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One of the largest acquisitions in tech history, valued at $61 billion, has sparked significant interest and speculation, raising concerns for customers and partners alike. 

Broadcom’s acquisition of VMware on November 22, 2023, sent shockwaves through the tech world. With VMware holding a 44.8% market share in virtualisation, customers were left wondering how this change would affect them. Concerns ranged from price hikes to service model shifts and service quality drops to fundamental changes in service models.

In reality, it’s too early to fully understand the acquisition’s impact, as many customers are still under their current contracts. The most significant change felt by customers to date is the sunsetting of the VMware vSphere Hypervisor (free edition), which has been marked as End of General Availability (EOGA) with no equivalent replacement product announced. 

Aside from the handful who have begun the move away from VMware, we’ve found that from our conversations with a range of customers, most fall into one of the following groups:

  1. Staying with VMware 
  2. Adopting a Wait-and-See Approach 
  3. Exploring Alternatives

Staying With VMware

According to Statista’s report in December 2023, VMware was the leading virtualisation technology with approximately 44.8% market share, reflecting its dominant and incumbent position. For many businesses, these technologies are deeply entrenched, having been integral to their operations for years, and will likely see out their remaining lifespan in the data centre. 

For these organisations, a significant portion of these installations is mission-critical and embedded within bespoke processes and complex dependencies that would be challenging to reconfigure. Although it is often said that where there is a will, there is a way, some may view this transition as a resource-intensive project they would rather not undertake. The potential risks of significant downtime and operational challenges outweigh the rewards, making a change less appealing for many. For others, the decision to stay with VMware is driven by product satisfaction.  

VMware has long been regarded as the gold standard for virtualisation, evolving from enabling x86 servers to run multiple virtual machines (VMs) to offering advanced solutions in virtual desktop infrastructure (VDI), mobile device management (MDM), and data centre virtualisation. This proven history of innovation and reliability has reassured customers, encouraging them to weather the storm and continue with VMware despite the uncertainties of the acquisition. 

The Wait & See Approach

Despite hints at new licensing terms, restructuring of the partner model, and proposed changes in service levels, it is still too soon to determine how these factors will impact organisations. When speaking on Broadcom’s Q4 2023, CEO Hock Tan, emphasised VMware’s new strategy aimed at focusing global enterprises to seamlessly deploy applications across data centres and public clouds using VMware’s software stack. This strategic shift could pose challenges for smaller businesses relying on VMware, whose solutions may no longer fully meet their needs. Moreover, smaller enterprises that do not fit the global enterprise profile may find themselves facing potential restrictions or limitations when using VMware. 

For those in this group, there is anticipation of potential price increases and upcoming changes. As VMware license renewals approach, prolonged negotiations are likely, leading to delays and heightened complexity in finalising terms.  Historically, Broadcom’s acquisitions have significantly disadvantaged small to midsize businesses, influencing pricing, cost structures, purchasing channels, and support levels disproportionately. 

Only the largest customers wield sufficient negotiating power to challenge VMware’s licensing terms. Meanwhile, all other businesses are bound by Broadcom’s conditions, with resources predominantly allocated to servicing the needs of the highest revenue clients. This dynamic often leaves smaller enterprises to navigate the complexities independently. 

Given these uncertainties, having a plan B is crucial. Without one, organisations risk making rushed decisions if they choose to pivot away from VMware. By using this time to thoroughly understand their current environment, dependencies, potential impacts, and necessary actions for various future scenarios, organisations will be better prepared. This proactive preparation can help mitigate risks, making alternative options less daunting and facilitating more strategic, informed choices. 

Exploring Alternatives

Faced with the decision point now or proactively preparing for their upcoming VMware renewal, some customers are exploring alternative vendors, technologies, and approaches to diversify their options and reduce their dependency with VMware. 

Today, many alternatives are accessible on the market, making it challenging to justify being locked into a single vendor. However, the landscape of viable options may not be as diverse as it appears. Windows-based solutions, while mainstream, are sometimes less feature-rich and require specific expertise that some companies may lack. On the other hand, Linux-based hypervisors demand extensive technical skills, which can be a significant barrier. While for SMB, options like Proxmox and Virtuozzo exist, but these may not fully meet the rigorous demands of enterprise organisations.  

The suitability of these alternatives depends heavily on the specific context and requirements of each organisation, including how they align with operational needs, strategic goals, and long-term vision. In the quest to find the optimal solution between staying with VMware or transitioning to alternatives, the decision encompasses weighing risks, complexities, pros, and cons that impact cost structures, service levels, support quality, and integration capabilities. 

To navigate these complexities, IT leaders are crafting robust contingency plans and exploring alternatives (including plans C and D!). They’re considering ‘how can we empower organisations to make informed decisions and mitigate risks effectively?’. They are focused on empowering organisations to ensure alignment with their strategic objectives and operational needs. 

The Next Steps

Whether you are preparing for a VMware renewal or exploring alternative solutions, thorough preparation is key. Start by examining your current environment and identifying any dependencies on VMware products. Then, consider conducting a comprehensive assessment of all available options to better understand the pros, cons and risks for alternative technologies which can help your organisation make better and informed decisions when faced with upcoming renewal discussions. 

Navigating the best course of action can be daunting without time or expertise. Many organisations turn to strategic partners to ensure they have the support and guidance to assess impacts and consider viable solutions thoroughly. 

At Nephos, we combine technical expertise and the strategic business value of traditional professional service providers to deliver innovative data solutions. We collaborate closely with a network of partners well-versed in navigating these complexities. Our goal is to mitigate the stress and risks associated with transitions, ensuring your IT strategy remains resilient and aligned with your business objectives. As the tech landscape evolves post-acquisition, preparing now ensures you’re ready for whatever changes may come. Interested in knowing how ? Click here.

Stephen Morgan

With a career spanning more than ten years, Stephen has a wealth of experience in pre-sales and analytics roles. His thought leadership content reflects his expertise in leveraging the latest trends in data infrastructure. Through his content, Stephen explores innovative technologies and methodologies that revolutionise how organisations store, process, and analyse data.

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