Customers are turning on VMware – here’s who stands to gain

Whispers of concerned VMware clients have been floating around since Broadcom struck a deal to acquire the company for $61 billion in May last year. But the extent of just how much customer sentiment has shifted against VMware became crystal clear at a Nutanix event last week.  

"Don't trust VMware," Ron Lincicum, infrastructure engineer at Grainger, said during a keynote interview with Nutanix COO David Sangster at the Nutanix NEXT conference. The audience reacted with cheers and laughter. (A Grainger representative told Silverlinings that the position expressed at the Nutanix conference does not reflect Grainger’s official position on VMware.)

Still, Andrew Lerner, VP of Gartner Research, told Silverlinings there are a few reasons why customers generally have soured on VMware. 

“Customer sentiment towards VMware has turned in a negative direction, based on VMware’s behaviors recently which include pricing increases, licensing adjustments, sales behaviors, executive departures, deal delays, etc.,” he said.  

VMware notably hiked prices in August 2022 and in December of that year lost three top executives, including the heads of its Application Platform, Networking and Advanced Security, and Cloud Infrastructure Business Groups. The latter two execs ended up at Cisco and Google Cloud, respectively. 

Though Broadcom has a reputation for acquiring companies, raising prices and slashing R&D, it has sought to reassure customers, making public statements about its commitment to VMware’s VCF suite and professional services. But Lerner noted, “There is more focused concern from customers regarding specific VMware products that Broadcom isn’t talking about such as the end user compute portfolio.” 

Clients are taking a range of approaches to prepare for the deal’s completion, Lerner said. Some are strategizing for expected price renegotiations while others are looking at alternative options. Some are just taking a wait and see approach. But no one is happy.  

A Nutanix spokesperson confirmed as much in a statement to Silverlinings, calling the VMware-Broadcom deal a “significant industry event that's causing a number of organizations to re-evaluate their risk profile going forward.” 

“Many customers, partners and prospective customers have reached out to us because they are concerned about the impact on their businesses and the potential pricing, roadmap, and support risks associated with their current plans,” the representative said. “Some are making contingency plans and looking at exploring alternatives or implementing a multi-vendor strategy.” 

Blood in the water 

Futuriom’s Scott Raynovich said the biggest challenge VMware faces is the fact that its deal with Broadcom remains in a state of limbo. The longer that remains the case, the harder it is for both companies “to commit, build and hire for new products and markets. Right now, some competitive entities are going to try to take advantage of that.” 

AvidThink’s Roy Chua agreed, telling Silverlinings competitors are “definitely pushing” the uncertainty narrative, pointing to Broadcom’s earlier acquisition of Symantec as an example of what might happen in the future. That’s especially the case for “for smaller VMware customers who depend on their less-established product lines – i.e., any product line that's not the enterprise virtualization, and perhaps their security suite as well.”  

Chua added competitors are suggesting that the company will only focus on its largest and most profitable customers once the deal is done, and that Broadcom will reduce R&D spending. But Chua noted the reality is “the situation is much more complicated than that.” 

According to Gartner, top VMware competitors in the cloud networking area include Cisco, Juniper, Arista Networks, HPE, Dell Technologies, Lenovo, Huawei and Nokia. When it comes to server virtualization, it’s up against the likes of Microsoft, Nutanix, Citrix, Red Hat and Oracle. 

Raynovich pointed to Red Hat as VMware’s primary competitor but said Red Hat is “hindered” by the fact that it is owned by IBM. Nutanix could also benefit from the uncertainty around VMware’s deal. But Chua cast a wider net.  

On the virtualization front, he said “Nutanix, Oracle, IBM/Red Hat, Microsoft are pushing. And we can't forget the migration to public cloud and the VM to container migration which opens up new alternatives. Even smaller players like Scale Computing who have been in the space for some time and are pushing hard on the edge are making progress given the uncertainty.”  

On the security side of things, he added Palo Alto Networks, Fortinet, Checkpoint, CrowdStrike and a list of up-and-comers are all “jostling” to replace its Carbon Black product. 

Finally, VMware is feeling the pressure on the telco side from public cloud options, telco cloud platforms like IBM and Red Hat and Wind River.  

One thing’s for certain, all of the players seem to be sensing a disturbance in the VMware force.  

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