Two years ago, Broadcom acquired VMware for almost US$70 billion in what was the biggest IT acquisition to date.
Was there any change at all? Not that I noticed…only joking!
Broadcom really rattled the gates with customers, partners, its ecosystem and its internal teams.
Was the acquisition worth the money and will VMware Cloud Foundation win the IT world?
This blog post looks at how SoftwareOne, Crayon and our customers are facing into this change.
Legacy VMware’s portfolio was huge, encompassing more than 15 business units, each with its own products, go-to-market strategies, and countless article numbers. At times, it felt like you needed to master the Dark Arts just to keep up with this plethora of product options.
Broadcom took an opposite approach, divested the EUC division (now operating as Omnissa), put Carbon Black in Broadcom’s Enterprise Security division and centered on the core offering: VMware Cloud Foundation.
This is complemented by a few smaller bundles for the mid-market. Everything is available through subscription aligning with industry standards. VMware had been one of the few organizations still clinging to a perpetual model, and it has now caught up with everyone else.
These moves made sense.
Only a handful of customers really used VMware Cloud Foundation previously. Legacy VMware had a “pick and choose” model and many customers had an array of VMware products, rarely following a standard operating model.
So what did Broadcom do?
Simplification was key. It packaged everything into one bundle: server, storage, network virtualization and management. Was it deeply integrated back then? Not really, albeit the components are all industry-leading products but the issue was that they were developed in silos by different business units. It was far from a perfect offering and it was clear it needed some serious TLC.
Broadcom’s favorite investment bucket is research and development. The moment it was clear that VCF was the solution to go for, Broadcom invested massively in its development. As a result, VCF 9 is no longer a loose collection of former VMware products. The bundle has really evolved into one product. But pure X-Virtualization with an immaculate management console will not be sufficient to establish a true Private Cloud.
The simple answer is the one that delivers more value to customers.
For years, hyperscalers have been on the rise because there was simply no counterweight on the private side. VMware vSphere has long dominated the market, but most customers have continued to operate in silos within their on-premises data centers with separate teams for storage, network, Kubernetes, and management. Some collaborated closely, others barely knew each other.
Different vendors have traditionally aligned with these separate teams and, of course, interoperability was limited by design. That made it easy for the hyperscalers who could sell Infrastructure-as-a-Service (IaaS) like sliced bread. But that was only the first step. To become truly sticky with customers, providers had to offer more: Kubernetes, database, codeless development tools, hot and cold storage, Database-as-a-Service and as much automation and AI as possible.
How does Broadcom counter this?
Admittedly, Broadcom started from a much larger customer base. Approximately 70% of all customers use vSphere for Server Virtualization already. Adding VCF Operation and Automation Management is a logical choice.
In addition, we expect customers to invest significantly in VMware Storage and Network Virtualization in the upcoming years. But that is just the beginning. Broadcom understands that to outpace public offerings they must enrich VCF with more services.
They have done exactly that.
Micro segmentation, private AI, native containers, and Kubernetes support, cyber resiliency and recovery, failover mechanisms, disaster recovery, DevOps support, and an excellent developer experience: all these core and add-on services now bring VMware VCF closer to the “real” cloud ideal.
VCF 9 is another step to a real private cloud platform: easily consumable, self-healing, unified, all workloads, fully automated and AI-enabled.
Of course, challenges remain. Traditional/ HCI/ cloud storage vendors as well as those in networking will continue to defend their positions. Still, customers who fully embrace VMware gain the best of what public clouds have to offer and more. Within private clouds, data residency is no longer a concern, customers maintain full control and responsibility for their data on service quality, latency is rarely an issue and third parties have limited access. Outages are less of a concern as there is no dependency on the hyperscalers.
Just as important there are no egress charges. This makes cost control in private clouds far easier. While the public cloud market continues to grow at double-digit rates, private cloud adoption is currently expanding even faster. In fact, we are even seeing some customers repatriate specific workloads from hyperscaler environments to on-premises clouds.
Let’s face it, the new standard is hybrid. Most of our customers now use private and public cloud solutions side by side as well as deploying a growing number of SaaS applications. In the hybrid cloud segment, VMware by Broadcom also offers an excellent value proposition.
VCF 9 not only runs in customers’ on-premises data centers, but also with selected service providers and major hyperscalers (including Azure VMware Solution, Google Cloud VMware Engine and AWS Elastic VMware Service). Many mission-critical workloads of customers already run on VMware stacks, and even the hyperscalers have recognized this by offering VMware-based services within their hyperscaler data centers.
Introducing bundles and new license metrics overnight, fewer direct contacts, and pricing adjustments tied to new feature-rich bundles: communication hasn’t been Broadcom’s core strength and customers have been surprised by the suddenness of these changes.
That’s why partners like us matter more than ever. Many customers were, at best, frustrated when the news landed. But once the smoke cleared, we looked at the facts together. The truth emerged that VMware products are more critical and harder to replace than many assumed. Even if a customer wants to replace them, would they be willing to pay the same or even more for a new stack?
Perhaps that is why we have rarely seen customers moving away from VMware purely based on cost. In some advisory engagements, we have discovered that moving away from VMware often takes years. Industry analyst research backs this up showing that enterprise companies should expect a large-scale migration from VMware’s service virtualization platform to take anywhere from 18-48 months. Incidental costs (training on the new solution stack, higher initial support needs, potential new hardware) can push TCO even higher.
As a rule of thumb, if customers look at VCF purely as a tool for server virtualization (i.e. want to use vSphere-only) they might consider alternatives. But if they want to build up a truly software-defined data center aka Private Cloud, VCF will offer most likely the lowest TCO conditions.
On the technical side, many customer teams have been impressed by the new bundles.
Comments we’ve heard include:
The key takeaway from all of this is: be open-minded. As a former VMware CEO said: Never waste a good crisis.
Do your due diligence or run a VMware Advisory Project with us to compare VMware to alternatives. Factor in training, migration and other incidental costs. Jointly calculate TCO for each option and if it fits your operating model, consider a hybrid solution that blends the best of both worlds.
At first, it was quite a struggle. A new partner program, new focus products, a new go-to-market approach – those early months were tough, and we often found ourselves as the last direct contact for customers navigating the changes.
Fast forward 24 months, and our partnership with Broadcom is stronger than ever. We continue to deepen our collaboration and are proud to be recognized for our commitment and expertise. Stay tuned for an exciting update on our formal partnership status soon.
Contact us to learn more about how we can help you optimize your VMware investments.
Ready to discuss VCF 9? Get in touch with our specialists for tailored advice and solutions to make the most of your VMware investments.
Ready to discuss VCF 9? Get in touch with our specialists for tailored advice and solutions to make the most of your VMware investments.
