“As companies grow larger and larger, they create a lot of complexity internally, across different business functions. What Hock brings to the table is not only a lot of experience and understanding of how to drive efficient operations, but also a lot of clarity with regards to the financial objectives and what customers should expect down the road. There’s a level of simplification and focus,” Elliot said.
Changes to partner programs and licensing models
Broadcom is transitioning VMware’s licensing model from perpetual software licenses to annual subscriptions, although this process began about a year before the acquisition. It ended VMware’s partner program and is moving customers to an invite-only Broadcom Advantage Partner Program, effective February 5, 2024. All VMware partner incentive programs will end on or before February 4, 2024, according to a letter sent to partners and posted on a Reddit board for VMware users.
A Broadcom spokesperson issued the following statement: “Broadcom remains committed to creating value within our combined ecosystem, which has been made stronger with the addition of VMware partners. Effective February 5, 2024, Broadcom will be transitioning VMware’s partner programs to the invitation-only Broadcom Advantage Partner Program. Based on recent discussions with hundreds of partners globally, this transition will help our partners achieve even greater opportunities for profitability through simplified bundled offerings and more opportunities for service revenues.”
Will customer defections come to fruition?
Before the deal even closed, Forrester Research estimated that up to 20% of VMware’s enterprise customers were planning to at least look into switching to a new virtual machine stack in the coming year.
While the confusion around VMware has been good for Oxide’s business, Tuck said most VMware customers are under long-term contracts and likely couldn’t get out of them too soon. He added: “I think every VMware customer is evaluating what’s the right strategy. And I think their findings of what the alternatives are, what the path to those alternatives are, are going to result in what percentage of those customers end up actually moving. But I think that feels like a conservative estimate,” he said.
IDC’s Elliott, meanwhile, said the opposite is happening. “There are customers that have actually already renewed [contracts]. They renewed after the deal was announced. And they’re renewing their license agreements after it has closed. So there are a lot of customers that are moving forward,” Elliott said.
