Broadcom’s acquisition of VMware had significant implications for customers and partners. Let’s explore how this takeover impacted VMware’s ecosystem:
- Subscription Model Shift:
- Broadcom’s Changes: Since Broadcom’s acquisition of VMware, there have been controversial changes to the licensing model. Broadcom announced that it would no longer sell perpetual VMware licenses as of December 2023.
- Rising Costs: Customers have expressed concerns about rising costs associated with the new subscription-based model. Some reported price jumps of up to 600%, while small managed service providers saw their costs rise tenfold1.
- Broadcom’s Defense: Broadcom executives argue that customers using at least two components of VMware’s flagship Cloud Foundation will end up paying less. Additionally, the new pricing includes support, which VMware didn’t offer before1.
- Industry Groups’ Concerns:
- Unfair Business Practices: Industry groups, including Belgian CIO trade group Beltug, French network Le Cigref, Dutch association CIO Platform Nederland, and German association VOICE e.V., have expressed discontent.
- Letter to European Commission: These groups sent a letter to European Commission President Ursula von der Leyen and European Commissioner Thierry Breton, urging them to take action against Broadcom’s practices. The letter highlights issues such as increased prices, non-fulfillment of contractual agreements, and a shake-up of the VMware reseller ecosystem1.
- Channel Margins and Support Resources:
- Impact on Partners: Based on VMware’s active reseller partners and cloud/managed service providers, Broadcom’s plan is estimated to eliminate around $650 million in channel margins.
- Resource Availability: The acquisition may lead to a decline in the availability of channel-delivered VMware installation and support resources2.
- Navigating the Evolving Landscape:
- Transparency and Flexibility: Customers and partners need to navigate this evolving landscape with transparency, flexibility, and strategic planning. The changes require careful consideration of licensing and product offerings3.
In summary, Broadcom’s takeover of VMware sparked significant changes, both in pricing models and partner ecosystems. While Broadcom defends its approach, industry groups continue to push for regulatory intervention1. The impact on customers remains a topic of ongoing discussion and scrutiny.
Disclaimer: This overview provides a high-level perspective. For deeper insights, refer to official financial reports and expert analyses.123