Answering Key Questions on VMware Updates and Opportunities

vmware updates

In late 2023, Broadcom finalized their acquisition of VMware, a virtualization and cloud computing software provider. Included in the acquisition has been a dramatic simplification of VMware’s program model and pricing structure. This impacts hundreds of thousands of organizations as a result. To put it into perspective, 84% of organizations’ workloads that have been virtualized are running with VMware. Furthermore, 95% of cloud providers in AVANT’s portfolio are running VMware. This means that these changes are far-reaching and will be a key conversation point for the foreseeable future. 

For both Trusted Advisors and IT decision-makers, it’s important to have a baseline understanding of the program changes and potential options for an organization’s cloud strategy, both right now and in the future. Check out some of the most frequently asked questions we’re hearing from partners and customers to further develop your awareness of the latest updates and ensure you can have an informed conversation as you begin to consider your next move. 

The Latest Updates on VMware

What are the timelines of the new licensing models being discussed? 

The new licensing models are already being rolled out, effective 12/11/2023. They will impact customers when they are up for licensing renewal, which can take place anywhere over the next 3-5 years. For customers waiting for their renewal to come up, or for Trusted Advisors guiding their clients, remember now is still a great time to focus on validating the situation and exploring options so the preparation and planning are done. 

What type of clients will be most immediately impacted by these updates? 

Nearly every customer using VMware, whether on-premises or with a cloud provider, will experience the impacts. To put this in perspective, 80% of on-prem workloads are virtualized; of those, 84% run on VMware. On the service provider side, 95% of AVANT’s private cloud providers run VMware. So, it’s safe to say the vast majority of businesses are leveraging VMware in one way or another. The immediate impact will be felt when they come up for licensing renewal.  

What is the price point for the bundle going forward? 

Going forward, the bundled product structure from VMware may lead to an average cost increase of 300 to 400% for customers. There is a chance that this could be higher or lower, but this is the average increase noted across the board. This is primarily due to the bundling that has occurred, because 75% of customers today only use vSphere, the VMware hypervisor.  

Customer Options

What are the options for affected customers? 

Customers have several options available, much of which depends on their current cloud strategy. If they remain on-premises, they can renew with VMware, or switch to an alternate hypervisor like Nutanix. If they move to cloud, they can look at a VMware service provider, an alternate platform like Nutanix, or a public cloud like AWS, Azure, or Google. It’s unlikely they will be able to lift and shift immediately. Therefore, they may start picking off specific workloads; for example, they could decommission their VMware DR site and move that to a more favorably priced DRaaS solution from a VMware Cloud Service Provider (CSP) 

Which options can Trusted Advisors represent through AVANT?  

If a customer is looking to move to cloud, or to a different cloud provider, AVANT can provide support for the Trusted Advisor and their customers! We have all the bases covered and can offer vendor-agnostic recommendations and guidance on the following: 

  • VMware Pinnacle and Premier service providers, who will see significant cost benefits when compared to licensing costs for end customers 
  • Alternate private cloud platforms, like MSFT Hyper-V / Azure Stack or Nutanix 
  • Assistance migrating to and managing public cloud environments like AWS, Azure, and Google 

Where do we see the most profound opportunity, as these updates roll out? 

There has never been a better time to talk about cloud with your customers. These changes are affecting nearly every business at their renewal date. Many of these organizations are often already aware of and preparing for them now. If not, this is an opportunity for Trusted Advisors to step into a guiding role for their clients. Whether they ultimately decide to move to a VMware CSP, or another platform entirely, the moment to begin these conversations is right now.  

Should customers consider moving all their workloads off VMware? 

The answer is, of course, it depends. This will be driven by cost, application dependencies, third-party integrations, hardware amortization, and more. While we expect some customers to make a shift, not all of them will turn around and abandon VMware tomorrow. If you are an IT decision-maker for your company and you are experiencing a drastic increase in price due to the Broadcom program changes, we encourage you to engage with your Trusted Advisor to get a clearer idea of the options available to you. If you want to connect with a Trusted Advisor, please fill out this form to share more about your situation and AVANT can put you in touch with a helpful technology guide! 

VMware Cloud Service Providers

What’s happening with the VMware CSPs?  

VMware is slashing their service provider program from 4,500 companies to 500. Of the 500, 100 will fall into the Pinnacle tier, and 400 will fall into the Premier tier just below that. 

What happens to the 4,000 excluded CSPs?  

Those 4,000 service providers can sign up to be Registered partners, a third tier below Pinnacle and Premier. However, these Registered partners must purchase their licensing from a Pinnacle or Premier partner. 

Is it possible to buy VMware licensing only through a TSD? Meaning, on-prem licensing, not private cloud? 

For an end customer looking to buy VMware licensing, no, this isn’t possible. For a VMware CSP that was excluded from the new program, there is potentially a wholesale opportunity. If you’re a VMware CSP that falls into this group of providers, please connect with your AVANT Vendor Engagement Manager to learn more about the opportunity. 

What additional resources are available for Trusted Advisors and customers seeking more information on these updates?

As the VMware situation continues to evolve and more updates are shared, be sure to continue leveraging AVANT’s full library of resources and our team of experts to help you navigate these shifts.  

  • Log into Pathfinder to watch the on-demand recording of our VMware webinar that we hosted in March 2024 
  • For Trusted Advisors looking to start these conversations with their customers, we’ve compiled a helpful list of qualifying questions you can leverage to learn more about your customer’s current situation and potential options 
  • Our Technology Insights podcast team released a new episode where Cloud experts from AVANT and Flexential delved into the VMware situation from the point of view of customers who may be experiencing impacts because of these changes