VMWare: Will It Thrive or Decline?

VMWare is a leading company mainly known for its virtualization technology. I remember my first encounter with their product back in 2005 when I used the VMWare solution to create a virtual Linux server on a Windows laptop, helping me simulate a fully functional and portable client-server development environment.

Since then, virtualization has evolved significantly and now plays a crucial role in cloud computing. Many advantages of cloud computing, such as resource optimization, flexibility, cost efficiency, and scalability, are byproducts of virtualization technology.

In November 2023, Broadcom completed its acquisition of VMware. This acquisition, valued at approximately $69 billion, is one of the largest in the technology sector. A few months after this acquisition, Broadcom announced some radical shifts in VMWare’s long-standing perpetual licensing, moving to subscription licensing. This change has caused a lot of uncertainty for small and medium Managed Service Providers (MSPs).

The history of Broadcom acquisitions shows that the price reshuffling strategy has been used in the past. After Broadcom purchased CA Technologies in 2018 and Symantec in 2019, customers of the two companies “saw massive price hikes and stalled development,” according to Forrester Research .

Hyperscalers such as AWS and Microsoft Azure have not been directly impacted since they use alternative or in-house technologies. However, their clients using VMWare products and services have been equally affected.

Considering other serious virtualization providers such as Nutanix and Citrix, and even reliable open-source solutions like KVM, the question arises: what was Broadcom’s motivation to change VMWare’s business strategy?

It’s not very clear if the new VMWare strategy shift is based on customers’ willingness to pay predictions or simply considering the high switching costs in their calculus. However, moving to other solutions might be a one-way journey!

Have you benefited or been impacted by VMWare’s recent strategy change? Feel free to share your thoughts or comments and let me know if something is wrong or missing.

Image credit: Image created using Microsoft Copilot

Useful links/resources:

Broadcom Explains VMware Strategy Amid Product 'Confusion' (datacente VMware Customers: Get Ready For Broadcom Disruption (forrester.com) Chipmaker Broadcom completes $69bn deal to buy VMware (bbc.com)

#BusinessStrategy #Broadcom #VMWare

#Virtualization

#ManagedServices #CloudComputing