Unless you’ve been living under a rock (not that there’s anything wrong with that), you’ve probably heard about the VMware acquisition by Broadcom for $61B. Sitting at a whopping 41.5% market share (VMware and Nutanix still dominating HCI market – Blocks and Files ), this change is bound to affect a lot of our partners. At Ynvolve, we are in daily contact with MSPs, so we looked into how this change might affect you in the future, and what your possible alternatives are. Without further ado, let’s get started!
1 – Quick recap
Since the completion of Broadcom’s acquisition of VMware, a significant amount of controversy has arisen regarding the changes underway throughout the entire company.
These changes concern licensing alterations, channel program adjustments, and the partner program’s discontinuation. Unfortunately, communication surrounding these transformations has been less than ideal, resulting in misunderstandings and a sense of chaos.
A recent blog post by VMware addressing a “new licensing policy” affecting various products, notably vSphere and vSAN virtualization software, Site Recovery Manager, vCloud Suite, and Aria Suite, has been misunderstood as an announcement of the products’ discontinuation. In reality, these products are not being phased out, they will no longer be sold individually but will instead be offered as bundled packages.
Long story short, eG Innovations published a good overview of the key changes applicable as of the 5th of February:
- vSphere Enterprise Plus (Enterprise+) customers must transition to bundled per core subscriptions such as VMware vSphere Foundation or VMware Cloud Foundation
- Many standalone products have become EOA (End of Availability), as detailed in VMware End Of Availability of Perpetual Licensing and SaaS Services – VMware Cloud Foundation (VCF) Blog
- Broadcom has announced it will be divesting the VMware EUC (which includes the Horizon VDI/DaaS products) and Carbon Black businesses, see: A New Dawn For VMware EUC And Carbon Black Brings Risk (forrester.com).
- Broadcom seems to be effectively reducing or significantly changing large parts of their channel and partner programs – VMware customers face uncertain future as Broadcom ends VMware partner programs | Ars Technica.
- Aria SaaS, a cloud version of VMware’s Aria monitoring management tools (which were previously sold under the “vRealize” brand) has been killed, see: Amid subscription push, VMware killed a SaaS product • The Register.
2 – Why does it matter for MSPs?
Hypervisor-based virtualization is here to stay per all latest indicators. So it will definitely still be a topic of interest in the foreseeable future for MSPs since they will naturally be among the most impacted by the changes.
- Esxi
As part of the transition of perpetual licensing to new subscription offerings, the VMware vSphere Hypervisor (free edition) has been marked as EOGA (End of General Availability). At this time, there is not an equivalent replacement product available. For most MSPs though, the paid version was used, but these changes could mean a sharp rise in bottom-line costs, as the product is now available only in a bundle with vSAN and VRealize licenses, which could mean doubling or tripling the costs depending on situations.
No more freebies for trial and error!
- End of partner program
A couple of months ago, Broadcom told VMware partners it would terminate their channel program, transitioning an undefined amount of them to its “invitation-only Advantage program” starting this month. Many sources seem to indicate that only VMware partners bringing in $500,000 or more in revenue will get those invitations. That also seems confirmed by the experience of people on Reddit, with the lowest revenue getting an invitation being at $40K a month. On top of that, Broadcom has decided to take the top 2,000 VMware clients to go direct, leaving countless partners stranded.
That move raises a lot of questions about Broadcom’s understanding of the power of the channel. A report from McKinsey shows that every VMware customer leans on average on seven trusted partners, which creates enormous ripple effects, McBain told Channel Futures “All is not lost: vendors rescuing VMware Partners Stranded by Broadcom.”
Many MSPs receive high-quality support from partners and having to deal directly with VMware for support may be a much less attractive option.
In any case, it seems that an unprecedented amount of partners are actively looking for an alternative. By 2026, disruption in the server virtualization market will drive 50% of enterprises to reevaluate their server virtualization needs and explore replacement server virtualization technologies, up from 10% in 2022.
This naturally brings us to the final question of our little exploration… what are the other options and is it really realistic to switch?
3 – I am an MSP with questions, what are my options?
As you can probably tell, there is no fit-for-all approach, and it will highly depend on your exact situation. Staying with VMware are might be a perfectly viable option: you won’t have to train people, or change anything to something that’s already working, but you’ll have to be ready to pay substantially more. This could mean having to transfer the costs to the client, or seeing a significant impact your bottom-line.
On the other hand, as companies are now looking at a situation where change is being forced upon them in an area where it was previously considered too pricey to change anything, it is now more realistic than ever for them to switch.
Besides packaged solutions like Nutanix, who are trying really hard to bring deceived partners to them (but who offer highly bundled solutions that might drive the costs way up for your company), open-source becomes a really credible and smart alternative. Not to mention that if you pair your open-source hypervisor with circular hardware, you can scale up without burning too much cash.
For companies making the leap from the VMware universe of enterprise software licensing, there obviously are some hurdles to clear. Tools like Proxmox get thrown around as functional equivalents, but the reality check here is that it holds true only for pretty basic scenarios. This might be a bit of a letdown for companies used to the sophistication of VMware setups.
On the flip side, OpenStack stands as a fully functional VMware doppelgänger, but it comes with the baggage of being perceived as a tad complex with the whole “build-it-yourself” and “support it yourself” vibe, a mindset a bit different from the usual enterprise software license shopping spree.
Now, if you stumble upon the right vendor, there’s a sweet spot waiting for you. Commercial open-source alternatives to VMware not only tackle the DIY challenges but also throw in professional support, often at a much friendlier price point than what you might be used to. For instance, we are currently testing our circular solutions with Vates, a serious contender.
If you want to dive deeper into the technical side of the alternatives and have feedback from a variety of specialists, Reddit is here for you.
Conclusion: “I know that I know nothing”
Some argue acquisitions tend to solely focus on shareholder value maximization: analyst coverage has indicated concerns about Broadcom having a very strong bottom line focus with the companies it has acquired over time (CA and Symantec for example). In both of those cases, customer satisfaction took a serious hit.
While we are conscious that open source solutions come with a load of questions, the hypervisor space and the current developments with VMware do provide a solid reason to investigate such options. Finding the sweet spot might be a bit more complicated than with a proprietary solution, but once you find it, the friendlier price range and independence gained might convince you.
And don’t worry, even if you switch to a fully packaged solution, we will still love you!
