Broadcom VMware, on the eve of great changes

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Source : Content compiled from DatacenterKnowledge by Semiconductor Industry Observation (ID: icbank), thank you.

In the three months since Broadcom completed its acquisition of VMware, the company has made sweeping changes to VMware's software licensing, product portfolio and partner programs, changes that executives admit have confused and worried customers and partners.

In this article, Broadcom's VMware Cloud Foundation (VCF) unit once again attempts to explain its VMware strategy, which includes moving entirely to a subscription model and consolidating standalone products into two bundles.

"This is a huge change and definitely caused confusion in the market. We could have done better," said Prashanth Shenoy, vice president of cloud platform, infrastructure and solutions marketing for Broadcom's VCF division.

Broadcom is driving simplicity and wants to convince its VMware customers and partners that the changes will drive more value and innovation for customers, and more opportunity and profit for its partners.

For example, VMware previously had four business units responsible for building the four products of VCF, VMware's all-in-one software platform that combines compute, storage, networking and cloud management services to enable organizations to run and manage their virtualization as well as on-premises and Containerized workloads across multiple public clouds.

Shenoy said Broadcom has merged the four business units responsible for vSphere, vSAN, NSX and Aria into one VCF unit so the combined team can focus on building better integrated solutions. One of the upcoming improvements, he said, is that the engineering team is now building a single sign-on experience, rather than 20 different ways to log in to VCF depending on the product the customer is using.

"Previously, obviously we were all in our silos and trying to build the best product for that silo. I believe we didn't succeed in really creating a comprehensive, integrated experience," Shenoy said in an interview with Data Center Knowledge said in an interview. "The charter for the engineering team is now clear. We are focused on this core product to provide the greatest value to our customers."

In early December, just weeks after Broadcom completed its $69 billion acquisition of VMware, the company announced it would end perpetual licenses and move to a subscription model, unnerving some customers.

The company also announced that it is streamlining nearly 9,000 product SKUs and 160 product bundles into two main bundles: VCF and VMware vSphere Foundation, which is designed for small and medium-sized customers and includes vSphere server virtualization software, Tanzu Kubernetes Grid and Aria operations management software.

The consolidation of products gave some customers the false impression that the company was discontinuing the products, when in fact, the products were not going away. The products will be sold in packages rather than individually.

Then in late December, Broadcom announced it was ending its partner program without providing further details, leaving its 18,000 reseller partners in limbo. They spent nearly a month wondering whether they would be invited back.

Shenoy said that starting in mid-January, Broadcom began inviting its reseller partners to join the Broadcom Advantage Partner program, and now, 100% of resellers who have sold VMware products to customers in the past two years have been invited back.

"You're hearing in the market that VMware as part of Broadcom is not going to be focused on partners right now. That's far from the truth," Shenoy said. "The challenge was that during those weeks, there was silence. We didn't clearly spell out [our plans]. They didn't know if they were going to get an invitation."

According to media reports, Broadcom's changes to VMware and the confusion and consternation it caused have prompted some VMware customers and reseller partners to consider alternatives. VMware's rivals have launched an onslaught, hoping to gain a piece of VMware's 300,000 customers in the market for virtualization technology and tools for deploying and managing virtual machine-based servers in private clouds and hybrid multicloud environments. VM) and container-based applications.

For example, Nutanix launched a "VMware to Nutanix Migration Promotion" for VMware customers, while ScaleComputing announced a "rip and replace" program with discounts for VMware customers.

Forrester Research analyst Tracy Woo said she's heard from VMware customers who are unhappy with the huge price hikes they're seeing. "There are definitely some people who have retained their permanent licenses because they got a better deal as a result," Woo said.

While Broadcom says reducing the product portfolio to two main bundles is better and simpler, it means less flexibility for customers, Woo said. "That means they're either paying too high a price for what they want, or they're paying too low a price, which makes it difficult for customers to get the value they want," she said.

Regarding licensing issues, Shenoy said that VMware started introducing a subscription-based model about 18 months ago, and now that VMware is part of Broadcom, it has completely shifted to subscriptions to comply with industry standards. Today, most VMware customers still use perpetual licenses, so they will eventually have to move to subscriptions, he said.

"We're probably the last company in the industry to move to a subscription model," he said. "Every other major player has done this."

As for pricing, Shenoy said subscription costs for VMware customers using the VCF bundled solution will be reduced by 50%. When VMware was an independent company, it charged $700 per core. Broadcom charges half that price: $350 per core, he said.

Customers who previously used two VMware products (such as vSphere and vSAN together) should see comparable pricing for the new bundled solution. But he said enterprises using vSphere only in the data center will face price increases for the new bundles.

Matt Kimball, vice president and principal analyst at Moor Insights & Strategy, said VMware is most vulnerable in small businesses and midmarket markets because they are more likely to have less investment in VMware technology and are more able to easily migrate to competitors like Nuno. Same as Tanix.

"These customers are most likely to have vSphere-only deployments and therefore may experience price increases," Kimball said.

However, he said large enterprises that have invested heavily in VMware (licensing, resources and operations) are less likely to migrate.

In fact, Forrester Research's Woo said that while some customers are building a business case for migrating from VMware, some customers she's interviewed say it will take them four to five years to move away from VMware.

Broadcom announced a new partnership with Google Cloud on February 14 to enable license portability, meaning customers who have subscribed to a VCF license can use the same license in their on-premises data center and Google Cloud.

Shenoy said that because Broadcom has simplified its product lineup, customers can easily migrate workloads from on-premises data centers to Google Cloud and know that the versions of VCF are compatible.

"That's another aspect of business simplification: buy software once and then use it everywhere and really get a consistent experience," he said.

The Broadcom executive said the company expects to strike license portability deals with other cloud providers in the near future.

As for its Broadcom Partner Advantage program, Shenoy said Broadcom has heard positive feedback from its reseller partners. Broadcom has standardized pricing and offered upfront discounts so its reseller partners can better predict profits, he said.

Woo said that despite Broadcom's commitment to continued innovation and support, some VMware customers are concerned about Broadcom's reputation from past software acquisitions and worry they will see less support and innovation.

But Broadcom is talking a good game. On the product side, Broadcom plans to release a major version of VCF by the end of the year, Shenoy said, and will provide more details on its product plans at the VMware Explore conference in August. In the meantime, the company will release a smaller version in May or June that will include automation of data services and load balancing services, he said.

Time will tell whether Broadcom can deliver on its promise of faster innovation, more value for customers and more market opportunities for partners.

In the meantime, Broadcom's current outreach plan to further explain and fully inform customers and partners about its VMware strategy is the right move for the company, Kimball said.

"I do believe this will remove a lot of the 'FUD' that has been going on for the past month and a half," he said.

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https://www.datacenterknowledge.com/manage/broadcom-explains-vmware-strategy-amid-product-confusion

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