Broadcom: "VMware is not suitable for everyone (in the charity sector)"

[German]There has been a lot of criticism of VMware by Broadcom's licensing policy from customers who are faced with massive price increases. Particularly in the area of charitable organizations, there are indications that Broadcom wants to withdraw with VMware. Partners who negotiate with customers in the charity sector have been told that "VMware is not suitable for everyone".


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Raising money by Broadcom

I have reported extensively on the development at VMware after the takeover by Broadcom in the blog (see links at the end of the article). For end customers, it is relevant that VMware discontinued perpetual licenses and also the free ESXi server as a product in spring 2024 (see Broadcom ends perpetual licenses for VMware products – End of the free ESXi server?) Customers will be shifted to subscription licenses and preferably to the cloud, to VMware Cloud Foundation (VCF).

End customers now often experience a "rude awakening" when license renewals and contract changes lead to drastic cost increases. I had taken up cases in the German blog post Der Fluch der neuen Broadcom/VMware VCF-Lizenzierung in der Praxis. Broadcom's approach is probably very targeted, as I outlined in the post Analyses: VMware acts on licenses; switching to alternatives a problem. Their management is aiming for double-digit percentages in quarterly sales (see my German blog post  Broadcom erwartet 2024 bei VMware quartalsweises Umsatzwachstum im zweistelligen Prozentbereich).

The Association of European Cloud Providers (CISPE) had filed a complaint with the EU Commission (see VMware plans two Cloud Foundation releases, can they do it? CISPE complaint filed), and the EU Commission sent Broadcom a hearing (see Broadcom accommodates VMware customers with licenses; EU Commission sends questions). At times it looked like VMware was making some concessions to customers. But it seems to be mainly "cosmetic".

Charitable organization sector left out

Even in non-profit or charitable organizations, IT relies on virtualization. Software providers often offer discounted licenses so as not to overburden the budgets of these organizations. The blog readership pointed me to the CRN article Broadcom Tells Partner Negotiating For Charity 'VMware Is Not For Everybody' from April 23, 2024 (thanks for that). It looks like Broadcom/VMware no longer sees a market in the charity sector if they don't pay the prices.

The background to this is probably a statement by Jeff Ready, CEO of Scale Computing. During a keynote speech at a recent partner fair, he accused VMware by Broadcom of "ripping off" a charity organization for hospitals. "I've seen a children's hospital raise their prices," Jeff Ready told the audience in his keynote at the 'Platform 2024' conference. "I talked to the partner who told me that Broadcom told this customer, after they asked for a deferral because it was a non-profit, 'I'm sorry, VMware is not for everyone.' That's just not the way we see the world."

The CRN website investigated this and then took up the details. The partner conducting the negotiations was probably Micro in the UK. Tom Smyth, head of technical solutions at Misco, is quoted by CRN as saying: "The statement I received from Broadcom was: 'We realize that VMware with these changes is not for everyone'. Everyone else can use it. Broadcom will no longer base its decisions on them [charities]." Clearly, Broadcom sees no money there and wants out of that market. Tom Smyth says that he can understand this and respects these decisions. Personally, however, he does not seem to approve of the behavior. In other words: Hospitals, charities and non-profit organizations are in for hard times if they have relied on VMware virtualization products.


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One Response to Broadcom: "VMware is not suitable for everyone (in the charity sector)"

  1. Michael S says:

    Pretty much came across this when our renewal for VMware came onto the radar for the next month. We have a very small 2-blade ESX install of vSphere, with 4 CPUs across the two blades, and 8 cores per CPU. Broadcom now has a mandatory cost minimum of 16 cores per CPU, if you have less than that, bad luck to you, the core count you have to pay for has just doubled.
    Add to that the overall price increase, and we are now paying almost double for a one-year renewal to what we had to pay for a 2-year renewal. Very tough to digest and with the short lead-time, we have to pay it this year, but we will be working very hard to get off VMware in the coming year, as we do not have a budget for such a huge cost. I told the VMware rep I spoke to that this was not acceptable for small clients (we are a very small govt agency with a small hardware footprint), but the rep pretty much seemed resigned that they were going to lose lots of customers due to this. Must be a very depressing place to work in that position at the moment. Many less clients will also mean that sooner or later they will cut the number of reps to talk to clients.

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