Broadcom Cancels VMware Partner Agreements
The Broadcom/VMware® evolution continues. Effective Sunday, February 4th, 2024, VMware partner programs and incentives will cease to exist. This announcement was made on Friday, December 23rd in an email to all VMware partners, who will need to wait to see if they will be admitted to the invitation-only Broadcom Advantage Partner Program.
Unfortunately, Broadcom did not share its partner program requirements with VMware partner sprior to cancelling the VMware partner program, leaving partners very uncertain about their respective futures.
A VMware partner who listened to a Broadcom internal briefing told Computer Reseller News (CRN) that reseller partners who make between $500,000 and $1 million or more in revenue can expect an invitation—which leaves out many partners focused on midlevel and SMB customers.
There are two exceptions to the partner program announcement. Broadcom will wait until April to end VMware service-provider partner agreements, and VMware’s End-User Computing (EUC) division partner program will not be affected because Broadcom intends to sell the EUC division.
Despite Broadcom’s recent claims that they would continue to serve VMware customers of all sizes, few industry experts were surprised by this move. Broadcom has a history of buying technology companies, stripping them of their assets, and laying off thousands of employees to increase profitability. What remains of VMware is focused on enhancing Broadcom’s appeal to enterprise buyers. Some industry experts have predicted that in reaction, VMware’s midlevel and SMB customers and partners will move to alternative technologies.
Reinforcing this gloomy outlook is Broadcom’s December 7th announcement of its intent to divest VMware’s End-User Computing division and Broadcom’s December 11th blog post regarding changes to VMware product portfolio and licensing policies.
Given its long history, it’s no surprise that 60% of VMware’s customers continue to buy perpetual licenses. Prior to its acquisition, VMware was working with partners to transition customers’ to subscription licensing, but was not forcing partners or customers to relinquish their perpetual licenses.
Broadcom’s December 11th post changed that approach. In the post, Broadcom announced that, rather than supporting the continued purchase of perpetual license products, VMware products would be sold by subscription only, as two integrated solution platforms—one intended for enterprise customers and one “simplified, enterprise-grade workload platform” intended for mid-sized to smaller customers. Broadcom has not yet shared technical details about these new platforms.
VMware customers owning perpetual licenses with active support contracts will continue receiving perpetual license support until their support contract ends. Broadcom will not renew support contracts for perpetual licenses. Instead, Broadcom will help customers “trade in” their perpetual product licenses so they can move to one of the new subscription-based solution platforms.
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Broadcom plans to convert most of VMware’s perpetual license contracts to subscriptions by November 3rd, 2024, the end of its 2024 fiscal year. Redress Compliance, a consulting firm specializing in software licensing, estimated in a blog post that these changes will grow Broadcom revenue from $ 4.7 billion to $ 8.5 billion in 3 years.
The exception to this monumental product and licensing change is the EUC division, which will retain its current licenses (along with its channel program) due to the planned division divestment. However, many VMware EUC customers run their VMware end user implementation on the current virtualization products that Broadcom is moving to a subscription model. That means that VMware Horizon customers will need to manage two different licensing models—and possibly two different partner organizations.
Unfortunately, with the exception of Broadcom’s announcement regarding the end of perpetual licensing support, VMware customers and partners remain in the dark regarding the new cloud platforms’ technical details and capabilities, which partners will be allowed to continue selling VMware products and related services, how Horizon implementations and licensing will fare as changes to VMware data center technology and licensing move forward, what entity will end up acquiring the EUC division, and how the EUC division and technology will change when acquired.
Only time will tell.
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