Broadcom will no longer take VMware’s biggest 2,000 customers directly. Instead, it will work with VMware’s 500 biggest customers, giving channel partners the opportunity to participate in deals and provide additional value for VMware customers. The reversal is being viewed as an effort from Broadcom to discourage migrations from VMware, but there’s skepticism around how much impact it will truly have.
Various customers have lamented the changes that succeeded Broadcom buying VMware about a year ago. Controversial moves have included ending perpetual license sales, bundling VMware products into a smaller number of SKUs, and ending VMware’s channel partner program. These changes have led some firms to consider reducing their business with VMware.
This week, for example, UK-headquartered cloud operator Beeks Group said that a 1,000 percent increase in VMware costs led to it moving most of its 20,000-plus virtual machines to OpenNebula. And numerous customers that Ars Technica has spoken with in the last year are seriously researching or planning total or partial VMware migrations.
Now, Broadcom is looking to save some business by incorporating channel partners into deals that it previously ushered them out of. In January, CRN reported that Broadcom took over more than 2,000 of VMware’s biggest accounts, circumnavigating partners and confusing some partners and customers. In a March earnings call, CEO Hock Tan said Broadcom would focus on upselling those accounts. As The Register reported today, Broadcom recently announced told partners that it will only work directly with the top 500 VMware accounts.
In a statement, a Broadcom spokesperson said:
Broadcom continues to work on behalf of our partners to create new value in capturing the market opportunity for private cloud. Most recently we announced a program that is currently in development to offer qualified VCF customers a 15 percent professional service entitlement of their annual contract value to access partner-delivered or Broadcom professional services. This will help customers improve both time to value and ROI. Broadcom does not have an official, static number of direct strategic accounts. The number of customers with whom we work directly changes over time.
At Canalys’ APAC Forum event today, Canalys chief analyst Alastair Edwards said that “Broadcom recognizes that its best defense against possible migrations is making sure customers implement its full private cloud bundles and see strong return on investment. Broadcom sees giving 1,500 big users back to partners as the way to make that happen, and is even giving its channel 15 percent of the value of deals they win to fund professional services so that VMware software is quickly made operational,” per The Register.
