Some candid observations about what Broadcom's VMware moves mean to you

We're several months down the road from Broadcom taking over VMware, and we've now seen pretty clearly the moves Broadcom is making.  Additionally, we've heard the talking heads opine about who will be the winners and losers in this environment.  So far, I've been surprised by the lack of clear analysis of what this means for the average End User customer.  So, let me share my views on things, particularly on what it might/could/should mean for End Users.

To begin, VMware has been selling two products that most End Users have deployed for many years.  VMware's flagship product, and the product that pretty much everything else is based on, is vSphere, also known as ESXi.  This is the virtualization product that VMware is known for, since they invented the product in the early 2000s (over 20 years ago...a lifetime in technology).  The other product VMware is known for is vCenter, which is their management plane, allowing users to manage their virtualized environments.  Both products are well regarded, and most organizations have trained their staffs on these products.

For years, VMware sold their products on a perpetual basis.  You would buy a server from Dell or HPE, and then you would buy vSphere licenses for those servers, in some cases, the vSphere licenses cost as much as, or more than the actual server itself.  You also added the new server to your vCenter license.  Again, you paid once for the VMware products and had the ability to use them essentially forever.  Or so you thought.

Keep in mind that the software industry has had a history of changing the way they charge for software.  Some software companies base their charges on CPU cores, some is based on CPU sockets, some is based on number of users, etc.  Originally, most software companies sold their software with perpetual licenses, so that they could realize the revenue up front.  But years ago, the world changed to wanting recurring revenue over time, and subscription licenses became what most software vendors went to.  A good example of this is how you pay for Salesforce; it's not a perpetual license...it's a subscription.  In other words, you're going to have to pay for that software more than once during the time you use it.  Good business for the software manufacturers, and not at all unfair to End Users.

So now Broadcom decided to change from perpetual licenses from subscription licenses.  That in itself should have been a non-story, but the way they went about it was dumb.  Rather than just move from perpetual to subscription, they decided that they wanted to bundle many software products (that End Users may not have a need for) into the subscriptions for the products that most users liked, namely vSphere and vCenter.  The idea was to add perceived value to the licenses as validation of a large cost increase.  That's what made the costs jump. 

It's not anecdotal information about the rise in costs from Broadcom.  In our business, we've seen cost increases ranging from 40% to over 500%.  Of course, an increase of 500% on a base of $1,000 is measured in the small thousands, but to End Users that were paying VMware a million a year, the increase is in the millions.  Real money.

I believe Broadcom must not have a very smart public relations/marketing department.  I mean, the issues they have today are all self-inflicted.  They've decided to run their business a certain way, which is their right, with little regards for End Users.  Again, that's their right, but, as a customer, you don't have to sit there and take it.

The possible winner in this mess is Nutanix.  As many know, my company is a well regarded partner of Nutanix and we know the platform extremely well.  But I think Nutanix's messaging on the Broadcom situation is off a bit.  Nutanix is going around telling everyone that they're a great alternative (and they are) to vSphere and vCenter.  But it's not like you can just purchase Nutanix's vSphere and vCenter products and run them in your existing environment instead of VMware.  Nope, you need to do something else, WHICH IS WHAT I THINK THE REAL BENEFIT TO END USERS IS.

In Nutanix's view, VMware's vSphere and vCenter are not products anymore, but features.  Nutanix is 100% right about this.  You pay large amounts of money for products, but not features.  So why have end Users continued to pay huge sums to VMware/Broadcom for vSphere and vCenter?  My opinion is that it's Newton's first law.  Remember "objects at rest stay at rest"?   Well, End Users have always avoided doing things until they are forced to.  Sure, most technical people were trained in VMware, and even though there may have been better products in the market, End Users stayed with VMware.  Even when there are alternatives that are FREE!  In your personal life, you wouldn't do that, but in business, well, it's the company's money, not mine.

 Let's go back to the discussion about Nutanix.  Nutanix offers two features with their AOS operating system called AHV, which is Acropolis Hypervisor, and Prism.  AHV is the equivalent of vSphere, and Prism is the equivalent of vCenter.  Both are included, at no extra cost, with every node that Nutanix sells.  In other words, you can have the same functionality as VMware at zero cost.  Who wouldn't consider that?

But what is the real benefit I was talking about?  Well, in order to take advantage of Nutanix's AHV and Prism, you have to deploy Nutanix's HCI platform.  This means, you'll be moving from a 30 year old architecture called 3-Tier to a proven 13 year old architecture called Hyper-Converged Infrastructure (HCI).  If you're unfamiliar with HCI, it's because you must not understand the architecture of the Public Cloud.  The Public Cloud uses HCI, and has been for a very long time.

The real benefit comes from moving to HCI with all of its inherent advantages (much higher performance, simplicity, scalability, choice and lower cost).  The ability to eliminate VMware costs is a cherry on top, not the real driver.

To summarize, smart organizations are using Broadcom's actions to take back control over their IT infrastructures, and migrate to a more modern infrastructure (HCI), with its advantages, and positioning themselves to eliminate Broadcom/VMware costs altogether.

If your partner isn't giving you insight like this, feel free to reach out and speak to Roundstone Solutions.  As you can see, we look behind all the headlines to really understand things, so that we can make the best recommendations for you.  We can be reached at 925-217-1177 (office), 925-324-1582 (cell), or [email protected].

​You'll be glad you did.