A recent survey indicates that Broadcom’s takeover of VMware may have serious consequences for the virtualization software’s business, even if customers aren’t able to jump ship.
Hybrid cloud management platform CloudBolt commissioned a Wakefield Research poll of 300 enterprise IT decision-makers (both VMware customers and partners) on Broadcom’s recent acquisition of VMware. Early reports suggested VMware customers were bracing for rapid price increases and cutbacks in service, and the poll backs that up: 95% of respondents to the survey said the acquisition was disruptive to their IT strategy.
Around 75% of those who answered the poll anticipated the new management would raise their VMware costs by over 100%.
News of the acquisition sent “shockwaves” throughout the VMware ecosystem, CloudBolt Chief Product and Technology Officer Kyle Campos told IT Brew.
“VMware has their product sets in all different areas of enterprises. In many cases, large enterprises don’t know a world apart from VMware,” Campos said. “But they know what the world with Broadcom looks like, and so they’re trying to de-risk that pretty heavily.”
Broadcom didn’t respond to IT Brew’s request for comment on this story.
Ars Technica previously reported the survey was partly underwritten by Amazon Web Services (AWS), which expressed frustration after Broadcom stopped permitting it to act as a reseller for VMware Cloud on AWS. However, CloudBolt spokesperson Caroline Statile told IT Brew acknowledgements in the report mentioning AWS were due to a “versioning error" and AWS had “no involvement in this survey.”
CloudBolt’s platform is tightly integrated with VMware and the survey was part of an effort to understand the ramifications for its customers and the broader enterprise ecosystem, according to Campos. Broadcom CEO and President Hock Tan has admitted that the $69 billion acquisition has resulted in “unease” among VMware clients, even as Broadcom has taken steps such as taking over VMware’s top 2,000 customer accounts, eliminating perpetual licensing, and canceling partner programs in favor of an invite-only alternative.
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The Register and ServeTheHome have both separately reported on incidents where customers complained of price increases as high as 10 times prior rates under Broadcom, which has also laid off hundreds of VMware staff.
‘"If you’re already spending tens of millions of dollars, and then that’s gonna go up five times, there’s no five-year budget that had a curve like that for these enterprises,” Campos said.
“Typically in this space, that’s an area that enterprises pay not to be a problem, right?” Campos added. “But when the price hike hits, it’s like we can’t afford to pay away this concern, so now the problem’s on the table.”
But the biggest impact may be yet to come. Around 69% of respondents said their contracts with VMware expire within the next 12 months, with 87% anticipating to make any related changes to their IT strategy in the same time period.
Most survey respondents indicated they would plan to stick with Broadcom/VMware either fully or partially (40% and 43%, respectively), though other moves under consideration included partial public cloud migration (38%), selecting an alternate hypervisor (34%), or total public cloud migration (33%).
Running out existing contracts may give enterprises time to decide on a strategy—but reliance on, and investment in, VMware products runs so deep that the prospect of a switch runs the gamut from “challenging to terrifying,” according to Campos.
“I don’t think anybody’s waiting and seeing,” Campos said. “I think they’re exploring and ensuing…Any customer that was like, under a year [until contract expiration], that is like full hair on fire.”