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In recent months, Broadcom's VMware Cloud Foundation division, responsible for flagship infrastructure software, reduced its offerings from nearly 1,000 to just two bundles. Additionally, perpetual license sales, allowing indefinite software use with a one-time payment, were replaced by a full subscription payment model. The company also laid off hundreds of VMware workers, although Broadcom hasn't commented on this.
The division claims that these changes result from feedback indicating their offerings were too complex. They believe streamlining the portfolio will provide better value for customers. Moving to a subscription model is aimed at delivering continuous innovation, faster time to value, and predictable investments.
VMware, founded in 1998, pioneered virtualization, a crucial element in the development of cloud computing. With approximately 330,000 customers, the company focuses on helping clients navigate the challenges of a corporate IT environment involving multiple cloud providers and their own data centers.
Chief information officers are closely monitoring these changes. Some express concerns about price increases and declining support levels. Broadcom's strategy of focusing on its top 600 customers has led some CIOs to reconsider their relationship with the company.
Todd Florence, CIO of Estes Express Lines, notes that being outside the top 600 customers makes him apprehensive about future support. This, coupled with price increases and support degradation, has prompted him to explore alternatives.
Broadcom's strategy, which emphasizes cross-selling and upselling to a core base of 600 business customers, differs from the typical software industry approach. Some customers, like Goya Foods CIO Suvajit Basu, are considering reducing reliance on VMware due to potential price hikes or licensing changes.
Moving away from VMware can be costly and time-consuming, requiring specialized talent, according to Tracy Woo, a principal analyst at Forrester Research. Forrester estimates that in 2024, 20% of VMware customers will begin transitioning to alternatives.
Despite concerns, Stephen Elliot from International Data Corp sees the product portfolio simplification as an opportunity for customers to derive more value from their VMware purchases. He believes it also requires VMware and Broadcom to actively engage with customers to highlight the increased value.
In conclusion, while some customers express reservations about the changes, there is optimism that the simplification could lead to better value and more focused engagement from VMware and Broadcom