It’s hard to believe that come late November 2024, it will be a full year since Broadcom announced its $69 billion acquisition of VMware. Yet for tens of thousands of VMware customers – especially those who are just now approaching the end of their VMware licensing agreements – there remains more questions than answers as to whether they will continue to be supported by their new corporate overlords.
During his opening State of the Platform session at our recent 2024 Platform event in Las Vegas, Scale Computing’s CEO Jeff Ready spoke directly to some of the concerns that VMware customers are facing post-acquisition: “On Broadcom’s very first earnings call following the acquisition they were very proud to talk about the fact that 70% of their revenue comes from their top 600 customers. And I brought this up last year because I asked everybody in the room – how many customers in the room find themselves among those 600, or how many partners in the room find themselves supporting customers who are in those 600?”
Jeff goes on to explain that this notion of ‘profit harvesting’ is a tried and true strategy ripped from the private equity playbook in which they aim to maximize financial gains and cash flow after a product reaches maturity by minimizing their investment in the product. “Now, I don't know about you, but it doesn't sound like you wanna be on the wrong end of profit harvesting, right?”
Well, if the past few months are any indication, a growing number of VMware customers and partners appear to be growing weary of this egregious price gouging and are actively seeking alternative platforms to support their virtualized systems.
Here at Scale Computing, we recognize that the switching costs involved can be daunting – applications and data need to be migrated, IT staff have to learn new systems, and all of those existing systems must be fully integrated and tested. So it’s not hard to see why many VMware customers feel like they have few viable options and end up deciding to hold their nose and eat the additional costs.
Which is why we have created several compelling promotions to help take some of the financial and operational pain out of the decision. Our original Seamless Switch program will cover any remaining VMware contract term at no charge for up to 12 months when a customer moves to the SC//Platform as well as free migration tool access and complimentary Scale Computing Advanced Training Certification. This past June, we augmented this promotion with the Seamless Switch: Trade-Up to Scale Computing program, which not only extends the Seamless Switch offer to upgrade their software but also includes hardware, ensuring a comprehensive migration experience tailored to meet the needs of businesses of sizes and industries.
Of course, it’s not just VMware users who have been negatively impacted by Broadcom’s profit harvesting tactics. There are also thousands of channel partners and resellers who have found themselves excluded from the new invitation-only program, facing significant disruptions to their business models and revenue streams. These partners, who have invested years building relationships and expertise around VMware solutions, are now left scrambling to find new products and services to fill the gap left by VMware's exit.
As Jeff reminded the audience at Platform, “from the very beginning, Scale Computing has been a 100% channel-first company.” With these partners in mind, we created the VMware Rip & Replace Program to provide partners with a 25% discount on Scale Computing software and services along with the necessary tools and training to quickly migrate their customers from VMware to the SC//Platform. In addition to increased profit margins, the Rip & Replace program also includes complimentary NFR licenses for testing and demonstrations as well as dedicated sales and technical support.
Through these different programs, we hope to give VMware customers and partners some much needed options and flexibility when it comes to running their virtualized infrastructure. As Jeff emphasized during his keynote, "In order to be the best ever vendor partner, we have to take a long-term view. It’s not about what we can do just today, but how this relationship will work over decades. We're building the future together, and that requires a commitment to supporting our partners and customers for the long haul."