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  • Ronnie L

Broadcom's acquisition of VMWare and the implications on SME

In November 2023 Broadcom completed its acquisition of VMWare from Dell EMC putting the wider IT market on edge about what this would mean for VMWare users. VMWare has changed hands numerous times since it's founding in 1998; first by EMC in 2004 which was then acquired by Dell in 2016.

During these acquisitions VMWare has gone from strength to strength, This recent purchase by Broadcom is a different scenario. Broadcom has typically been a network device manufacturer making everything from wireless cards in laptops through to fibre back haul and long range wireless communication infrastructure.

VMWare's product stack has been fantastic for businesses of all sizes to harness the power of their hardware for tasks such as end user compute, storage and server functionality. Their focus in recent years has been to bring historically high end enterprise features such as high-availability and easier scalability to the SME market.

Since the completion of the acquisition we have seen numerous announcements that have far reaching implications such as:

  • Redundancies with approximately 7.5% of VMWare employees being made redundant in the first month

  • Change in sales channels

  • Removal of the free VMWare license for home and lab use

  • Removal of perpetual license model, subscription based is now the only choice

  • Removal of some product lines altogether

  • Price increases across all product lines

What this means for clients currently using the VMWare product lines. Yearly renewals for support are no longer available. The only option is to purchase their new subscription licensing with initial pricing being some 1200% higher than previous years. VMWare can lose 90% of it's clients and still have similar revenue. It appears as though Broadcom's plan is to price all the small clients out and force them to look at other options. The only clients who will remain are the Fortune 500 companies who are so deep in the VMWare ecosystem that just the idea of changing vendor scares their boards into acceptance of the price hikes.

For the clients who aren't locked into that ecosystem and have the option to change it's time to start looking into options. VMWare built a very open and robust ecosystem that worked exceptionally well with third party vendors for functions such as backup, high-availability, monitoring and access. Waiting until you're up for renewal might leave you forced into proceeding with VMWare as risk assessments, product trials and implementation all take time.

It's not all bad news - there are many vendors offer similar product stacks similar to VMWare. Some of these include Microsoft, Citrix and Proxmox. Each has their advantages and pitfalls. Give ViridianIT a call to find out what your risks are in the space and what your options are moving forward to secure your infrastructure.

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