AWS, Red Hat hybrid cloud wares court VMware converts
Broadcom has softened some of its stances on VMware licensing and public cloud, but competitors stay poised to pounce on customers looking to defect.
Broadcom changed course on some of its unpopular alterations to VMware's pricing and partnerships and struck a fresh hybrid cloud deal with AWS, but competitors are licking their chops nonetheless.
Broadcom's business has been healthy since its $61 billion acquisition of VMware closed in November 2023. Earnings for its fiscal year 2024 were up 44% to a record $51.6 billion, according to a company earnings call Dec. 12, and it has signed up 4,500 of its 10,000 largest customers for VMware Cloud Foundation (VCF). VMware had more than 300,000 customers; Broadcom did not disclose how many of the 4,500 signups for VCF were VMware customers before the acquisition.
Broadcom CEO Hock Tan has emphasized private cloud as the focus of the company's strategy for VMware, in contrast to VMware's previous multi-cloud and hybrid cloud approach.
At the same time, Broadcom has revised some of the policies that drew the ire of customers and partners earlier this year. It added more services to its basic VMware subscriptions in October after ending perpetual licenses and drastically consolidating thousands of product offerings down to just two main bundles, VCF and vSphere Foundation, and hiking their price midyear.
Last month, it reportedly backed off a stated plan to sell directly to VMware's 2,000 largest customers, which had drawn protests from channel partners, revising that number to 500. After discontinuing sales of VMware Cloud on AWS through AWS and channel partners in May, Broadcom mended fences with cloud partner AWS last month to offer a new joint product, Amazon Elastic VMware Service.
Still, some industry analysts have predicted major attrition among VMware customers long-term -- for example, Gartner estimated its 70% market share in hyperconverged infrastructure in 2024 will drop to 40% in 2029. Forrester Research estimates 1 in 5 VMware customers will eventually leave the company's virtualization platform for alternatives. Other industry watchers have insisted that as a foundational piece of virtual data center infrastructure with huge existing installations -- tens of thousands of VMs -- at least the very largest VMware shops are stuck with it for the long haul.
Compounding the situation is the fact that there's no one destination for customers that want to defect from VMware -- no single competitor exists that can exactly match VMware's full range of hyperconverged infrastructure and cloud automation tools.
"There are numerous vendors building a business around picking up fleeing VMware customers, but it is hard to say how many … customers have left or are planning to leave," said Torsten Volk, an analyst at Informa TechTarget's Enterprise Strategy Group. "It is still too early to make sweeping conclusions in terms of what share and tier of customers VMware will lose."
Meanwhile, despite Broadcom's change in tactics over the last three months, signs of trouble linger. Ingram Micro confirmed reports this week that it will part ways with VMware as of January 2025. The global tech distributor claims 161,000 customers and partnerships with 5,000 IT channel vendors.
"It remains to be seen" whether Broadcom walking back some of its stances on VMware will prevent mass exodus, said Rick Vanover, senior director of product strategy at backup and replication vendor Veeam, which has customers in common with VMware. "[But] the Ingram Micro news is a headwind, in my opinion, to softening the situation."
AWS changes its hybrid cloud tune with EKS
Against this backdrop, the likely beneficiaries of a mass VMware migration are moving to lure in VMware hybrid cloud customers. AWS, for example, made a notable concession to hybrid cloud -- and VMware customers who diverge from Broadcom's Tan on private vs. public cloud -- with new Amazon EKS Hybrid Nodes and Auto Mode services rolled out Dec 1. This stands in contrast to past years' "all-in" messaging from AWS for public cloud services.
"Enterprises are increasingly focused on … multi-cloud flexibility and on-premises capabilities [as] top priorities," said Steven Dickens, principal analyst at HyperFrame Research. "The [Amazon] EKS Auto Mode and Hybrid Nodes announcements … signal a tacit acceptance by AWS that hybrid is a model for many clients and that Kubernetes is ready for prime time."
EKS Hybrid Nodes adds an AWS-managed Kubernetes control plane that supports both public cloud and on-premises environments, including existing on-premises hardware. Previous distributed Kubernetes services such as EKS Anywhere and EKS on Outposts required the customer to manage the hybrid control plane. EKS Auto Mode, unveiled ahead of the AWS Re:Invent conference, automates compute, storage and network management for Kubernetes clusters, not unlike the hyperconverged infrastructure offered by VCF.
In case there was any doubt about who AWS has in its crosshairs with new hybrid cloud services, the cloud provider also rolled out app modernization services built on its Amazon Q AI assistant Dec. 3 that specifically included a VMware migration utility.
One VMware partner predicted smaller customers will favor big cloud providers if they decide to migrate.
"We have a lot of customers weighing their options, but not many have actually done anything -- at least not yet," said Christian Mohn, chief technologist for software-defined data center at Proact IT Norge, an IT services and consulting firm in Bergen, Norway. "Most of my clients are pretty large and too deep into the whole ecosystem to replace it quickly, but it might accelerate smaller customers' move to hyperscalers -- mostly Azure here in Norway."
Red Hat pitches OpenShift Virtualization as VMware alternative
AWS and partner Red Hat expanded a long-standing relationship Dec. 2 with a new agreement that will bolster AWS support for OpenShift Virtualization, a container-based alternative to traditional VMs, within the existing Red Hat OpenShift Service on AWS. The Red Hat OpenShift Kubernetes platform will become available under the expanded partnership as a self-managed service on Amazon EC2 bare metal.
One analyst said VMware is clearly a target for the expanded AWS-Red Hat partnership, especially since the new AWS-Broadcom Amazon Elastic VMware Service overlaps Red Hat OpenShift Service on AWS more than VMware Cloud on AWS did.
"It makes it easier for customers to engage with Red Hat through the AWS Marketplace, even including migration services," said Rob Strechay, an analyst at TheCube Research. "This is absolutely part of the Red Hat playbook that has a read-out of what VMs are well-designed to move to OpenShift Virtualization."
OpenShift Virtualization is among the most directly comparable software-defined infrastructure components to VMware's hypervisor, although it flips traditional VM architecture on its head by hosting virtual machine workloads within containers rather than containers within a cluster of virtual machines. OpenShift Virtualization allows IT ops teams to manage VM-based workloads alongside containers using Kubernetes and has gained adoption among large customers such as Goldman Sachs and Morgan Stanley that want to gradually modernize legacy virtual infrastructure. Red Hat has targeted VMware converts with a migration toolkit for OpenShift Virtualization since 2021.
This proposition has become more enticing for VMware defectors since the Broadcom acquisition – at least, if you take Red Hat officials' word for it.
"We have significant interest in this space, and we're working to make it even easier for customers to migrate and support VM workloads to OpenShift," said Kirsten Newcomer, senior director of OpenShift and security product management at Red Hat, during a press briefing Nov. 7. "We've delivered capabilities with [OpenShift version] 4.17 like memory oversubscription and improved support for active-active deployments, as well as a dedicated [GUI] console for virtual workloads."
Another OpenShift feature introduced in November, user-defined networking, allows the creation of a virtual Layer 2 network within Kubernetes clusters specifically to migrate VMs running within Kubernetes pods among cluster nodes.
"[User-defined networking] also enables attaching the VM and Pod network to a provider network, specifically a VLAN ID to segment, mark and isolate traffic," Newcomer said during a press briefing Q&A session. "This is part of our overall investment in zero-trust networking, but it's particularly useful for our customers who are adopting OpenShift Virtualization."
Still, features such as memory oversubscription have been commonplace in the VMware hypervisor for many years. OpenShift Virtualization has taken time to add other features that have similarly been table-stakes for years among hypervisors, such as non-disruptively swapping, or hotplugging, storage volumes, which became available in OpenShift 4.16 in July.
Whether OpenShift captures VMware emigres "will depend on how quickly … Red Hat can start handling the critical workloads that are currently running on vSphere, and also on how they can convince VMware admins to change over to OpenShift," said Enterprise Strategy Group's Volk.
AWS and Red Hat must also compete with a hyperconverged infrastructure contender in Nutanix and other large IT vendors offering alternatives to VCF such as HPE's GreenLake. Nutanix launched an AI platform to compete with Red Hat OpenShift AI in November.
"About 25% of large companies that are moving from VMware, according to a survey [with 105 respondents] by our partner ETR.ai in October, are moving to OpenShift," said TheCube's Strechay. "About the same number say Nutanix."
Beth Pariseau, senior news writer for TechTarget Editorial, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out @PariseauTT.
