[German]Will VMware by Broadcom's customer base collapse "soon"? There has been much speculation about this since the takeover of VMware by Broadcom. The other day I came across an article with an analysis that states that over half of VMware customers are looking to switch to another virtualization provider in the medium term.
Broadcom is still partying
In numerous articles here on the blog, I have traced the drama of the VMware takeover by Broadcom (see the article links at the end of the post). Broadcom's declared goal is to make real money after the takeover – I pointed this out in the German blog post Broadcom erwartet 2024 bei VMware quartalsweises Umsatzwachstum im zweistelligen Prozentbereich.
Will that work" was my thought – and I raised this in the article VMware takeover by Broadcom, will the bet work? I was all the more astonished when Broadcom CEO Hock Tan celebrated in front of customers at the VMware Explore in-house exhibition at the end of August 2024 because of sales increases in Q3 2024 and looked ahead to bright business prospects (I had reported on this in the German blog post Broadcoms VMware-Umsatz Q3 2024 schießt nach oben und Eindrücke von der VMware Explore).
Analysis sees customer escape
At the back of my mind when writing the above post was the thought "maybe it's just a flash in the pan" and I wondered what things would look like in a year or two. The other day I came across the The Register article Research suggests more than half of VMware customers are looking to move.
A study VMware Customers Seek Simplicity and Predictability when choosing their next cloud provider published by Civo showed, that more than half of VMware customers are considering leaving the virtualization platform because they are dissatisfied with the development under Broadcom and see no future. It should be noted that VMware by Broadcom's declared aim is to drive small customers away from the platform and retain only the large hyperscaler customers (cloud providers). To this end, VMware has set prices accordingly and is effectively forcing customers out of the business relationship.
And it's worth noting that Civo is a VMware competitor looking to woo those same customers to its virtualization solution. Civo CEO Mark Boost told The Register earlier this year that Broadcom's strategy seems to be to get rid of smaller customers by raising prices (I reported this in the article Analyses: VMware acts as planned with licenses; switching to alternatives a problem).
The steep price increases at VMware are causing financial difficulties for smaller companies that have built their business model on VMware. A Civo survey found that 48.7 percent of customers are considering switching cloud providers and 44.9 percent are considering migrating to open source solutions. However, 28.6 percent of VMware customers surveyed are concerned about the security of open source solutions, and 23.2 percent expressed concern about security and service level agreements (SLAs).
Simon Hansford, former CEO of UKCloud and now at Civo, told The Register that VMware's customer base can be roughly divided into three parts:
- Those that Broadcom hopes will simply see the price increases as a cost of doing business,
- a third that hopes they are small enough not to be pursued by VMware's new leadership,
- and a third who say they will "just abandon ship" or the VMware virtualization platform.
The new study suggests that well over a third of existing VMware customers could jump ship from the VMware platform "in the near future." This is not good news for Broadcom's long-term business development in this area, no matter how rosy the sales figures may look at the moment.
Many competing cloud providers and vendors would be happy to take customers, and VMware customers are tired of living in a situation where prices are skyrocketing without improving service at the same time. These are likely to be good times for Proxmox, Nutanix & Co. to which former VMware customers are migrating.
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