Broadcom ditches VMware Cloud Service Providers
(2024/01/10)
- Reference: 1704908180
- News link: https://www.theregister.co.uk/2024/01/10/broadcom_ends_vmware_partner_program/
- Source link:
Exclusive Broadcom is tossing the majority of VMware's Cloud Services Providers as part of its shakeup of the virtualization titan's partner programs, say sources, leaving customers unclear who their IT supplier will be.
The $61 billion purchase of VMware by Broadcom in November was [1]swiftly followed by news of how it planned to reorganize the business into several Broadcom divisions. A month later we revealed that Broadcom intended to [2]discontinue VMware's channel program, and that some solution providers/ resellers would be transitioned to its own scheme, but on an invitation-only basis, from February.
However, while Broadcom informed one part of VMware's channel of this change, a second notice was also sent to Cloud Services Providers (CSPs), informing them that their program is going to be terminated at the end of April. This program allows service providers such as smaller cloud operators to sell a VMware-based cloud service.
[3]
In the letter, seen by The Register , Broadcom tells its cloud provider partners: "Effective April 30, 2024, the ability to transact as a VMware Cloud Services Provider, under the VMware Partner Connect Program, will come to an end. However, we want to emphasize that you may have the opportunity to join the Broadcom Expert Advantage Partner Program. This invite-only program has simpler requirements and offers expanded benefits, and we will begin inviting partners to join in early 2024."
[4]
[5]
One service provider told us their company had been left in the dark since that letter was received, and Broadcom has given them no indication of whether they will be invited to join its partner program or not, or what their customers are supposed to do if the company loses the right to operate a VMware cloud service.
"I don't know how many smaller providers are affected by this but it must be a very large number," the source told us. "The VCSP program was the only way for MSPs and service providers to offer a multi-tenant VMware-based cloud service."
[6]
Chatter among some in the industry is that Broadcom is only interested in keeping the largest and most profitable customers, and the company simply doesn't care about the smaller users and the providers that service them. Unconfirmed fears that are only ten percent of Vmware's biggest CSPs will be invited to the new master program.
"This all sounds very much like Broadcom taking an aggressive approach to its route to market and focusing on those partners that can deliver growth and significant revenue," said Omdia chief analyst Roy Illsley.
"I suspect the intention is to ensure that VMware consists of only profitable products and they are sold in a more cohesive way with the rest of Broadcom. So I expect to see some news on this continuing to come out for most of 2024 as the company puts this plan into action. I would not rule out disposals of some assets in a drive to streamline the portfolio to those that fit with Broadcom's strategy."
[7]
Running a big channel can be expensive - although not as expensive as running a direct sales force.
Regardless of the reason, there must be many smaller providers that face losing their right to operate VMware cloud services on April 30, and their customers might be completely unaware of the need to migrate to a new provider at short order.
[8]Broadcom to end VMware's channel program, move partners to its own invite-only offering
[9]VMware's end-user compute products are for sale. Who might buy 'em?
[10]VMware channel partner rates new product bundles and subs-only licenses 'very attractive'
[11]Broadcom halves subscription price for VMware's flagship hybrid cloud suite
It is probable that many of these customers will find themselves ending up on one of the larger cloud providers, which are understood to have a different relationship with VMware. The VMware Cloud on AWS service, for example, is operated and supported by VMware itself.
This would be ironic as Broadcom itself used the spin that its takeover of VMware would [12]actually lead to more competition in the cloud market, back when it was trying to sweet talk European Union antitrust regulators into giving it the go-ahead.
The notion that the Broadcom-VMware merger might stifle competition was precisely why various regulatory bodies around the globe decided to look closely at the deal before allowing it to proceed. However the regulators focused on whether Broadcom (which makes chips) might limit VMware's compatibility with rival hardware, and may thus have been focused on the wrong problem.
It is doubly ironic as the UK antitrust watchdog, the Competition and Markets Authority (CMA), is currently [13]looking into potential measures to address the domination of the domestic cloud market by the large cloud providers.
A service provider source told us they were still trying to comprehend this decision by Broadcom.
"How can they just cancel a major program affecting hundreds, perhaps thousands of customers, with zero notice, and zero details?" the source asked. "They sent the notices out the Friday before the holidays, with no follow-up, which makes the situation even more egregious. What are we supposed to tell our customers? It's mind-boggling."
We asked VMware and Broadcom for a response, but they had not responded by the time of publication. ®
Get our [14]Tech Resources
[1] https://www.theregister.com/2023/11/23/broadcom_vmware_reorg/
[2] https://www.theregister.com/2023/12/28/broadcom_vmware_partner_transition/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2023/12/28/broadcom_vmware_partner_transition/
[9] https://www.theregister.com/2023/12/19/vmware_euc_sale_speculation/
[10] https://www.theregister.com/2023/12/15/vmware_by_broadcom_update/
[11] https://www.theregister.com/2023/12/12/vmware_broadcom_licensing_changes/
[12] https://www.theregister.com/2022/10/17/broadcom_vmware_cloud_eu/
[13] https://www.theregister.com/2023/10/20/cma_cloud_monopoly_remedies/
[14] https://whitepapers.theregister.com/
The $61 billion purchase of VMware by Broadcom in November was [1]swiftly followed by news of how it planned to reorganize the business into several Broadcom divisions. A month later we revealed that Broadcom intended to [2]discontinue VMware's channel program, and that some solution providers/ resellers would be transitioned to its own scheme, but on an invitation-only basis, from February.
However, while Broadcom informed one part of VMware's channel of this change, a second notice was also sent to Cloud Services Providers (CSPs), informing them that their program is going to be terminated at the end of April. This program allows service providers such as smaller cloud operators to sell a VMware-based cloud service.
[3]
In the letter, seen by The Register , Broadcom tells its cloud provider partners: "Effective April 30, 2024, the ability to transact as a VMware Cloud Services Provider, under the VMware Partner Connect Program, will come to an end. However, we want to emphasize that you may have the opportunity to join the Broadcom Expert Advantage Partner Program. This invite-only program has simpler requirements and offers expanded benefits, and we will begin inviting partners to join in early 2024."
[4]
[5]
One service provider told us their company had been left in the dark since that letter was received, and Broadcom has given them no indication of whether they will be invited to join its partner program or not, or what their customers are supposed to do if the company loses the right to operate a VMware cloud service.
"I don't know how many smaller providers are affected by this but it must be a very large number," the source told us. "The VCSP program was the only way for MSPs and service providers to offer a multi-tenant VMware-based cloud service."
[6]
Chatter among some in the industry is that Broadcom is only interested in keeping the largest and most profitable customers, and the company simply doesn't care about the smaller users and the providers that service them. Unconfirmed fears that are only ten percent of Vmware's biggest CSPs will be invited to the new master program.
"This all sounds very much like Broadcom taking an aggressive approach to its route to market and focusing on those partners that can deliver growth and significant revenue," said Omdia chief analyst Roy Illsley.
"I suspect the intention is to ensure that VMware consists of only profitable products and they are sold in a more cohesive way with the rest of Broadcom. So I expect to see some news on this continuing to come out for most of 2024 as the company puts this plan into action. I would not rule out disposals of some assets in a drive to streamline the portfolio to those that fit with Broadcom's strategy."
[7]
Running a big channel can be expensive - although not as expensive as running a direct sales force.
Regardless of the reason, there must be many smaller providers that face losing their right to operate VMware cloud services on April 30, and their customers might be completely unaware of the need to migrate to a new provider at short order.
[8]Broadcom to end VMware's channel program, move partners to its own invite-only offering
[9]VMware's end-user compute products are for sale. Who might buy 'em?
[10]VMware channel partner rates new product bundles and subs-only licenses 'very attractive'
[11]Broadcom halves subscription price for VMware's flagship hybrid cloud suite
It is probable that many of these customers will find themselves ending up on one of the larger cloud providers, which are understood to have a different relationship with VMware. The VMware Cloud on AWS service, for example, is operated and supported by VMware itself.
This would be ironic as Broadcom itself used the spin that its takeover of VMware would [12]actually lead to more competition in the cloud market, back when it was trying to sweet talk European Union antitrust regulators into giving it the go-ahead.
The notion that the Broadcom-VMware merger might stifle competition was precisely why various regulatory bodies around the globe decided to look closely at the deal before allowing it to proceed. However the regulators focused on whether Broadcom (which makes chips) might limit VMware's compatibility with rival hardware, and may thus have been focused on the wrong problem.
It is doubly ironic as the UK antitrust watchdog, the Competition and Markets Authority (CMA), is currently [13]looking into potential measures to address the domination of the domestic cloud market by the large cloud providers.
A service provider source told us they were still trying to comprehend this decision by Broadcom.
"How can they just cancel a major program affecting hundreds, perhaps thousands of customers, with zero notice, and zero details?" the source asked. "They sent the notices out the Friday before the holidays, with no follow-up, which makes the situation even more egregious. What are we supposed to tell our customers? It's mind-boggling."
We asked VMware and Broadcom for a response, but they had not responded by the time of publication. ®
Get our [14]Tech Resources
[1] https://www.theregister.com/2023/11/23/broadcom_vmware_reorg/
[2] https://www.theregister.com/2023/12/28/broadcom_vmware_partner_transition/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/virtualization&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZZ8hmToFZTNmWSs9I6JCYQAAAAM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2023/12/28/broadcom_vmware_partner_transition/
[9] https://www.theregister.com/2023/12/19/vmware_euc_sale_speculation/
[10] https://www.theregister.com/2023/12/15/vmware_by_broadcom_update/
[11] https://www.theregister.com/2023/12/12/vmware_broadcom_licensing_changes/
[12] https://www.theregister.com/2022/10/17/broadcom_vmware_cloud_eu/
[13] https://www.theregister.com/2023/10/20/cma_cloud_monopoly_remedies/
[14] https://whitepapers.theregister.com/
Re: The End
NoneSuch
*GASP* He said the P word!
Let's all say it together. PROXMOX.... Oh, I feel so dirty, but also sooooooo goooood!
Re: The End
Nate Amsden
I'm guessing these cloud providers use more sophisticated vmware software (probably vCloud and other stuff that I've never used) and Proxmox wouldn't be a suitable alternative out of the box (any more than ESXi+ vCenter by itself would be). They'd probably have to do quite a bit of custom work(provisioning/billing/resource management) which was probably why they decided on VMware to begin with to reduce the amount of work their staff had to do. Of course the biggest cloud players do all of that work anyway so don't need vmware.
They could probably try the OpenStack route but that would be a whole other can of worms with tons of new skills/staffing required in most cases, the small providers won't have the expertise to do it, and it may not be cost effective because of that.
sucks for them for sure though.
Re: The End
Throatwarbler Mangrove
Serious question: does Proxmox just replace the hypervisor, or does it have a good management interface as well? VMware brought virtualization to the masses by centralizing management and making it easy to use, whereas most open source projects spit contemptuously on the mere notion that usability might even be a concept worth momentarily contemplating pursuing (witness Kubernetes).
Note to cloud providers...
IGotOut
...hear is my advice.
"Unfortunately VMware / Broadcom has ceased our contract with ourselves and many other providers with little or no warning, therefore your service has now ceased. You may wish to move to their service, where they may decide to cancel your contract in a similar manner and / or provide the service at a much greater cost. Our advice is to look elsewhere for your VM requirements, as they clearly don't care about you and will no doubt fuck you over again at some point in the future.
Yours, Cloud Provider"
The End
... and this is the beginning of the end of VMware. Proxmox seems to be shaping up nicely!