As the landscape of cloud computing evolves, companies like Egenera must continually reassess the technology partners that support our operations. For years, VMware has been a stalwart in the industry, providing robust hypervisor technology that underpins many of our critical applications and services. However, recent developments have prompted many in the industry to question whether VMware remains the right partner for the future.
The Longevity and Stability of VMware
There's no denying VMware's impressive track record as the leading commercial hypervisor provider globally. Its technology has powered countless enterprise data centers and cloud environments, offering unparalleled reliability and scalability. For companies like ours, built-in redundancies and a solid support infrastructure have been essential in maintaining our operations without disruption.
Challenges and Changes Ahead
Yet, the acquisition of VMware by Broadcom has introduced uncertainty. Historically, VMware included support in subscription licensing like the Cloud Provider pograms but allowed for inexpensive software only licenses for smaller companies that did not need the subscription bells and whistles. The shift under Broadcom's ownership now necessitates subscription models for almost all users. This change has raised concerns among VMware users, who have long relied on the company's robust customer relations and technical expertise without additional cost burdens.
Broadcom's Pricing Models
Broadcom's approach to pricing has introduced elevated commitments, less program options, and long contract terms, particularly impacting smaller aggregators and users. Almost all users have seen minimum cost requirements per host far exceed previous VMware offerings. Although Broadcom defends these pricing programs they gloss over other very concerning changes that came with that pricing. Most new Broadcom contracts require end-user information disclosure, and except for the highest tier partners a multi year agreement through a new reseller creating potential channel conflicts and necessitating changes to existing privacy policies within companies.
Market Dynamics and Competitors
In this evolving landscape, Microsoft's Hyper-V emerges as a formidable competitor. With its integration into the Microsoft ecosystem and competitive pricing structures, Hyper-V presents a compelling alternative to VMware. Many organizations are now weighing the benefits of Microsoft's offering against the established market leadership of VMware, particularly as concerns about support quality and financial stability surface. For organizations wary of both Microsoft and VMware, alternatives such as Proxmox, KVM, and CloudStack are gaining renewed attention.
Looking Ahead: Strategic Decision-Making
At Egenera, our decision-making process centers on ensuring that our technology partners align with our strategic goals, considering both technological and financial perspectives. From a technological standpoint, we acknowledge VMware's historical role as a cornerstone of our IT infrastructure, providing industry-leading stability. However, recent changes in ownership and service models raise concerns about VMware's future ability to maintain this leadership in the long term.
Financially, Broadcom's new contract terms pose significant challenges for smaller cloud providers like us. In the short term, absorbing these increased charges is unavoidable because of our strong commitment to price stability. Our global footprint affords us some advantages but still the impact is significant and left unchecked will affect our financial health over the long term. It is clear that sustaining our commitment to price stability will force us to make a hard decision between changing our service to operate at very low margins or changing our virtualization partner.
Conclusion
While we have not yet reached a final decision. Our current course is to maintain our relationship with VMware and uphold our existing price commitments, despite the strain on our margins. Nonetheless, Egenera places great value on price stability and even more so on service so the challenges posed by Broadcom's approach necessitates us evaluating other options that would better support our current business model. Only time will tell what decisions Egenera makes but VMware is no longer the partner Egenera could never see changing and conversations with peers indicate there are many companies in the same boat.
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