As the industry awaits the expected close of the $61 billion Broadcom-VMware deal, research firm Forrester says ‘beleaguered’ VMware customers want other options. Cloud partners ShapeBlue and Crayon, and vendor VergeIO, agree.

Kelly Teal, Contributing Editor

November 10, 2023

6 Min Read
VMware alternatives

As the $61 billion Broadcom acquisition remains in limbo, a significant number of enterprise customers and cloud service providers are on the hunt for VMware alternatives.

In fact, 20% of current VMware users will begin their “escape” in 2024, according to a recent note from Forrester.

“The impending acquisition of VMware by Broadcom has cast a shadow on an already beleaguered VMware customer base,” write Michele Pelino and Naveen Chhabra, both principal analysts for the research firm, in an Oct. 30 blog, “Predictions 2024: Technology Infrastructure Addresses A Tumultuous Environment.”

“Many are exhausted by significant price hikes, degrading support and mandatory subscription to software bundles in which some modules such as NSX and Aria Suite/vRealize Suite end up as shelfware,” Pelino and Chhabra note. “Subsequently, many of VMware’s enterprise clients are exploring alternatives to its virtualization, cloud management, end user computing, and hyperconverged infrastructure products despite the company’s dominance in these technologies. In 2024, Forrester predicts that 20% will begin their escape.”

Broadcom Deal ‘Has Introduced a High Level of Uncertainty’ for VMware Users

Companies including ShapeBlue, VergeIO and Crayon concur with Forrester.

Related:Broadcom CEO Pledges Investment in Channel When Broadcom-VMware Deal Closes

“[T]he deal has introduced a high level of uncertainty regarding future pricing policies and innovation strategies with existing customers,” Giles Sirett, CEO and founder of ShapeBlue, an Apache CloudStack integrator and cloud channel partner, wrote in a Sept. 27 blog.

ShapeBlue's Giles Sirett

Indeed, Sirett added, a survey that ShapeBlue conducted in August found that 52% of organizations adopting CloudStack did so to get out from under VMware. A year earlier, the figure only stood at 8%, per ShapeBlue.

“In the last few months, we have seen massive interest in Apache CloudStack as an enabler for people to remove their VMware lock-in,” Sirett added. “In terms of what’s driving our customer’s projects, the situation with VMware currently accounts for more than half of those projects.”

Aaron Richman, director of business development at VergeIO, agreed that organizations are looking for VMware alternatives.

“One of the most immediate and worrisome impacts of the Broadcom-VMware deal is the potential decline in customer support quality,” Richman recently wrote on LinkedIn. “VMware has built a strong reputation for its customer-centric approach, with timely responses to inquiries and robust technical support. Unfortunately, Broadcom's track record in this department leaves much to be desired.”

Related:What’s Next for Broadcom-VMware as China Holds Up Clearance?

Andreas Bergman, global lead for hosting partners at global managed service provider Crayon, made a similar point in a late September blog.

“Some customers are already reporting changes in their account teams, with resource shifts that may affect the level of engagement they receive from VMware,” Bergman said. “While this is still unfolding and not a conclusive sign of the acquisition’s impact, it does raise questions about the level of attention smaller customers may receive in the future.”

VMware Alternatives: Not Just About Support — Cost Matters, Too

There’s also fear around Broadcom raising VMware prices — in spite of Broadcom CEO Hock Tan’s ongoing assertions to the contrary.

“As Broadcom seeks to recoup its investment in VMware, there is a real risk that they will hike up licensing fees and subscription costs, leaving businesses to foot the bill,” Richman said.

Again, Tan has declared that will not happen.

Broadcom's Hock Tan

“The answer is simple: No,” Tan wrote last December, after publishing a similar statement two months earlier. “Following the close of the transaction, we will invest in and innovate VMware’s products so we can sell even more of them and grow the VMware business within enterprises, deepening and expanding the footprint instead of potentially raising prices,” Tan said.

However, observers are not so convinced. 

“Previous acquisitions, such as CA Technologies, have seen customers experiencing significant increases in the total amount spent, even if the company claimed not to have raised prices, wrote Crayon’s Bergman. “This is often due to changes in the negotiation process, such as reduced discounts. And, with VMware also moving from per-socket to per-core licensing, customers may find themselves paying substantially more without technically experiencing a price increase.”

ShapeBlue’s Sirett and VergeIO’s Richman both agreed.

“For obvious reasons, organizations are worried now about their long-term dependency on VMware,” Sirett said.

“The impending acquisition of VMware by Broadcom is a development that warrants serious concern from VMware customers,” Richman noted.

Guidance for Organizations Looking at VMware Alternatives

To that point, VergeIO just issued guidance for organizations — including channel partners — assessing VMware alternatives.

First, the vendor said, examine whether switching to a VMware alternative would reduce and simplify licensing costs. After that, look for additional factors including:

  • Smoother workflow processes

  • Longer hardware lifespan

  • Elimination of separate storage infrastructure

  • Improved data protection

  • Enhanced ransomware resiliency

And, while cost should not serve as the sole determining factor in a migration off VMware, it does stand out as a key consideration. That’s especially true as executives across organization types — enterprises, vendors and channel partners themselves — pay greater attention to outlay amid ongoing inflation and other economic disruptions. ShapeBlue’s Sirett says VMware alternatives can deliver results CFOs and other finance-centric personnel will welcome.

“The migration from VMware to … [other] IaaS environments can not only save companies from long-term infrastructure issues and worries but seems to bring significant cost decreases,” he said.

Channel Partners Best Positioned to Help Customers with VMware Alternatives

Above all, the channel can — and should — take the lead in helping customers decide whether, and how, to pursue VMware alternatives, Crayon’s Bergman advised.

“As VMware customers navigate the changes that VMware is already making, let alone the ones to come, resellers and channel partners will play a crucial role in providing support and guidance,” he wrote. “They can help customers understand the intricacies of licensing changes, manage their existing infrastructure and keep them informed about industry developments. Moreover, they can monitor the evolving situation post-acquisition and provide insights on the best courses of action.”

Broadcom-VMware Update

The Broadcom purchase of VMware was expected to close on Oct. 30 but China’s regulatory authority is holding up the transaction. Observers say the country is retaliating for U.S. President Joe Biden’s recent dictate to tighten exports of advanced chips. 

Even so, CEO Tan continues to take an optimistic stance. After reportedly meeting with officials from China a week after the VMware close didn’t happen, he made a brief appearance at VMware Explore in Barcelona.

“We will accelerate the pace of innovation, step up R&D,” he told customers and partners. “Next, we intend to invest much more in the VMware ecosystem of value-added resellers, distributed OEMs, managed service providers and global system integrators to make our products more available and much easier to deploy and consume. Finally, we will make ourselves and our products easier to deal with.”

Broadcom announced in May 2022 that it would acquire VMware for $61 billion.

About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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