Dell kills sweetheart distribution deal with Broadcom's VMware
(2024/01/31)
- Reference: 1706657712
- News link: https://www.theregister.co.uk/2024/01/30/dell_terminates_vmware_distribution_agreement/
- Source link:
Updated Dell has terminated its distribution deal for VMware products.
A [1]regulatory filing in the US today reveals Dell has written to Broadcom terminating a "commercial framework agreement" forged in November 2021 between Dell and VMware, which is now owned by Broadcom.
That [2]agreement was struck on the same day Dell and VMware [3]parted ways – back when Big Mike's Bespoke Computer Barn decided to pay down some debt by making Virtzilla a standalone company.
[4]
In those far-off days, Dell was still all-in on VMware, which is why their agreement sought to "formalize the commercial relationship between the parties in order to maintain the mutual strategic advantage between Dell and VMware [and] to affirm the parties' interest in continuing to collaborate on solutions and a go-to-market (GTM) strategy."
[5]
[6]
The agreement added: "With respect to certain technologies and GTM activities, the parties' respective products and services work better together to create advantages and value for customers."
Nothing has changed that would make such collaboration less beneficial for customers. Nothing, that is, other than Broadcom's decision to stop allowing manufacturers like Dell to resell licenses for VMware's products – a consequence of the chip giant's plan to stop selling perpetual VMware licenses and instead insist on software subscriptions that bundle many products.
[7]
That decision has not been well-received – neither by OEMs, who lose a line of revenue, nor by customers who quite liked buying bundled licenses with hardware because doing so is often more efficient than buying them separately.
[8]Amid Broadcom's subscription push, VMware killed a SaaS product
[9]Veeam researching support for VMware alternative Proxmox as backup buyers fret about Broadcom
[10]Broadcom ditches VMware Cloud Service Providers
[11]Broadcom re-orgs VMware into four divisions – none of which mention end-user compute products
Dell's filing cites the original agreement's allowance for its VMware distribution deal to be dissolved after a "change of control" at either party. Broadcom's acquisition of VMware certainly represents such an event.
Whether this also represents Dell losing interest in VMware is harder to say. Despite Broadcom's swingeing changes at VMware in its first few weeks as the virtualization giant's owner, the vStack remains very competitive. It would be a huge call for Dell to throw its support behind a rival.
The Register 's virtualization desk fancies this filing is therefore a legal nicety that terminates an agreement that is no longer appropriate seeing it was struck to meet the needs of a particular moment in 2021 – but was perhaps timed to make a point about Broadcom's change to OEM licenses.
We've asked Dell to explain its decision and will update this story if we receive a substantive reply. ®
[12]
Updated at 12:15 AM January 31st, UTC A Dell spokesperson sent the following statement: "Broadcom is an important and valued partner for Dell Technologies. We will continue to evolve our relationship with Broadcom to deliver value to our business and our customers and partners."
Get our [13]Tech Resources
[1] https://investors.delltechnologies.com/node/15351/html
[2] https://www.sec.gov/Archives/edgar/data/1571996/000119312521315488/d146470dex101.htm
[3] https://www.theregister.com/2021/11/01/vmwares_divorce_dell/
[4] 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=2ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%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=4&c=44ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%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=3&c=33ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%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=4&c=44ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/01/24/vmware_subscriptions_evolve/
[9] https://www.theregister.com/2024/01/22/veeam_proxmox_oracle_support/
[10] https://www.theregister.com/2024/01/10/broadcom_ends_vmware_partner_program/
[11] https://www.theregister.com/2023/11/23/broadcom_vmware_reorg/
[12] 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=33ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://whitepapers.theregister.com/
A [1]regulatory filing in the US today reveals Dell has written to Broadcom terminating a "commercial framework agreement" forged in November 2021 between Dell and VMware, which is now owned by Broadcom.
That [2]agreement was struck on the same day Dell and VMware [3]parted ways – back when Big Mike's Bespoke Computer Barn decided to pay down some debt by making Virtzilla a standalone company.
[4]
In those far-off days, Dell was still all-in on VMware, which is why their agreement sought to "formalize the commercial relationship between the parties in order to maintain the mutual strategic advantage between Dell and VMware [and] to affirm the parties' interest in continuing to collaborate on solutions and a go-to-market (GTM) strategy."
[5]
[6]
The agreement added: "With respect to certain technologies and GTM activities, the parties' respective products and services work better together to create advantages and value for customers."
Nothing has changed that would make such collaboration less beneficial for customers. Nothing, that is, other than Broadcom's decision to stop allowing manufacturers like Dell to resell licenses for VMware's products – a consequence of the chip giant's plan to stop selling perpetual VMware licenses and instead insist on software subscriptions that bundle many products.
[7]
That decision has not been well-received – neither by OEMs, who lose a line of revenue, nor by customers who quite liked buying bundled licenses with hardware because doing so is often more efficient than buying them separately.
[8]Amid Broadcom's subscription push, VMware killed a SaaS product
[9]Veeam researching support for VMware alternative Proxmox as backup buyers fret about Broadcom
[10]Broadcom ditches VMware Cloud Service Providers
[11]Broadcom re-orgs VMware into four divisions – none of which mention end-user compute products
Dell's filing cites the original agreement's allowance for its VMware distribution deal to be dissolved after a "change of control" at either party. Broadcom's acquisition of VMware certainly represents such an event.
Whether this also represents Dell losing interest in VMware is harder to say. Despite Broadcom's swingeing changes at VMware in its first few weeks as the virtualization giant's owner, the vStack remains very competitive. It would be a huge call for Dell to throw its support behind a rival.
The Register 's virtualization desk fancies this filing is therefore a legal nicety that terminates an agreement that is no longer appropriate seeing it was struck to meet the needs of a particular moment in 2021 – but was perhaps timed to make a point about Broadcom's change to OEM licenses.
We've asked Dell to explain its decision and will update this story if we receive a substantive reply. ®
[12]
Updated at 12:15 AM January 31st, UTC A Dell spokesperson sent the following statement: "Broadcom is an important and valued partner for Dell Technologies. We will continue to evolve our relationship with Broadcom to deliver value to our business and our customers and partners."
Get our [13]Tech Resources
[1] https://investors.delltechnologies.com/node/15351/html
[2] https://www.sec.gov/Archives/edgar/data/1571996/000119312521315488/d146470dex101.htm
[3] https://www.theregister.com/2021/11/01/vmwares_divorce_dell/
[4] 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=2ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%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=4&c=44ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%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=3&c=33ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%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=4&c=44ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/01/24/vmware_subscriptions_evolve/
[9] https://www.theregister.com/2024/01/22/veeam_proxmox_oracle_support/
[10] https://www.theregister.com/2024/01/10/broadcom_ends_vmware_partner_program/
[11] https://www.theregister.com/2023/11/23/broadcom_vmware_reorg/
[12] 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=33ZbnT9Vv6RYB9IAK2HkbP-wAAAMM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://whitepapers.theregister.com/
biddibiddibiddibiddi
Does this mean Dell won't sell systems with VMware already installed, and maybe won't even certify systems to work with VMware products specifically? Or are they just going to end up working out some other sort of agreement so that Dell will continue to do those things BUT not have to pay any money to do it since they're not earning anything on licensing, and as mentioned by another user, probably provide zero support, and terminating the agreement so forcefully is just kind of a way to slap Broadcom's wrists so they understand that VMware needs Dell more than Dell needs VMware?
Puts a lot more pressure on VMware's tech support team(s)
At least with HPE, and I assume Dell and probably others, when you bought VMware through them they typically provided the tier 1 & 2 vmware support (at least for hypervisor+vCenter can't speak to other products), they could escalate to VMware's team as well if needed. (though have heard in general all of them are pretty terrible across the board for support quality).
Fortunately haven't really needed their support in a long time(only have had one serious support incident to me with VMware in the past 17 years of using ESXi, when a windows based vCenter corrupted itself(OS level corruption, though the DB was in Oracle on a Linux system and was unaffected) and I was just looking for the best way to recover out of paranoia, in the end the recovery was simple(reinstall new OS, new vCenter, point at existing DB) just took support a week to communicate it properly, didn't know if doing that would cause the hosts to freak out or not and in the end hosts didn't care as I assumed they wouldn't but wasn't 100% sure), keep configs simple and years behind the curve means less problems(and less headaches dealing with support).
But it sounds like Broadcom already terminated the deal by saying Dell (and HPE and others) can't resell their stuff. Not as if it being a subscription has anything to do with it, Dell I'm sure resells subscriptions to lots of things, tons on the Microsoft side at least. Will be interesting to see the fallout over the year, I'm assuming it will be pretty big, but time will tell of course.