After an initial spate of controversy surrounding the Broadcom acquisition of VMware, it appears the company is now counting on partners to help organizations that have licensed the VMware Cloud Foundation (VCF) platform to help install it.
VCF surges as Broadcom reshapes partner model
Broadcom earlier this year revamped its partner program around an invite-only initiative that requires partners to be able to install an integrated VCF platform rather than just one element of the VMware portfolio. At the same time, Broadcom is also cutting direct ties with cloud service providers that are not squarely focused on enterprise customers.
Some VMware customers have chosen to migrate to other platforms instead of licensing the integrated VCF solution that combines hypervisor, storage, and networking. Despite this shift, Broadcom continues to see significant revenue growth from its VMware business unit. Infrastructure software revenue for the third quarter reached $6.8 billion, a 17 percent year-over-year increase. In total, infrastructure software revenue accounted for 43 percent of the $16 billion in total revenue Broadcom reported for the quarter.
VCF drives revenue, but full adoption still lags
Broadcom CEO Hock Tan also told industry analysts that momentum should continue in the forthcoming fourth quarter as the company expects infrastructure software revenue to be $6.7 billion, most of which is generated by VCF.
However, it’s not clear to what degree organizations that have agreed to license VCF are actually deploying all of its components. Many of those organizations have already deployed the VMware hypervisor, but continue to rely on other storage and networking platforms. The challenge now will be to convince more than 90 percent of the top 10,000 customers that have licensed VCF to actually deploy it over the next two years, said Tan.
Additionally, Broadcom plans to soon focus more on the next 20,000 to 30,000 mid-sized companies of the VMware customers that might potentially adopt VCF, said Tan. There are approximately 300,000 VMware customers in total. Most of them use the VMware hypervisor along with storage and networking software from other vendors.
MSPs are key to full VCF deployment
Many organizations are now turning to managed service providers (MSPs) to help them migrate to more cost-effective platforms. At the same time, Broadcom will also rely on MSPs to fully operationalize the VCF platform for its larger licensed customers. Even though the new Broadcom partner program for VCF is considerably smaller, it’s apparent that partners will still play a significant role. The challenge, of course, is acquiring the expertise needed to deploy, secure and maintain a complete platform rather than simply managing a hypervisor.
Many organizations remain deeply unhappy with Broadcom’s changes to the VMware licensing model, and that frustration continues to grow. Tesco alleges that its previous perpetual license for VMware software guaranteed access to upgrades and security patches through 2026. The agreement also included an option to renew the license for an additional four years. Tesco alleges it is now being required to pay twice for the same software licenses.
Broadcom is also gaining traction in large enterprises, including a strategic agreement with Walmart. Under the deal, Walmart will rely on Broadcom to build a modern private cloud and edge computing environment.
MSPs should carefully evaluate each customer’s circumstances to ensure the right solution. Organizations that have been running VMware software for years are not likely to overhaul IT platforms overnight. The amount of effort and expertise required to make that type of migration goes well beyond simply replacing one hypervisor with another. MSPs should prioritize helping each customer achieve the outcome that aligns best with their financial goals. This requires tailoring solutions to fit each organization’s unique circumstances and operational needs.
Photo: Stock-Asso / Shutterstock
This post originally appeared on Smarter MSP.