Broadcom Changes & Micron21's Response

Ever since Broadcom acquired VMware back in November 2023, alarm bells have been ringing within the IT industry.  This is because Broadcom’s track record with such acquisitions is to cull service providers that fall below a certain volume threshold.   Even though it would still be profitable to keep them onboard, they choose to cull them due to the traditionally higher costs associated with servicing a large market size of service providers.  The loss of revenue that they would have attained from these service providers is then offset by substantial increases in price for larger partners/customers.  The overall effect in increased profitability of the product line for Broadcom, which in the end benefits their shareholders. 

So it came as no surprise in late February 2024, when this scenario played out and Broadcom announced several changes to the existing line-up of products from VMware, as well as their pricing, and also changes to their Partner Program.   

Whilst price increases were expected, most concerning was the scale of these price increases. 

With regards to the Partner Program, there was a drastic shift there too whereby they announced  "we will be transitioning VMware’s Partner Program to the invitation-only Broadcom Advantage Partner Program (BAPP)."   The main shockwave from this announcement was what the minimum requirement was to be invited to be part of the BAPP.  Their main criteria was that partners had to have a minimum requirement of 3500 cores (within a minimum of 16 cores per socket) before they could even be invited!  This is a huge shift away from traditional vRAM and vSAN pricing models.  And just to put that into perspective, a commitment of 3500 cores equates to over a million dollars in spend per year on licensing!

While those with around 3500 cores will receive a price increase, those on less cores have a substantial price disparity that will make them uncompetitive and/or unprofitable with the less cores they have.  This is a monumental kick in the guts for smaller hosting companies and managed service providers that have built their business and clientele on the back of VMware and effectively sabotaging relationships.

Perhaps, the most alarming for VMware’s future is the removal of the free version.  Having no access to VMware for educational, training and development purposes means that future generations of IT professionals and students will be less inclined to learn on this platform.  This just seems short-sighted and will damage the long-term viability of the product except perhaps in large organisations where the cost to move away may be more prohibitive than the product costs.  Either way, there will be an erosion of VMware’s market share in time.  Microsoft surely must be rubbing their hands.

While Broadcom and large channel partners stand to gain from this, actual customers and users of the product do not.  Micron21 has extensive VMware experience dating way back to when we first commenced operations, not to mention our experienced staff dating even further back.  We have built our premium platforms on VMware Hyperconverged Infrastructure and supported novel co-customer hardware contributions to our HCI cloud.  As such, Micron21 will still provide ongoing management and support to those customers that wish to remain on this ecosystem.

However, the Broadcom changes have motivated us to invest in a new Hypervisor and CEPH Storage platform that is superior to our current VMware platform in many respects.  This is the same technology used by some of the largest hosting and cloud companies in the world!  The solution provides high-availability (HA) compute, fault-tolerant and clustered storage, plus much more.  The platform is based on high-end, open-source software designed for scalable cloud services and storage - all backed by our 24/7 Enterprise Support.

From our perspective, companies have put significant investment into their cloud technologies and so should not be beholden to the whims of major commercial interests.  Micron21 recognises many companies do not have an option to move right now from VMware and so we are still committed to supporting and managing this environment.  However, given the price increases and access to licences, we also know that many customers, companies and resellers will be displaced by Broadcom’s drastic changes.  As such, we have put solutions in place and have the platform, capability, support and ability to migrate you to our environment.