Note to readers: Ever since Broadcom completed its acquisition of VMware in November 2023, we have been getting questions from existing and potential customers about the impact of the deal. While we normally don’t comment on our competitors, we do believe it’s important to help customers gain a better understanding of the transaction so that they can make more informed decisions to grow and protect their business. What follows below is a straight-to-the-point explanation of the potential impact of the Broadcom-VMware deal as well as recommendations for customers on how they may navigate the transaction’s possible benefits and risks.
Broadcom’s acquisition of VMware, valued at $61 billion, marks a pivotal shift in the cloud computing and virtualization landscape. It has been a major topic of discussion and concern within the tech community, especially its impact on customers and partners.
This comprehensive analysis dives into the multifaceted implications of the acquisition and outlines strategic alternatives for businesses navigating these changes.
Understanding the Acquisition: Impacts and Industry Shifts
The acquisition has introduced significant changes in VMware’s operational strategy, particularly in its shift from perpetual to subscription-based licensing models.
This transition reflects a broader industry trend but has raised concerns about increased costs and complexity for existing VMware customers.
For an insightful overview, TechCrunch and The Verge offer detailed analyses on the acquisition’s broader impact on the tech industry.
Shift from Perpetual Licenses to Subscription Models
Under Broadcom, VMware’s licensing model has changed from perpetual licenses to subscription-based licenses (or term licenses), as stated in this ITAM Review report. It’s a move that aligns with the industry’s broader move towards subscription models.
But Broadcom’s strategic pivot has been met with mixed reactions. Customers who currently have perpetual licenses may have cause to worry — something which VMware itself admits, per Ars Technica.
Broadcom says it aims to simplify VMware’s portfolio and align it more closely with cloud consumption standards, per Broadcom’s Krish Prasad (Senior VP and General Manager of VMware Cloud Foundation Division).
But there’s doubt over its value proposition for customers who are used to one-time free purchases. A Forrester article called “VMware Customers: Brace For Impact” states:
“Do expect price hikes, degraded support, and a VMware with a more diluted value prop.”
Community Reactions and Customers Concerns About Price Increases
The response from the VMware user community offers a ground-level view of the acquisition’s impact.
Discussions on platforms like Reddit’s r/vmware provide a forum for customers and partners to share their experiences and concerns, from pricing adjustments to changes in support structures.
On an unofficial VMware subreddit page, some VMware customers are already reporting price increases, with some claiming as high as 1200 percent, according to The ITAM Review.
Now that prices appear to be adjusted, 1 out of 5 VMware customers are looking for new alternatives, according to Forrester.
VMware’s End-User Computing Division Sold
VMware’s end-user computing division includes virtual desktop infrastructure products like VMware Horizon.
But Broadcom has sold this division to global investment firm KKR, turning it into a standalone company, according to a CRN report. This may indicate that Broadcom is streamlining VMware’s products and focusing on cloud and hybrid environments.
Strategic Accounts Prioritized Over Broader Customer Base
Broadcom ‘s post-acquisition strategy seems to prioritize a smaller number of strategic accounts, as suggested in a report by CRN, potentially at the expense of the broader VMware customer base.
It may allow Broadcom to optimize research and development and sales. But it may also result in decreased support for smaller customers who aren’t deemed strategic accounts.
Strategic Accounts Prioritized Over Broader Customer Base
The acquisition has caused reactions and concerns from the VMware community. Some customers are now looking for alternatives due to potential price increases and changes in support.
Experts say IT leaders should start exploring similar technologies and anticipate existing supplier relationships to be affected.
The shift to subscription models may also mean changes in software asset management and procurement processes.
Alternatives to VMware: Exploring Microsoft Azure and Azure Stack HCI
Microsoft Azure’s comprehensive cloud platform integrates seamlessly with existing Microsoft products.
Azure can offer companies already using Microsoft 365, Dynamics 365, or other Microsoft apps an extension of the familiar environment into the cloud, allowing easier integration.
In the wake of these developments, businesses and organizations should start considering alternatives to VMware.
Companies that have already invested in Microsoft tech and Certified VMware Solutions, can with small adjustments shift to another solution: Microsoft Azure and Azure Stack HCI.
Microsoft Azure and Azure Stack HCI stand out for their integration capabilities, cost management, and scalability.
Detailed information on these solutions can be found through Microsoft’s official blog and Azure Stack HCI Solutions Catalog.
Experts say IT leaders should start exploring similar technologies and anticipate existing supplier relationships to be affected.
The shift to subscription models may also mean changes in software asset management and procurement processes.
1. Benefits of Microsoft Azure and Azure Stack HCI
Shifting to Microsoft Azure and Azure Stack HCI can ensure continuity, leverage existing relationships, and gain more flexible and cost-effective infrastructure solutions.
2. Integration with Microsoft
Microsoft Azure’s comprehensive cloud platform integrates seamlessly with existing Microsoft products.
Azure can offer companies already using Microsoft 365, Dynamics 365, or other Microsoft apps an extension of the familiar environment into the cloud, allowing easier integration.
3. Azure Stack HCI on Lenovo MX Nodes
Azure Stack HCI, Microsoft’s hyper-converged infrastructure solution, can run virtualized workloads on-premises.
Lenovo ThinkAgile MX Certified Nodes offer a pre-configured solution that simplifies deployment and management of hybrid cloud environments. It allows businesses to leverage Lenovo’s hardware with Microsoft’s software-defined compute, storage, and networking technologies to create scalable and secure infrastructure.
4. Cost Management and Scalability
The pay-as-you-go pricing model equals more predictable costs compared to traditional licensing models, especially when considering the potential for cost increases after Broadcom’s VMware acquisition.
5. Hybrid Cloud Capabilities
Azure Stack HCI can offer seamless connectivity to Azure for backup, disaster recovery, and cloud analytics services.
It lets businesses maintain data and apps on-premises with Lenovo MX nodes while taking advantage of Azure’s cloud services for extended capabilities.
6. Security and Compliance
Microsoft’s robust security framework includes built-in security controls and comprehensive compliance coverage.
This is crucial for businesses in industries that are regulated by stringent security requirements.
Strategic Considerations for Microsoft Azure and Azure Stack HCI
- Assessment and Planning: Assess your current VMware deployment to identify specific workloads and apps that could transition to Azure Stack HCI. Plan for the technical and operational implications to ensure compatibility.
- Cost-Benefit Analysis: Compare the ongoing costs of VMware licensing under Broadcom’s new model versus the costs associated with shifting to the Azure ecosystem.
- Partner and Vendor Support: Leverage support from Microsoft and Lenovo, who may offer assistance during the transition.
- Training and Skills Development: Prepare your IT staff by investing in training and certification programs focused on Azure Stack HCI.
Conclusion
Broadcom’s acquisition of VMware might be a significant turning point, encouraging businesses to reconsider their approaches to cloud computing and virtualization strategies. As the landscape evolves, Microsoft Azure and Azure Stack HCI offer viable paths forward, combining operational flexibility with robust security and compliance features. For those embedded in the Microsoft ecosystem, this transition presents an opportunity to modernize IT infrastructure and align more closely with future technology trends.
