Opinion Cancel your Netflix account. Delete House of the Dragon Season 2 from your diary. This year’s must-see drama will unfold in three episodes that will unfold in the first weeks of June, September and December, when Broadcom unveils its results and perhaps also whether its software licensing model is viable.
In case you’re late: After acquiring VMware, Broadcom quickly decided to only sell subscriptions that include support and bundles of its software, said costs would be reduced for customers currently using as many as two products in a bundle, and that this plan would allow customers to get the maximum the value from the VMware stacks and its merchandise will effectively pay for itself in improved agility and efficiency.
Many VMware customers don’t like this plan. Some feel they now have to acquire products they may not want or are ready to implement in order to get the products they currently use and rely on, and have pointed to price increases, some of which are huge. Register he was told the bills had gone up by 500 or 600 percent and read the bills about the license fees jumping from $17,000 to $470,000 and $8 million 100 million dollars. Your vulture here has even heard of an organization that thinks going back to bare metal might be cheaper than new VMware licenses.
Broadcom said Register those complaining about the price increases have not calculated the amount properly considering support costs on top of VMware’s old perpetual licenses.
However, the American mega-corporation also promised shareholders that its approach would achieve double-digit revenue growth for its VMware portfolio through 2024.
That’s an unusual growth rate in the enterprise software industry, and even rarer in mature markets like virtualization and hybrid cloud that don’t attract large numbers of new customers each year.
So every other enterprise software vendor in the world is probably watching to see if Broadcom can meet its goals, because if it can, others will certainly be tempted to repeat its tactics.
These tactics are not unique. Cloud Software Group and private equity owners of enterprise software companies do similar things.
But Broadcom is a public company. It has to share its numbers every quarter, then explain itself to investors and do the same at the annual meeting.
So we’ll soon know if Broadcom’s plan worked.
For what it’s worth, your humble vulture thinks Broadcom will get closer to its goal for three reasons.
One is that he probably planned to lose customers – as happened when he bought Symantec.
Another is that migrations from VMware will be painful, and the alternatives outside of Nutanix aren’t overly strong. If Scale Computing was going to get big, it would have already happened. Vendors like SoftIron are probably too small for large customers.
Open source alternatives to VMware aren’t too enticing. OpenStack remains a challenging deployment. Citrix’s interest in server virtualization has been so sporadic that the revamped XenServer must surely prove itself again before attracting new customers beyond those forced to embrace it by dropping the hypervisor from Citrix’s other product suites. The likes of XCP-NG and Proxmox have solid reputations, although they have ecosystems that won’t suit large customers. Many vSphere users will stick around despite inflated bills while they wait for alternatives to mature.
A third reason your correspondent thinks Broadcom will succeed is that VMware customers haven’t organized to fight back except in Europe, where four user associations have asked the European Commission to look into Broadcom’s practices. There is no sign that Europe will act, and even if it does, any decisions will be made so far into the future that most VMware customers will have to accept Broadcom’s licenses.
Broadcom is thus unthreatened.
Except, perhaps, by Microsoft because many VMware users will also be Windows Server clients and have some underutilized or unused Hyper-V privileges that they can put to work to take over virtualized workloads.
You read that right: Microsoft, which developed a dominant gene for predatory licensing when it conquered the PC market in the 1980s and continues to express it today by making its products cheaper when they run on Azure, may soon be the least annoying thing for VMware customers alternative.
Isn’t technology magnificent? ®