how suppliers work together¹⁴. Now, when buying new VMware software, customers might not deal with the same partners they used before¹⁴. Broadcom is also cutting jobs to save money from the $69 billion deal. This move, along with a return-to-office policy, might upset VMware staff who like working from home¹⁴.

Changes in VMware Partner Dynamics

Broadcom’s takeover has reshaped the VMware partner world¹⁵. The company now focuses on VMware Cloud Foundation and VMware vSphere Foundation¹⁵. It also made it easier to move VMware Cloud Foundation around, which is good for flexibility¹⁵.

Broadcom has also merged all product teams into one division¹⁵. This move helps integrate products better and improve service delivery¹⁵.

Potential Job Cuts and Return-to-Office Mandates

The deal has also raised worries about job losses and work changes¹⁴. Broadcom plans to cut jobs to save money, affecting VMware staff¹⁴. The company’s push for everyone to return to the office might also upset some employees who prefer working from home¹⁴.

The Broadcom-VMware deal has deeply affected supplier relationships, partner dynamics, and the workforce. As Broadcom changes the partner ecosystem, pricing, licensing, and security, companies need to think carefully about their choices. They should plan their moves to avoid disruptions and keep their businesses running smoothly.

Evaluating Migration Options and Alternatives

After Broadcom bought VMware, many companies are looking at their virtualization and cloud plans. Some might stick with VMware, but others are checking out new options. These include open-source virtualization and Kubernetes-based container solutions¹⁷.

Reassessing Virtualization and Cloud Strategies

This time is a chance for companies to think about their IT needs for the future. They might choose solutions that are more flexible, cheaper, and better for the future. A study by Forrester says 20% of big companies might switch away from VMware in 2024¹⁷.

A poll by Candafero found that 70% of VMware partners are looking at other cloud providers because of Broadcom’s deal¹⁷.

Exploring Open-Source and Containerized Solutions

Companies looking for VMware alternatives are interested in open-source and Kubernetes. Nutanix’s AHV, for example, works with other hypervisors like Hyper-V. This gives IT leaders more choices¹⁷.

Kubernetes is also becoming popular. It makes it easier to move workloads between different clouds. This is because it’s more portable and flexible.

Moving to a public cloud can be hard, but tools like Nutanix Move help. Nutanix Move makes it easier to move from VMware’s ESXI to Nutanix’s AHV or public clouds like AWS and Azure¹⁷.

“Migration strategies typically focus either on applications or hardware, with application-centric migrations targeting data, workloads, and apps, and hardware-focused migrations involving the transfer of data and workloads between physical machines.”¹⁷

As companies look at their options, IT teams need to check their current setup. Starting with small migrations can help teams get used to the process before tackling bigger projects¹⁷.

The changes in virtualization and cloud offer both challenges and chances for companies. By looking at migration strategies and new solutions, they can be ready for the future¹⁷¹⁹¹⁸.

Regulatory Scrutiny and Market Consolidation Concerns

The Broadcom-VMware deal, worth $61 billion²⁰, has caught the eye of regulators. They worry about the impact on competition and choice in the enterprise software market²⁰. With Broadcom growing in this area, many are questioning the effects on the market²⁰.

The deal hit regulatory hurdles from May 2022 to November 2023. China’s State Administration of Market Regulation (SAMR) approval was a major hold-up²⁰. Yet, Broadcom has cleared legal hurdles in several countries, including the European Union and the UK²⁰.

VMware’s $12 billion in revenue in 2022²⁰ makes Broadcom’s acquisition significant. It could change the virtualization and cloud computing markets. The regulatory review could affect how companies adapt to new tech²⁰.

Industry experts are also concerned about market consolidation. Broadcom made 78% of its revenue from semiconductors before buying VMware²⁰. This raises questions about Broadcom’s strategy and its effect on customer options.

As Broadcom merges VMware’s cloud services, the future is uncertain. The integration of Tanzu and software-defined edge solutions²⁰ will shape the market. Regulatory scrutiny and consolidation will influence the industry’s path forward.

The Broadcom-VMware deal has faced intense regulatory scrutiny. This reflects worries about its impact on the enterprise software market and customer choice²⁰. As the industry adjusts, the future of virtualization and cloud computing is a topic of great interest and study.

Conclusion

Broadcom’s buy of VMware has changed the game in enterprise software and cloud computing. It’s making companies rethink their IT plans²¹. With VMware’s tech being key to many cloud providers, costs are going up, products are being dropped, and new licensing rules are coming²¹.

Now, being flexible, saving money, and looking ahead are key for businesses. The industry is at a turning point. The choices companies make now will shape their future in IT²². Broadcom’s plan to split VMware into four parts is raising questions about desktop virtualization, like Fusion²².

Service providers like USU are stepping up with solutions to handle these changes. They help companies manage vendors, cut costs, and follow rules²¹. As things keep changing, being able to adapt and find new ways to do things is crucial. This is how companies can keep their IT up to date and deal with the broadcom vmware acquisition impact summary and enterprise it infrastructure transformation.