Published on the 10/10/2024 | Written by Heather Wright

Spoiler alert, it won’t be easy…

“Don’t get mad. Get even.”

Gartner research vice president Michael Warrilow issued a call to arms to assembled CIOs and IT leaders trying to manage their dependence on VMware, under threat of hefty price increases many are experiencing post Broadcom’s takeover of the company.

“The subscription bit means you can’t renew support – that’s the master genius plan, which I’d describe as diabolical.”

Broadcom ended perpetual licenses, forcing customers to subscription models and private cloud and driving up prices for many customers post the November acquisition.

It’s a topic Warrilow dubs ‘grim’ and one which has seen AT&T begin legal action in New York, accusing Broadcom of breach of contract, saying it is being bullied into paying ‘a king’s ransom’ for software it neither needs, nor wants. The US telco has alleged that Broadcom is threatening to withhold support for software purchased under perpetual licensing, unless it pays hundreds of millions of dollars – allegedly a 1050 percent (no, that’s not a typo) price hike – for bundled subscriptions.

One third party support provider spoken to by iStart at the Gartner IT Symposium on the Gold Coast last month said Australian customers were reporting price increases of up to 500 percent through being forced to VMware VCF (VMware Cloud Foundation) private cloud.

None of the attendees in Warrilow’s session had signed a deal with Broadcom this year, though several said they needed to do so in the next year.

Warrilow, who has covered VMware for 20 years, says he’s taking ‘a long queue of miserable calls every single day’ from Gartner clients seeking advice on what to do.

“The subscription bit means you can’t renew support – that’s the master genius plan in here, which I would describe as diabolical,” he says.

“The situation we all find ourselves in is so miserable.”

He was scathing of Broadcom, saying understanding the company is ‘pretty simple’: “They are focused on investor returns. Their behaviour is very apparent. They have disrupted the customer base. They have disrupted the partner ecosystem. They have disrupted within that particularly the large VMware hosting community. They’ve disrupted the reseller environment as well.

“And with one clear aim.”

That aim, spelled out by Broadcom CEO Hock Tan is to convert an installed base of licenses – that was over 60 percent perpetual – to one that is mostly subscription by the end of fiscal 2024.

While the top 2500 customers globally are being forced direct and onto the most expensive product, Warrilow says, the next 10,000 or so can buy from resellers.

“He may let you buy the silver plated, rather than gold, but it doesn’t matter what you want from the silver. You have to pay for all of it.”

So what can customers do?

“If you love your licenses, let them go,” Warrilow says.

“You don’t need to renew what you have got, you only need to rent what you need.”

He says too many companies ‘got a bit fat and happy’ under their enterprise license agreements. Now, he says, it’s time to optimise ultilisation and minimise core count.

“There are a couple of ways to optimise your environment. Everybody knows RVtools, a free product from Dell. Ironically thy bought the company who provide a great way to inventory your environment. And there are others, including one for NSX, as well.”

Asset management tools and capacity planning and utilisation tools like IBM’s Turbonomic and Densify can ensure companies are getting the best bang for their bucks for every core.

“Some people are going to increase the memory in their boxes to increase the VM count on each box as well and in each license.”

For those with NSX networking and security virtualisation, the news is more grim. The only way to avoid the move to VMware Cloud Foundation (VCF) private cloud platform, and potentially move to the lower-priced VMware vSphere Foundation (VVF) offering, will be to stop using NSX.

“I sometimes feel relieved on calls when clients say they have NSX but aren’t using it. Thank goodness. If you have NSX you need to get VCF and if you are using NSX you’ve probably got microsegmentation and then for the privilege of that you have to buy an add on and pay even more,” he says.

“For most people it is DRS [Distributed Resource Scheduler] that is what they really need and you get DRS within VVF. If VVF was more accessible then we would go ‘we’re getting kicked in the short and curlies but we will get up off the floor and find a way to accommodate it’. If you’re forced to VCF it is such a massive increase in your environment.

“The more you can get off NSX and Aria the more you have a potential to get off VMware Cloud Foundation.”

Warrilow says local companies should consider VMware vSphere Standard for medium sites and/or test/dev, and vSphere Essentials Kit for small sites.

“For the record there is discounting happening. The best case we’ve seen if you get forced to VCF, they’re offering it to some at VVF pricing. But you can assume at next renewal it will be VCF at VCF pricing. And we do see from CA renewals there will be above inflation increases – generally above 30% when you get to your second renewal.”

There is another option, of course: Third party support. A multitude of companies have spun up support offerings. While they don’t have the source code and can’t offer new binaries, they maintain a catalogue of all the binaries a customer is entitled to until their support ends.

“You can keep upgrading and get to whatever version it is until the day your current VMware support runs out and then you can switch to them.”

He warns however, that beyond that date third-party support can’t provide any new features or bug fixes. Broadcom is only offering security patches for the highest level vulnerabilities – CVS9 and above – but it’s at their discretion to what is classified as CVS9.

“But, third party support tell me there are other techniques to secure your environment where patches for minor bugs are not going to be available.”

For many, the move from VMware, will take several years, assuming something can be found to migrate to.

“One strategy for managing this situation is locking down your existing system, draining the swamp as much as you can, freezing what is left and building your future architecture and focusing your time on that.”

Warrilow believes most local companies will stay, or partially exit VMware’s clutches. Opting for third party hosting will likely provide little relief with third-parties offering VCF.

“There were 4,500 providers here… I don’t know how many hundred will survive once this shakes out.”

Hardware lifecycles will be a key factor, he notes.

For the lucky few who can, going non-VMware and off-premise can include going more native cloud, public cloud, IaaS and lift-and-shift. “Then the problem goes away.”

The fourth option, which Warrilow dubbed ‘the unhappy box’ – and one he said many were in – was those who can’t go to cloud and are stuck trying to find an alternative for VMware.

“You can go bare metal, rephyscialise, revirtualise, containerise – and for the record I don’t believe containers are an answer to the VMware problem.

“There isn’t an easy alternative, and you’ve got to question the project cost.

“There are alternatives in every box – there are 25 vendors in our Market Guide for Server Virtualisation. It will be a matter of which boxes are appropriate for you.”

He warned companies to be judicious in their planning, urging them not to waste 2025 tyre kicking every solution.

“You have to keep focused, otherwise a year from now, nothing will have happened.”