Company Claims 1,000% Price Hike Drove It From VMware To Open Source Rival (arstechnica.com)
- Reference: 0175581499
- News link: https://slashdot.org/story/24/12/02/2023238/company-claims-1000-price-hike-drove-it-from-vmware-to-open-source-rival
- Source link: https://arstechnica.com/information-technology/2024/12/company-claims-1000-percent-price-hike-drove-it-from-vmware-to-open-source-rival/
> Companies have been discussing migrating off of VMware since [1]Broadcom's takeover a year ago led to [2]higher costs and other controversial changes . Now we have an inside look at one of the larger customers that [3]recently made the move .
>
> According to a report from The Register today, Beeks Group, a cloud operator headquartered in the United Kingdom, has moved most of its 20,000-plus virtual machines (VMs) off VMware and to OpenNebula, an open source cloud and edge computing platform. Beeks Group sells virtual private servers and bare metal servers to financial service providers. It still has some VMware VMs, but "the majority" of its machines are currently on OpenNebula, The Register reported.
>
> Beeks' head of production management, Matthew Cretney, said that one of the reasons for Beeks migration was a VMware bill for "10 times the sum it previously paid for software licenses," per The Register. According to Beeks, OpenNebula has enabled the company to dedicate more of its 3,000 bare metal server fleet to client loads instead of to VM management, as it had to with VMware. With OpenNebula purportedly requiring less management overhead, Beeks is reporting a 200 percent increase in VM efficiency since it now has more VMs on each server.
[1] https://slashdot.org/story/22/05/26/1748248/broadcom-to-acquire-vmware-in-massive-61-billion-deal
[2] https://it.slashdot.org/story/24/10/31/135212/300-price-hikes-push-disgruntled-vmware-customers-toward-broadcom-rivals
[3] https://arstechnica.com/information-technology/2024/12/company-claims-1000-percent-price-hike-drove-it-from-vmware-to-open-source-rival/
The new corporate buyout reality (Score:5, Interesting)
Corporate merger/buyout playbook:
Buy an underperforming property.
Redesign support contracts to maximize vendor lock-in.
Massively reduce staffing.
Crank up the price as high as you can crank it, making up for customer loss by increasing prices further.
Hold for five years.
Spin off the company and its debt into a separate holding company that goes bankrupt, while keeping the profits from those five years.
At some point, we should just accept that companies being allowed to buy/take over other companies is almost always a net loss for humanity, and ban the practice entirely. I can't think of very many counterexamples, and by very many, I mean any, at least when looked at with a long-term view.
Re: (Score:2)
You know, I'd never considered the no-buyouts way of dealing with the creeping domination of all aspects of life by a few hundred corporations, but it's got some merit.
Excellent idea to ban takeovers (Score:2)
Yes, that sounds like a great idea to me. Ban companies from being able to buy or own other companies.
Not only does it fix the corporate takeover problem, but also makes the whole concept of shell companies redundant
My rented vservers have been on KVM all along (Score:2)
I have several from two large providers, one primarily selling to business customers. For the last 5 years or so, they have all been KVM, with zero problems.
Serves em right (Score:2)
This is what you get for price gouging. Broadcom execs should be thankful they are not facing jail time like Martin Shkreli
Subject (Score:2)
We're still using VMWare at work because in an Enterprise environment it works pretty well (and honestly as a developer I don't handle that in my professional capacity anyways - the Infrastructure team does the virtualization stuff).
As someone who used to use ESXi at home for personal stuff though, yeah I've definitely migrated away from it to ProxMox. Not sure if it scales as well to manage multiple hosts, load balancing, etc, but just for cramming a bunch of VM's onto a single piece of hardware it works
Broadcom is just all-in on VMware Cloud Foundation (Score:2)
Why do people have such a hard time wrapping their heads around this? All Hock Tan cares about is VMWare Cloud Foundation. Their first 10-K after the acquisition did not list a engineering line items for anything else. So everything else is a Cash Cow -- which for those who have not been around long enough translates to: 1) Invest Nothing 2) Maximize Cash extraction from clients with no long term "goodwill" objectives. Which is exactly what we see occurring, so it should not be a surprise.
Sorry, not 1000% (Score:2)
If the price goes up by a factor of 10, that is an increase of 900%, not 1000%.
I have never met a journalist who can correctly calculate increases or decreases as a percentage change.
Only one explaination (Score:2, Insightful)
Broadcom wanted to buy VMWare so they didn't have to pay for it.
They didn't want to sell it as a product, so they're pricing out all the customers.
If the price gouging pays for the aquisition before all the customers are lost... it's a net win
Re: (Score:2)
That would be destructive and evil on an impressive level. On the other hand, it is Broadcom.
Re: (Score:2)
> That would be destructive and evil on an impressive level
That's modern capitalism. Short-term profits while ignoring both long-term revenues and externalities. This is not always the case, but it's usually the case, and this is the case which is rewarded by the market (which, again, focuses on short-term profits).
At investor calls for Costco, investors often complain that Costco overpays their employees and could increase immediate profits by paying employees less. Of course, Costco employees are rabidly loyal and the company has an incredibly small internal t
Re: (Score:2)
Enterprises that are in for the long haul are pillars of society. The short-term greedy ones just make some assholes rich and society as a whole much poorer.
CVS has something call "Buy & Close" (Score:2)
where they buy local pharmacies just to close them down so they can jack up prices after claiming all the customers.
I suspect that's Broadcom's goal. Open source software might mean it doesn't work, but it's hard to say since we've had almost no anti-trust law enforcement and this last election has killed off what little there was.
Re: CVS has something call "Buy & Close" (Score:2)
For VMware, the core customers are so change adverse they will pay a lot of money to keep things exactly the same, as change is risk.
See also, mainframe. For the values it provides, customers are mainly those that embraced the platform when it was popular and are terrified of any change.
Re: (Score:2)
I think it's more likely that Broadcom wants to be an Oracle. They don't want the high cost of supporting customers that actually need a lot of hand holding, so by pricing things high enough, the companies that can switch away do so, leaving only the big fish that need little support, but pay big money just in case they do at some point in the future.
Re: (Score:2)
> I think it's more likely that Broadcom wants to be an Oracle. They don't want the high cost of supporting customers that actually need a lot of hand holding, so by pricing things high enough, the companies that can switch away do so, leaving only the big fish that need little support, but pay big money just in case they do at some point in the future.
Hmm, MySQL meet MariaDB?
Re: (Score:2)
Or the big fish that need a lot of support, by way of expensive Broadcom supplied consultants.
Re: (Score:2)
Buying a company with 38K employees to avoid paying for software licenses seems like an expensive way to go. Actually laying off everyone except the core engineering is going to be more work than simply taking some open source project and staffing it up. Almost any size staff is doing to be smaller than the barest minimum you could trim a bloated company like VMware down to.
I think Broadcom had some kind of plan in mind with the purchase. Perhaps some bundling of products (although that can lead to antitrus