Broadcom Acquisition: How VMware Users are Taking a Hit

When it comes to cloud computing and server virtualization, VMware has long dominated the market. In November of 2023, IC design company Broadcom acquired VMware, officially marking its entry into the cloud market and setting into motion a firestorm of changes for employees, partners, and clients alike.

While the acquisition was announced well in advance, many failed to realize the far-reaching impact and weren’t prepared for the long-term residual effects these changes would bring about. This has particularly presented a challenge for businesses that rely heavily on VMware for their data center operations.

The acquisition has had, and continues to have, repercussions on organizations across the globe. We highlight what key decision-makers can and should do to fortify their infrastructure and prevent potential fallout.

TOP CONCERNS & CONSIDERATIONS

In response to the many impactful changes that the VMware acquisition has brought about, some organizations have decided to stay the course for stability and future planning purposes. Meanwhile, others are considering moving away from VMware entirely. Here are the top three concerns those in the C-Suite and on boards of directors must keep in mind when determining the best path to take for their companies.

PRICE UNCERTAINTY

There is the factor of cost to consider. Specifically, companies must weigh the costs associated with staying with VMware, taking a hybrid approach, or switching to a whole new platform altogether. In any case, there will inevitably be a significant price to pay.

Many businesses were not prepared for the sudden and marked increase in expenses that resulted from the acquisition, especially small businesses with limited budgets. The sticker shock has caused some companies to reevaluate their entire infrastructure setup. The European Union’s antitrust regulators announced an investigation into Broadcom’s sudden policy and practice changes for VMware licenses. These changes, which seem to have resulted in steep price increases, re-bundled licenses, a ban on license reselling, and a refusal to maintain security conditions for perpetual licenses, raise concerns about potential anti-competitive behavior.

Others may be wary to implement any major changes, but they must then take into consideration spikes in vendor pricing that are just now becoming more known. For example, companies on enterprise packages of VMware are starting to discover price increases of anywhere from three to ten times what they were paying previously. This could result in spending hundreds of thousands of dollars more annually, causing budgetary burdens and leading many to reconsider staying with VMware.

Changing vendors may not end up being as cost-effective as expected either. For instance, one competitor of VMware responded to the influx of new business by promptly doubling their prices. Adding taxes and other charges will ultimately result in higher prices for consumers, as these costs are typically passed down through the supply chain. This will lead to inflationary pressures on all products and services.

Furthermore, the trickle-down effects of infrastructure platform changes, expenses being passed on to customers, and transitions to new mobile device management (MDM) platforms may lead to disruptions in workflows, delays in project timelines, and communication issues for clients and customers.

Companies that are fully cloud-based may not notice any changes in costs up front; however, if their suppliers, subcontractors, and retailers are impacted, costs will likely still increase across the marketplace.

It’s critical that decision-makers be aware of the evolving landscape and increased prices, as well as the long-term impact they will have, so that they can accurately plan and budget accordingly.

ATTRITION OF KEY COMPONENTS

One of the primary concerns for VMware customers arose shortly after the acquisition was finalized, when the newly formed partnership decided to divest several of VMware’s end-user computing products.

For instance, integrated offerings like Horizon View and Workspace ONE, which were inherent components of the VMware infrastructure solutions, were sold off and Carbon Black is slated for sale also.

Prior to the divestment, these offerings were commonly bundled together with other VMware products for the purpose of managing mobile devices and providing access to corporate resources. The sale of these offerings to other companies may affect users who purchased them as part of a bundle with VMware products.

Specifically, users will now need separate licenses from VMware and these third-party buyers, causing potential issues for businesses that rely on the platform.

In response, some companies have turned to open source solutions, or integrated HCI hardware vendors, negating one of the main benefits of VMware having reliable corporate support with a broad base of compatible hardware. Not only is this approach inefficient, but it also leaves businesses much more vulnerable to potential security breaches.

Business leaders must identify specific areas of need resulting from VMware’s product line divestitures and determine whether it would be best to augment those areas with multiple independent tools and platforms, or if adopting an entire new comprehensive setup would be the wiser and more secure option.

STAFFING WOES

With VMware’s disintegration of some popular product lines and the increasing popularity of alternatives, like AWS and Azure specialization, the result will be that the number of experienced VMware engineers will decrease. We expect to see skilled professionals starting to diversify and move to other platforms.

Adding to the concern is the discontinuation of the free ESXi version in early 2024. This popular option allowed students and home labbers to experiment with the platform, fostering a pipeline of skilled professionals entering the workforce. Without this entry point, there’s a risk of a future talent shortage for those with practical VMware experience.

In most cases, when a company transitions to a new IT platform, they won’t eliminate their existing team but instead educate them on the new system. This education process is important because even if the new platform can perform the same tasks as the old one, the process of accomplishing those endeavors may be quite different. Retaining the existing team and providing training is often the key to a successful transition.

Ultimately, decisions will need to be made to determine whether it’s more cost-effective to outsource to a Managed Service Provider, reskill/upskill existing employees, hire new staff, or establish some sort of hybrid arrangement. Due to its long-term ripple effects, this decision will require careful and strategic consideration.

KNOW YOUR OPTIONS

Determining whether to stick with VMware for the long-term or switch is no easy feat—especially for key stakeholders who are not in the day-to-day IT trenches.

For decision-makers facing increased expenses and uncertainty about the future, partnering with a company like Marcum Technology can help in considering all the potential impacts and understanding the bigger picture of changes in the marketplace.

Not only are we experts at consulting others on how to modernize their infrastructure and effectively utilize technology, but having successfully navigated the transition away from VMware for Marcum Technology, we have gained invaluable first-hand experience with the entire process, end-to-end.

Our seasoned consultants can perform a strategic IT assessment to determine whether your organization should stay with your current setup, find a new vendor, or move to the cloud. For instance, we may recommend transitioning to the public cloud, such as Azure, as part of a long-term IT strategy, which avoids unnecessary expenses and ensures a smooth migration process.

Additionally, our infrastructure services team can help with restructuring data centers or moving to the cloud by providing staff augmentation, including project managers and engineers to help plan and execute the necessary changes for a smooth transition.

If you are one of the many companies facing monumental changes due to the acquisition of VMware, there’s no need to navigate these waters alone. Marcum Technology can help you confidently make the important decisions necessary to position your organization for continued success. For more information, contact [email protected].