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.
| Key Impacts of Broadcom’s VMware Acquisition | Implications |
|---|---|
| Streamlined VMware Licensing and Pricing | – Transition to a single SKU, VMware Cloud Foundation6 – Shift towards subscription-based models7 – Simplified licensing process for MSPs6 |
| VMware Partner Ecosystem Consolidation | – Fewer Premier partners, impacting smaller MSPs6 – Strategic evaluations and collaborative opportunities for smaller MSPs6 |
| Broader Industry Shifts | – Reshaping the virtualization and cloud computing markets6 – Increased scrutiny and consideration for migrating off VMware7 |
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.”
| Key Product Changes | Impact on Customers |
|---|---|
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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.
| Key Considerations for MSPs | Strategies for Success |
|---|---|
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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.
| Metric | Impact |
|---|---|
| VMware License Pricing | Increased by 3-10 times16 |
| IT Investment Value | Only 20% of CFOs believe IT investments demonstrate business value16 |
| Subscription-based Model Alignment | Careful consideration required to determine if it aligns with organizational needs16 |
| Perpetual to Subscription Transition | Can lead to significant long-term financial implications16 |
| Feature Parity with Alternatives | Many organizations may lack feature parity if they opt for alternative hypervisors16 |
| Business-critical Application Downtime | Can have a costly business impact16 |
| VMware Vulnerability Patching | Concern over lack of patches for vulnerabilities rated less than 9.0 in severity16 |
| Broadcom Security Patches | Offer some protection for vulnerabilities ≥ 9, but comprehensive hardening guides recommended16 |
| Security Expertise Requirement | Partnering with security experts is essential to effectively safeguard VMware products16 |
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.
| Virtualization Alternative | Key Advantages |
|---|---|
| Nutanix AHV | Supports multiple hypervisors, including Hyper-V; offers a functional stack with easy migration paths1718 |
| Kubernetes Containerization | Provides greater portability and flexibility for workloads across different cloud environments |
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.
| Metric | Value |
|---|---|
| Broadcom’s Acquisition of VMware | $61 billion20 |
| VMware’s Revenues (2022) | $12 billion20 |
| Broadcom’s Revenue from Semiconductor Solutions (Pre-Acquisition) | 78%20 |
| Acquisition Completion Timeline | May 2022 to November 202320 |
| Regulatory Approvals | China, EU, UK20 |
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.
FAQ
What are the significant cost increases for existing VMware customers after the Broadcom acquisition?
Broadcom has changed VMware’s licensing model to a White Label program. This has led to big cost hikes for many VMware users. Some companies are moving their VMware machines to Nutanix to save money.
How has Broadcom’s discontinuation of VMware’s discount programs impacted organizations, particularly non-profits?
Broadcom has ended discounts that helped non-profits afford VMware. This has made it hard for some, like the London Grid for Learning (LGfL), to keep using VMware. They now face expensive new options or must look elsewhere.
What are the key consequences of Broadcom’s acquisition of VMware across the enterprise software and cloud computing landscape?
Broadcom’s takeover of VMware has brought uncertainty and big changes. Many companies are now questioning their virtualization and cloud plans. They worry about VMware Cloud on AWS and the future of their managed service providers.
How has Broadcom’s transition to a streamlined VMware White Label Program and SKU-based pricing impacted customers?
Broadcom has simplified VMware’s licensing with a new White Label Program. It uses SKU-based pricing, focusing on VMware Cloud Foundation (VCF). This makes things easier but also leans towards subscription models.
What changes have occurred in VMware’s partner dynamics and supplier relationships due to the Broadcom acquisition?
The VMware partner ecosystem has shrunk, with Broadcom favoring a few top partners. This has pushed smaller providers to team up with the big ones. Also, companies might not work with their usual VMware partners anymore when buying new licenses.
How are enterprises responding to the changes introduced by the Broadcom-VMware acquisition?
Companies are now rethinking their virtualization and cloud plans. They can stick with VMware or look at other options. This includes open-source and Kubernetes-based solutions for better flexibility and cost control.
What are the regulatory concerns surrounding the Broadcom-VMware acquisition?
The deal has caught the eye of regulators, who worry about market consolidation. This could change the virtualization and cloud markets. It’s a challenge for businesses trying to keep up with tech changes.