Hock Tan locks in VMware's private cloud future
The Broadcom CEO said public cloud migration trauma can be cured by private cloud services like those from VMware, but VMware Explore attendees aren't fully sold on the idea.
LAS VEGAS -- Hock Tan, CEO of Broadcom, said more than a decade of migration headaches and unpredictable pricing woes have soured IT teams on the public cloud.
VMware by Broadcom, he argued Tuesday during his keynote at VMware Explore, will provide a comprehensive private cloud offering built on the decades-proven technology of VMware's virtualized compute, storage and networking.
"You're all now suffering from PTSD," Tan said to conference attendees. "The private cloud is now the platform to drive your business and innovation."
But VMware customers and beyond still aren't fully convinced by Tan's arguments, according to Naveen Chhabra, an analyst at Forrester Research. VMware was formally purchased by Broadcom in late 2023 after years of legal review. Now, the vendor requires customers to purchase pre-packaged subscription bundles of software formerly available a la cart with a perpetual license, he said, locking many into purchases and higher costs than they previously faced with VMware products.
"The promise of private cloud is far too aspirational than what it really is and what it can really be," he said.
Forrester estimates that 1 in 5 of VMware's more than 300,000 customers will eventually leave the company's virtualization platform for alternatives and cloud-native competitors, according to Chhabra.
Tan's view of VMware as a comprehensive alternative to the public cloud isn't aligned with the hybrid reality of many customers, who might still feel jilted by the contract changes and price increases associated with the new bundles, Chhabra said.
No bright, shiny objects
VMware now sells subscriptions for two primary software bundles: VMware Cloud Foundation (VCF), a private cloud suite; and vSphere Foundation, which provides virtualization and storage software.
Two other, smaller offerings -- vSphere Standard and vSphere Essentials Plus -- still exist and offer virtualization exclusively.
A major focal point of Tan's presentation was on VCF 9, the next iteration of VCF planned for a release in the future. VCF 9 will offer new automation capabilities and performance improvements and the new VCF Import.
"We're down to four core offerings -- and that's all you need," Tan said during his keynote.
By consolidating products and lowering its headcount, Tan said a leaner and more purpose-driven VMware has emerged, focused on results and customer outcomes, even comparing VCF to a personal AWS in a corporate data center.
"Sorry, but we're serious businesspeople," he said. "We're not here to show you bright shiny objects."
Still, VMware by Broadcom won't turn down upsell opportunities. The company sells additional, premium services for its platform including VMware Live Recovery, a cyber recovery capability, and a new version of Tanzu, VMware's container orchestration platform.
Throughout the show, Broadcom executives like Chris Wolf reiterated Tan's messaging that a streamlined VMware will dictate company strategy going forward.
"Complexity is great for profits, just not yours," said Wolf, global head of AI and advanced services for the VCF division at Broadcom.
Prior to the Broadcom acquisition, VMware was heavily focused on creating new products and developer needs, highlighted by the growth of Tanzu over the years, said Paul Nashawaty, an analyst at the Futurum Group.
Tan's change in strategy moves the company away from individual products but won't immediately alter the enterprise-focused features of the VMware platform, and customers might choose to stay to keep those capabilities despite a possible cost increase, he said. But, he added, over time those same customers might look elsewhere.
"They're not looking to be hugely innovative but staying true to the core values of what VMware has to offer," Nashawaty said. "It's the devil you know versus the devil you don't."
Should they stay or should they go
Customer opinion on staying or leaving Broadcom's VMware is almost evenly split, according to an informal survey conducted at the show by Expedient, a cloud service provider and VMware reseller.
As of midday Wednesday with just over 200 responses collected, 42% of survey takers said they planned to stay with VMware, 44% are considering alternatives and 14% are considering public cloud alternatives.
Among those considering alternatives, leading options included Nutanix Acropolis Hypervisor platform and Linux Kernel-based VM.
The results aren't surprising, according to Bryan Smith, CEO of Expedient. Many customers who need VMware's technology aren't looking to jump ship but likely had a visceral reaction to pricing increases due to the bundling of software and change in licensing model.
"There's a giant emotional reaction to a price increase [for VMware]," Smith said. "It's made customers poke up their heads and ask what the alternatives are."
The larger IT market has caught onto that concern with third-party services stepping in.
In May, Rimini Street, a provider of third-party support for VMware and other enterprise software, launched support for VMware products because of the number of queries it received from VMware customers concerned about whether support would degrade or disappear under Broadcom.
"We now have clients on four continents," said David Rowe, chief product officer at Rimini Street. "[The service] is going very well."
Enterprises are coming to Rimini Street to buy time while deciding how to migrate off VMware.
"They want to figure out what their next steps are," he said. "They may keep VMware in some cases for certain workloads, but they have options [for others]."
Rodney Kenyon, group vice president for Rimini Street's support organization, agreed, saying a lot of companies are waiting until their multi-year VMware license expires before turning on another vendor or signing a Broadcom subscription license.
The decision to leave VMware is difficult. The cost will rise under Broadcom, but VMware software works well. "You don't want to be the person to upset that apple cart," Rowe said.
Broadcom's approach of subscription bundling might remain unpopular with customers for now but more might see the value in the standardization of enterprise services and products down the line, said Scott Sinclair, an analyst at TechTarget's Enterprise Strategy Group.
"Every private cloud being its own unique snowflake is just not sustainable, I think that's true," Sinclair said. "There's no going back. I think that's where Broadcom is, where VMware is, and where their customers are getting to."
Antone Gonsalves, an editor at large for TechTarget Editorial, contributed to this report. He has worked in tech journalism for 25 years and is based in San Francisco.
Tim McCarthy is a news writer for TechTarget Editorial covering cloud and data storage.
