[German]An unpleasant surprise for existing VMware partners, who received notice of termination from Broadcom on December 22, 2023, effective February 4, 2024. This came just a few days after Broadcom switched its license models to subscription solutions. The VMware partners are now to be reselected and given new contracts. To this end, Broadcom has launched the Advantage Partner Program, which is open by invitation only. All partners with a turnover of less than 500,000 US dollars are to be excluded from this program.
Broadcom acquired the virtualization provider VMware for a horrendous sum (see Broadcom acquires VMware for 61 billion US-$). The takeover of VMware by Broadcom was then completed a few months ago, and now the "shake out" begins, which does not mean anything good for customers or VMware partners. At the beginning of December 2023, I had already reported in the blog post Broadcom plans to sell VMware end-user computing and carbon black businesses that Broadcom is starting to sell off its silverware. Interested parties can buy large parts of the VMware product range as a block. Broadcom is keeping the cloud services and has converted the license models there to subscription solutions. Now comes the next shock for VMware partners.
Termination for VMware partners
CRN reports in this article that Broadcom has terminated all existing contracts with VMware partners (resellers and service providers) as of February 4, 2024. The termination in question appears to have been sent to VMware partners last Friday, December 22, 2023, by email with the subject "VMware Partner Programs Termination Notice". This ends not only the partner program but also the incentive program that was used to provide sales incentives.
Anyone wishing to continue selling VMware products will have to reapply to Broadcom. Broadcom plans to tell its partners next month whether they will be allowed to continue selling its virtualization software, according to CRN. The site quotes a source saying that partners who make less than 500,000 dollars in annual sales with VMware risk losing their partner status. It is therefore unclear which of the existing VMware partners will still be able to sell VMware products or licenses from February 5, 2024. CRN quotes from the termination email provided to the site by Broadcom:
Broadcom remains committed to creating value within our shared ecosystem, which has been strengthened by the addition of VMware partners. Effective February 5, 2024, Broadcom will transition VMware's partner programs into the invitation-only Broadcom Advantage Partner Program.
Based on recent conversations with hundreds of partners worldwide, this transition will help our partners realize even greater profitability through simplified bundled offerings and more service revenue opportunities.
According to CRN, Broadcom's email asks partners to ensure that the company's contact information in the 'My Company' section of the Partner Connect portal home page is correct. And then all that remains for existing VMware partners is to wait and see if they can continue to sell VMware in the future.
Program by invitation only
Broadcom has launched the new "Broadcom Advantage Partner Program," but it is by invitation only through the company. CRN writes that those companies invited to join the program were offered in the email – signed by the Broadcom Partner Program Office – simplified profitability opportunities for partners using Broadcom's net margin model. This includes renewal compensation and grandfathering, deal registration discounts with differentiation by program tier, performance-based incentives for renewal deals. Simplified certification requirements and free training for all partners were also touted.
CRN quotes an unnamed VMware partner who took part in internal briefings on Broadcom's new approach. This person assumes that invitations will probably only be sent to reseller partners who generate between 500,000 and 1 million US dollars or more in sales. This source assumes that it will primarily affect small VMware partners and resellers who do not reach these revenue levels. The source assumes that around 4,000 smaller VMware partners will no longer be on board from 2024.
An unnamed VMware employee is quoted as saying that: "All contracts will expire at the end of January 2024 for most VMware partners, and by April 2024 for VMware service providers, Only the select few will be able to participate in the new program. The rest will no longer be able to sell VMware products."
The VMware employee, who was active in partner support, assumes that this termination of VMware partners will play into the hands of competitors such as Nutanix. "These competitors are actively seeking more business with partners. In my experience, this change is too much, too fast and will lead to churn and lost revenue," CRN quotes the VMware employee as saying. "The biggest drop in sales will be in vSphere. Broadcom is pushing for VMware Cloud Foundation. They're pushing for bundles that force customers to buy things they don't need."
So you're saying that the fears VMware customers had about the Broadcom acquisition are now coming true. Is anyone affected by this termination?
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