April 16, 2024 Broadcom has announced adjustments to its approach with VMware customers, signaling a shift in strategy as it faces market challenges and regulatory scrutiny in Europe. In response to customer feedback, Broadcom CEO Hock Tan acknowledged the need for a smoother transition to its subscription model and extended support for those on perpetual licenses.Amidst rolling out its subscription strategy for VMware’s suite of products, Broadcom has listened to customers’ concerns about the rapid changes, especially related to costs and the balance between capital and operational expenditure. In a move to ease this transition, Broadcom has offered support extensions to customers renewing their contracts during this shift.
Security Patches for Perpetual Licensees: A significant change introduced by Broadcom is the provision of zero-day security patches for supported versions of vSphere and the promise to extend this to other VMware products. This move allows customers with expired maintenance and support contracts who opt not to subscribe to the new offerings to continue using their perpetual licenses securely.
Regulatory Pressure in Europe: Broadcom’s licensing modifications coincide with inquiries from European antitrust authorities, likely prompted by lobbying from cloud consortiums and tech buyer associations concerned about the company’s licensing changes and their market impact.
Market Share Losses Predicted: Analyst firm Gartner forecasts a substantial market shift, predicting VMware’s hyperconverged infrastructure market share will halve by 2029. While specifics on the cause are not detailed, vendor dynamics and increased bundling costs are indicated as possible drivers for change, potentially influencing HCI vendor dynamics.
With a nod to Chinese HCI providers and mentions of Microsoft, Nutanix, and other competitors, the HCI market is poised for significant changes, suggesting an increasingly competitive landscape for Broadcom and VMware.
Broadcom’s strategy updates, along with the growing competition and regulatory actions, highlight the complex interplay between customer needs, market forces, and oversight requirements. These developments reflect a broader industry trend of adapting to the evolving demands of the tech market, emphasizing the importance of maintaining customer trust while navigating competitive and regulatory challenges.
