Many VMware partners left stunned as Broadcom issues ‘termination notice’

A “termination notice” sent to VMware channel partners by Broadcom on Dec. 22, as they were preparing to head out of the office for the holidays, did not leave many feeling the warmth of the season, says Jason Van der Schyff, the chief operating officer (COO) of private cloud infrastructure vendor Softiron.

The electronic notice Van der Schyff refers to, a copy of which was obtained today by Channel Daily News, begins by stating that “for more than two years, VMware has outlined its plan to transition from a perpetual to a subscription-based business model. This is consistent with the overall market trend toward cloud operating models and was reinforced with the launch and evolution of VMware’s Partner Connect Program.

“On December 11, 2023, VMware by Broadcom announced its simplified licensing model and solution portfolio. Broadcom and VMware are driven by technology and innovation and have a shared passion for, and commitment to, partner profitability and success. You are now well positioned to capture substantial growth opportunities for delivering advanced, innovative cloud infrastructure and associated services wherever your customers need.”

The big news, which took the form of a termination notice, can be found in the next paragraph, which stated Broadcom would be “transitioning” all of the VMware’s partner programs to the “by-invitation only award winning Broadcom Advantage Partner Program, effective Feb. 5, 2024.

“Effective today, we are also announcing changes to VMware’s partner programs which will exist through February 4, 2024. Please refer to the VMware partner program operative changes on the VMware by Broadcom Essential Partner Information page.

“Also, effective today, all VMware Partner Incentive programs will end on or before February 4, 2024.”

The by-invitation only part of the program means that actual invitations to join are scheduled to start being issued this month, and the timeline will vary by partner type and route to market, the notice stated.

Invitations, “will be sent to the partner identified primary and alternate contacts on file with VMware. Take this opportunity to ensure your company’s contact information is correct within the ‘My Company’ section of the Partner Connect portal home page.”

Van der Schyff countered that the  “greater channel has watched as Broadcom disassembled CA and Symantec, further limiting the available SKUs to make margin on. Seemingly irrespective of the promises of Broadcom, they are doing the exact same thing with VMware.

“Early in the narrative, we heard that Broadcom essentially had worked out how to pay for the US$60+ billion acquisition with the VMware revenue from the top 10 per cent of their clients. So, if the play here is to get as much revenue in as short time as possible, eviscerate VMware’s customer base, and move on to the next thing, they simply do not need their channel. I think that is exactly what we are seeing.”

It is not just many VMware partners wondering or worried about next steps, but end user organizations as well.

Andrew Moloney, Softiron’s chief strategy officer, wrote in a blog issued on Nov. 27, five days after the deal formally closed, “with the Broadcom acquisition now closed and the wide-reaching layoffs and restructuring starting to happen, another inflection point has been created.”

It is, he maintained, an inflection point that is “causing many IT leaders to re-evaluate their strategic options and chart the right path for the future – one that may or may not include VMware. I get to talk to many industry analysts in my role and they all tell me the same thing – everyone is looking for a credible alternative to VMware as their license renewals come due.

“And for those not willing or able to migrate all their workloads to the public cloud, their options are severely limited.”

Moloney added that anyone would be “hard-pressed to find a VMware customer who is happy with the cost of their VMware software licensing. And with a ~US$61Bn acquisition to pay for, prior form in that regard, and significant earnings promises being made to investors in an already saturated market, VMware customers are increasingly anxious that those licensing bills are only going one-way post-acquisition as Broadcom leadership exerts its authority.”

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Jim Love, Chief Content Officer, IT World Canada

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Paul Barker
Paul Barker
Paul Barker is the founder of PBC Communications, an independent writing firm that specializes in freelance journalism. He has extensive experience as a reporter, feature writer and editor and has been covering technology-related issues for more than 30 years.

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