Category: Cloud

Cloud

How will Broadcom’s Acquisition of VMWare Impact Private Cloud Customers?

By Broadleaf Services

The tech world has been buzzing with the news of Broadcom’s $69 billion acquisition of VMWare last November, a move that has significant implications for the future of cloud computing. This acquisition raises important questions for private cloud customers deeply invested in VMWare’s products and services. In this blog, we delve into the potential impacts of this corporate shake-up on these customers.

Understanding the Acquisition

Broadcom, primarily known for its semiconductor and infrastructure software products, is now stepping firmly into the cloud services arena with the acquisition of VMWare. The move is seen as a way for Broadcom to build out its multi-cloud strategy. VMWare, a major player in cloud computing and virtualization, is a backbone for many private cloud infrastructures. VMWare commands more than 70% of the global market for virtualization infrastructure with more than 500,000 customers, according to Gartner.

VMWare has had many owners over the years. EMC purchased the company in 2004, and Dell took over in 2016 following its $67B purchase of EMC. In 2021, Dell spun out shares of VMWare, which paved the way for the Broadcom acquisition. The company will operate as VMWare by Broadcom.

As software-defined edge (SDE) computing takes a an increasingly starring role in digital transformation, Broadcom stated its plans to drive a more streamlined go-to-market strategy at the intersection of its newly acquired edge computing stack, SD-WAN and SASE (now branded as VeloCloud), and telco platform products.  The three portfolios will merge into a single, specific market—the Software-Defined Edge—with a streamlined go-to-market versus the previous distinct product groups.

The company says this move will enable its partners and customers to drive revenue, whether they are a Global 2000 corporation or a “mom and pop” shop.

Potential Impacts on Pricing and Costs

One of the immediate concerns for private cloud customers is how this acquisition might affect their bottom line. Mergers and acquisitions can often lead to a restructuring of service pricing.  VMWare by Broadcom announced in December 2023 that it would “dramatically simplify” the offer lineup and licensing model by shifting to subscription licenses. The move was meant to simplify a complex internal structure at VMWare that made it difficult for customers to integrate products.

With this change, customers can only buy perpetual licenses. A new bring-your-own subscription license option has been introduced but customers with existing perpetual licenses cannot migrate or trade into the new subscription.

Cloud subscriptions typically can incur higher cumulative costs compared to one-time purchases and necessitate a tighter approach to financial management and planning. Although reliable data on VMWare price increases is anecdotal, Forrester predicts that 20% of the VMWare customers will drop off the platform in 2024.

December was also the month that Broadcom announced the abrupt termination of its partner agreements with VMWare resellers and services providers. The company is forcing existing partners to reapply, potentially leaving smaller partners in the lurch and customers scrambling to find a new reseller or partner.

The move signals Broadcom’s desire to focus on its largest 2,000 customers via direct sales and leave the smaller players to either drop out or accept potentially less favorable pricing and agreements moving forward.

Dell, one of VMWare’s largest resellers and OEM partners, recently decided to opt for early termination of their strategic partnership agreement. The move highlights the turbulence and headwinds the VMware product line is facing and Dell’s need to establish a strategic path forward for their legacy VMware customers.

Product Continuity and Support

Another significant concern revolves around the continuity of VMWare’s product offerings.  Broadcom has moved swiftly to shelve a series of VMWare products as standalone offers, now considered End of Availability (EOA). These products include:

  • VMWare vSphere Enterprise Plus
  • VMWare vSphere+
  • VMWare vSphere Enterprise
  • VMWare vSphere Standard (excluding subscription)
  • VMWare vSphere ROBO
  • VMWare vSphere Scale Out
  • VMWare vSphere Desktop
  • VMWare vSphere Acceleration Kits
  • VMWare vSphere Essentials Kits
  • VMWare vSphere Essentials Plus (excluding new subscription offering)
  • VMWare vSphere Starter/Foundation
  • VMWare vSphere with Operations Management
  • VMWare vSphere Basic
  • VMWare vSphere Advanced
  • VMWare vSphere Storage Appliance
  • VMWare vSphere Hypervisor (free edition)
  • VMWare Cloud Foundation/VCF+/VCF-S (excluding new VCF subscription offering)
  • VMWare Cloud Foundation for VDI
  • VMWare Cloud Foundation for ROBO
  • VMWare SSDC Manager
  • VMWare vCenter Standard
  • VMWare vCenter Foundation
  • VMWare vSAN
  • VMWare vSAN ROBO
  • VMWare vSAN Desktop
  • VMware vSAN+
  • VMWare HCI Kit
  • VMWare Site Recovery Manager
  • VMWare Cloud Editions/Cloud Packs
  • VMWare Cloud Suite
  • VMWare Aria Suite
  • VMWare Aria Universal Suite
  • VMWare Aria Suite Term
  • VMware Aria Operations for Networks
  • VMWare Aria Operations for Networks Universal
  • VMware vRealize Network Insight ROBO
  • VMWare Aria Operations for Logs
  • VMware vRealize Operations 8 Application Monitoring Add-On
  • VMware Aria Operations
  • VMware Aria Automation
  • VMware Aria Suite Cloud for US Public Sector
  • VMware Aria Automation for Secure Hosts add-on
  • VMware vRealize Automation SaltStack SecOps add-on
  • VMware Aria Operations for Integrations
  • VMware Cloud Director
  • VMware Cloud Director Service
  • VMware NSX
  • VMware NSX for Desktop
  • VMware NSX ROBO
  • VMware NSX Distributed Firewall
  • VMware NSX Gateway Firewall
  • VMware NSX Threat Prevention to Distributed Firewall
  • VMware NSX Threat Prevention to Gateway Firewall
  • VMware NSX Advanced Threat Prevention to Distributed Firewall
  • VMware NSX Advanced Threat Prevention to Gateway Firewall
  • VMware Advanced Load Balancer
  • VMware Container Networking Enterprise with Antrea
  • VMware HCX
  • VMware HCX+

Customers who have purchased perpetual licenses can still use their products, but once their current SnS contracts end, they will not be eligible to access VMware support or update to newer versions.

In a recent blog, VMWare by Broadcom explains the strategy as summarized in one word:  Simplification. The changes include a transition from selling perpetual licenses to subscription licensing only; a streamlined what, how, and through whom the company will sell its software; and an internal reorganization around VMWare Cloud Foundation strategy to streamline execution.

The company states it’s putting all its R&D investment towards fewer offerings and bringing all product teams into the VMWare Cloud Foundation division.

Innovation will be focused on VMWare Cloud Foundation and VMWare vSphere Foundation, along with some very strategic add-ons related to security, ransomware protection and recovery, application platform services and private AI.

And because all customers may not be ready to consume VMWare Cloud Foundation, the company says its thousands of reseller partners will drive adoption of VMWare vSphere Foundation. In the corporate segment, the company will support co-selling with CSP partners.  The commercial segment will be 100% owned and led by reseller partners to reduce channel conflict.

Strategic Changes and Long-term Outlook

Broadcom’s acquisition of VMWare isn’t just a business transaction; it’s a strategic move that may redefine the landscape of cloud computing.  The company certainly has a huge amount of capital to build, make, and affect that change. Part of the issue, according to Information Week, is that hyperscalers don’t currently play nicely with each other. VMWare excels in the abstraction layer by creating visibility across cloud providers, so the underlying infrastructure works seamlessly. If cloud providers start to cooperate by standardizing and integrating some of their services so that users don’t have to rely on tools for that seamless visibility and management, VMWare may be in trouble.

The balance between cloud growth and continued on-prem computing could also affect VMWare’s place as a major player in virtualization. Dennis Smith, distinguished VP analyst with Gartner, says about one-quarter of workloads have moved to the public cloud. That means there’s approximately three-fourths of workloads still on-prem, mainly sitting on VMWare. Some of it may never move into the public cloud.

Smith sees virtualization as the hotbed of competition in today’s market, with dynamic cloud providers, Red Hat, Nutanix and others jumping in. How Broadcom approaches its ownership of VMWare will be key to what comes next. If they “gut” the company as they have with previous software acquisitions such as Symantec and CA Technologies, it could be a disaster. To date, Broadcom management has said that will not be the case. They don’t feel VMWare was in the same state of disarray as some of its previous acquisitions.

What’s Next

The acquisition of VMWare by Broadcom marks a significant moment in the cloud computing industry. While the full impact of this move will unfold over time, private cloud customers of VMWare must stay informed and adapt to the changing landscape. This acquisition could herald new opportunities, but also requires careful navigation to ensure continuity and stability in their cloud infrastructure.

If you are concerned about how Broadcom’s acquisition of VMWare might affect your private cloud environment, stay ahead of the curve by reaching out to us. Our team of experts can help you navigate these changes, ensuring that your cloud infrastructure remains robust, efficient, and aligned with your business goals.

Sources:

https://www.computerweekly.com/feature/Broadcoms-VMware-acquisition-explained-The-impact-on-your-IT-strategy

https://redresscompliance.com/broadcom-vmware-licensing-and-subscription-changes-explained/

https://www.theregister.com/2023/11/08/vmware_customer_forrester_prediction/

Cloud

Cloudflare Points Finger at Hyperscalers Holding Cloud Data Captive

Source:  www.cloudcomputing-news.net.

Cloudflare says organizations are losing control over their IT and security environments – and the big cloud providers are holding all the keys to the castle.

The web performance and security provider released a study alongside Forrester which polled almost 450 IT decision makers globally, and found that while organizations had seen a dramatic increase in application adoption – predominantly SaaS-based – challenges have resulted.

Two in five firms polled (40%) agreed that they were losing control over their IT and security environments, while just under a third (30%) of respondents noted that managing and securing public cloud environments, as well as data in SaaS environments, was ‘significantly more complex’ today than ever before.

This is not the only thing which has changed in recent years either. Almost half of organizations polled said one of their top five challenges was the growing number of users they had to manage, as well as type; not just human, but machine and third-party. IT managers are also experiencing problems with maintaining or improving their team’s productivity – cited by 44% of respondents – as well as addressing growing attack surface areas (44%).

Organizations cited an increase in the number of applications they manage as the biggest factor contributing to the loss of control, cited by 66% of respondents. An increase in locations for applications was also popular, according to 62% of those polled, as well as the shift from on-premises to cloud (54%) and the shift towards remote and hybrid workforces (49%).

Who is to blame for these challenging conditions? For Cloudflare, the answer is obvious. “Today, the big clouds have built business models on capturing your data, making it hard to move your data,” said Matthew Prince, CEO of Cloudflare. “These captivity clouds will lure you in with one product, and make it near impossible to mix and match competitive offerings across the cloud space.”

The company claims that it has a solution, and is introducing what it calls the ‘connectivity cloud.’ It is described as a ‘unified platform of cloud-native services designed to help enterprises regain control over their increasingly complex and sprawling technology and data.’

This means, in principle, four key factors. The first is deep, native integration with the internet and enterprise networks for low-latency and infinitely scalable connectivity across users, applications, and infrastructure. The second is limitless interoperability and customizable networking, while the third is a single pane of glass. The last factor is the ability to analyse extremely high volumes and varieties of traffic in order to provide ‘platform intelligence’, which can be seen as a key strength for Cloudflare.

This appears to be a serious outlay for Cloudflare, who introduced itself in the press release as ‘the leading connectivity cloud company’, which might be a safe bet considering it is thus far a category of one.

“Fundamentally, we are a network that makes it easy for you to connect and protect everything,” added Prince. “We sit atop everything else and connect anything that’s online – whether it’s a cloud, a device, a database, or on-premises hardware – so businesses can escape the grasp of the cloud captors.”