I Made 9 Bold Broadcom Predictions One Year Ago

At the start of 2024, I made nine predictions for VMware users facing the uncertainty of Broadcom’s VMware acquisition. There have been many turns in the road since then, so let’s check out how those predictions played out. The results may surprise you!

Prediction Outcomes

1. Some VMware customers will pay more: True 

This was easy to predict and played out as expected. Customers experienced effective price increases when perpetual licenses were eliminated, when new minimum core counts exceeded physical server cores, and when individual high-volume products were eliminated.

Many independent reports support that customers are paying more, including industry analyst Forrester Research who highlighted reports of price increases ranging from 400% to 700% (Chhabra, 2024). Scharon Harding of Ars Technica similarly noted that VMware customers reported a 300% rise in costs (Harding, 2024).

2. Legacy storage payback periods will lengthen: True

When I made this prediction, Broadcom had eliminated the vSphere Ent+ SKU as a standalone offering which pushed all legacy 3-tier customers to bundled SKUs that included vSAN.

While Broadcom recently re-instated the vSphere Ent+ SKU, the company continues to prioritize VCF which requires a 4 node vSAN management domain that will extend the payback period of virtualized servers. Gartner recently stated, "By 2028, cost concerns will drive 70% of enterprise-scale VMware customers to migrate 50% of their virtual workloads."¹

3. Channel partners will reduce VMware investments: True

Broadcom is taking VMware’s 500 biggest customers (Harding, 2024) directly while ChannelE2E (Carlisle, 2024) reported that Broadcom cut 10,000 of VMware’s 28,000 channel partners. This frontal assault on the VMware partner ecosystem is just beginning to play out with Ingram Micro, the second largest technology distributor, announcing they will drop VMware support January 1, 2025 (Johnson, 2024).

4. Expect Dell, HPE and Lenovo to similarly reduce VMware investments: Missed this one!

Infrastructure decision-makers don’t move quickly and VMware OEM partners continue to support VMware offerings while customers work through their off-ramp strategies.  

Take note, however, that server OEMs are leaning into alternatives. Cisco and Dell both signed expanded partnership agreements with Nutanix, which will help customers minimize exposure to further Broadcom pricing, support, and legal actions.  

5. VMware EUC offerings may become more open: Not yet but stay tuned!

I was a little early in the prediction but directionally correct. Broadcom’s definitive agreement to sell VMware’s EUC business, rebranded Omnissa, proved to be true (Iyer, 2024). This sets the stage for customers to manage Broadcom risk by working with alternative infrastructure providers, including Nutanix

6. VMC may no longer be a VMware-managed service: I missed the big picture here.

Yes, AWS stopped selling VMC.  But the big story was that Hock Tan blew up the VMware hybrid cloud ecosystem by announcing the cloistered datacenter of the 1980s is Broadcom’s new vision with hyperscalers introducing cost, complexity, and compliance risk (Tan, 2024). 

Amazon responded quickly and decisively. AWS stopped selling VMC (Robinson, 2024) and then increased investment with Nutanix (Mellor, 2024). Nutanix and Broadcom strategies could not be more diametrically constructed - Nutanix envisions a connected hybrid future where apps and data can be optimally located across edge, datacenter and public cloud environments.

7. Dell may shift VxRail focus to PowerFlex: True

Broadcom pricing and control strategies insert risk for customers - but also for partners, including Dell. Nutanix publicly committed to introduce AHV support for Powerflex with Nutanix Cloud Platform which is the first time Nutanix will support a converged storage system.

In addition, Dell now sells and supports the Nutanix-powered Dell XCPlus appliance, a Dell-branded alternative to VxRail with factory-loaded Nutanix software.

8.  DPU Adoption May Slow: Debatable

The adoption of DPUs in the datacenter has been near zero. So, it’s tricky to say that Broadcom slowed adoption in the past year. However, Broadcom’s focus on maximizing profits from mature products would suggest that this new technology area will be relegated to the back burner.

9. Customer support may change: True

Customer support from VMware is changing rapidly, driven by re-orgs, shifts in reseller coverage, and divestiture of product lines. The EU has raised concerns with Broadcom about its changes to licensing and support (Foo Yun Chee, 2024).

The fallout has led to legal action, with AT&T claiming that Broadcom had “breached contract” and was “bullying” them into buying Cloud Foundation at a price 1,050% higher than before (Sharwood, 2024).

Nutanix can help you build a more predictable future

Nutanix is pleased to be offering customers integrity and trust in a time of great upheaval. We have the great fortune to be a trusted advisor to 27,000 customers with an NPS over 90 and we are helping customers every day build strategies to better manage Broadcom risk.

We welcome the chance to share our innovative strategies to manage Broadcom risk as you build out cloud native applications, Generative AI workflows, and hybrid cloud deployments.

To learn more, visit www.nutanix.com/vmware-alternative.

¹ Gartner, Inc, Market Guide for Server Virtualization, 28 August 2024, Michael Warrilow, Philip Dawson, Tony Harvey, Elaine Zhang. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

References:

Carlisle, S. A. (2024, February 14). Broadcom outlines streamlined VMware partner program. ChannelE2E.
https://www.channele2e.com/news/broadcom-cuts-vmware-partner-program-by-10k

Chhabra, N. (2024, June 20). Navigating the disruption of Broadcom’s acquisition of VMware. Forrester.
https://www.forrester.com/what-it-means/ep372-vmware-options/

Foo Yun Chee. (2024, April 15). Broadcom questioned by EU over VMware licensing changes. Reuters.
https://www.reuters.com/technology/broadcom-questioned-by-eu-over-vmware-licensing-changes-2024-04-15/

Harding, S. (2024, October 31). 300 percent price hikes push disgruntled VMware customers toward Broadcom rivals. Ars Technica.
https://arstechnica.com/information-technology/2024/10/a-year-after-broadcoms-vmware-buy-customers-eye-exit-strategies/

Harding, S. (2024, December 5). Broadcom reverses controversial plan in effort to cull VMware migrations. Ars Technica.
https://arstechnica.com/information-technology/2024/12/new-broadcom-sales-plan-may-be-insignificant-in-deterring-vmware-migrations/

Iyer, S. (2024, February 26). End-user computing division embraces its future as a standalone business. Omnissa.
https://www.omnissa.com/insights/broadcoms-euc-division-embraces-its-future-as-a-standalone-business/

Johnson, O. (2024, December 16). "Ingram Micro axes Broadcom: No longer ‘doing business.’" CRN.
https://www.crn.com/news/data-center/2024/ingram-micro-no-longer-doing-business-with-broadcom

Mellor, C. (2024, November 7). Nutanix tightens ties with AWS on hybrid cloud solutions. Blocks & Files.
https://blocksandfiles.com/2024/11/07/easier-access-to-nutanix-cloud-clusters-on-aws/

Robinson, D. (2024, May 7). VMware waves goodbye to AWS middleman as Broadcom takes the reins. The Register.
https://www.theregister.com/2024/05/07/broadcom_vmware_aws/

Sharwood, S. (2024, October 16). AT&T and Broadcom may settle VMware support case. The Register.
https://www.theregister.com/2024/10/16/att_broadcom_vmware_settlement_possible/

Tan, H. (2024, August 27). The future of the enterprise is private. Broadcom.
https://www.broadcom.com/blog/the-future-of-the-enterprise-is-private

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