Managing uncertainty is a required skill for CIOs and IT pros, especially those who are dealing with business changes following Broadcom’s acquisition of VMware, according to Steve McDowell, principal analyst and founder of NAND Research.
“Uncertainty is the enemy of IT, McDowell said in a wide-ranging interview with The Forecast by Nutanix.
“Consistency and predictability — that's all any IT leader wants. They have all these digital transformation projects and initiatives on their plates. They don’t need more distractions.”
However, there’s been a constant flow of uncertainty and disruption for VMware customers since the data center virtualization pioneer agreed to be acquired by Broadcom in 2022. McDowell said that changes rolled out since the acquisition completed in 2023 have forced many IT leaders to ask important questions:
- Should VMware customers move to a new virtualization platform when their contracts expire over the next three to five years?
- How does VMware’s switch to a new bundled pricing structure affect IT operations and expenses?
- How well does VMware’s current technology align with the latest wave of cloud-native infrastructures and applications?
- Will partnering with multiple virtualization providers help IT leaders manage uncertainty in the years ahead?
According to McDowell, part of the confusion stems from Broadcom’s attempts to communicate with the technology community about key elements of the acquisition. Tech-industry publications regularly cover complaints from VMware customers about the transition and discuss them in forums, including Reddit.
“You're hearing a lot of bad-guy stories right now and that gets clicks,” McDowell said.
He added that the negative headlines about VMware are striking because the company has a long reputation for keeping its developers happy. He said people took note when the evangelists supporting VMware customers were among the first people fired after the merger became final.
Impact of VMware Product Bundling
At the beginning of 2024, McDowell wrote an in-depth report outlining the fundamental changes confronting VMware customers. He explained that when they renew their VMware contracts, IT leaders will have to choose between two primary bundles: vSphere Foundation (VVF) and VMware Cloud Foundation (VCF).
“VMware will stop selling individual products outside of these bundles,” he wrote. “Popular products like Aria Suite, NSX Networking and vSAN can now only be purchased as part of a bundle.”
Thus, customers who want only one or two parts of a bundle must buy the whole thing, potentially paying for products they aren’t using. Additional add-ons can be purchased separately.
“By bundling, they're effectively raising prices,” McDowell told The Forecast. He suggested the biggest changes could happen to vSphere Enterprise customers now required to upgrade to the new VVF or VCF bundles. They may find that features in their current subscriptions can be purchased only as an add-on, piling on more costs.
In his report, McDowell encouraged VMware customers to read their pricing agreements closely to make sure they fully understand the scope of the new pricing structure: “Broadcom’s stewardship of VMware over the coming fiscal year will be a critical test of its strategic vision for enterprise software dominance,” he wrote. “While Broadcom is clearly focused on getting the financial aspects of the acquisition quickly under control, how the company will deliver long-term value to its VMware customers remains unclear.”
McDowell told The Forecast that large enterprise customers will most likely work out the nuances of these agreements with their VMware account manager, but mid-market and mid-enterprise, however, are unlikely to get the same attention.
Migrating Off of VMware
In May 2024, Broadcom CEO Hock Tan had to squelch reports that the flagship VMware offering on AWS, VMC wouldn’t run on Amazon Web Services (AWS) anymore. McDowell said that every time customers have to deal with a significant product change, even if it’s followed up with an explanation, it creates chaos because customers discuss their concerns in forums and competitors jump in with their offers to help.
“You have everybody from HPE to Nutanix to various storage companies out there saying, ‘We can give you a better alternative’,” McDowell said.
Editor’s note: learn the steps for migrating to Nutanix from VMware and the VMware to Nutanix Promotion (visit nutanix.com/migrationoffer to view full offer details). Also read 6 Simple Steps to Fast VMC-on-AWS Migrations.
He explained that for VMware customers, it’s tempting to take those offers but the switch often comes with technical challenges. Since a muffed migration could disrupt business operations, so McDowell expects many IT leaders will instinctively try to stick with what they know.
“VMware lives in the land of three- and five-year subscriptions, so there's not going to be a mass migration,” McDowell said.
But over the next few years, IT decision makers will have to assess whether they have the right technology to handle the challenges ahead.
“It's a big effort to migrate and you're asking me to switch while I'm also trying to figure out this AI thing and solve all my cybersecurity problems,” McDowell said.
This confluence of uncertainty is something a lot of IT leaders don’t want to deal with, he added. But many are taking this time to learn about alternatives as they seek resilience and formulate a Plan B.
Ready for a Cloud Native Future?
VMware rose to prominence by simplifying virtualization in on-prem environments. Today, hybrid cloud or hybrid multicloud is the IT model of choice, according to the 2024 Enterprise Cloud Index report. Added to this shift, McDowell also sees an accelerating use of containers and microservices that can run across modernized data centers and public cloud services.
“What does the future of infrastructure management look like?” McDowell asked. “It doesn't look like traditional virtualization. As soon as I start crossing cloud boundaries, that dies.”
McDowell noted that there’s little doubt that VMware’s enterprise customers will need old-school virtualization tools.
“A lot of people are just going to swallow the license and bundling impacts at least in the midterm,” he said. “But greenfield projects are probably not going to VMware. I think if I'm doing a new project, I'm going to look at cloud native.”
This shift is giving IT teams more reasons to move away from VMware to a new software platform for managing applications and data across private data centers and public cloud services.
Ultimately, IT leaders must find their way even if all their questions aren’t answered.
“You mitigate risk by balancing the options,” McDowell said. “A big part of this is having a second source — start mixing it in as new projects come up.”
One point of certainty: hybrid cloud operations and cloud native applications are the way forward, McDowell said.
“The mechanics are different, but conceptually they’re very similar,” he said. “Neither of them really looks like what VMware was delivering. And that's the future.”
Editor’s note: Learn about the Nutanix Kubernetes Platform, an enterprise-ready cloud native stack for running containerized applications across hybrid multicloud IT environments in this press release and blog post.
Tom Mangan is a contributing writer. He is a veteran B2B technology writer and editor, specializing in cloud computing and digital transformation. Contact him on his website or LinkedIn.
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