Did Broadcom Chop VMware Cloud off AWS?

Ever since the Broadcom-VMware deal was put in place, one issue that has vexed both customers as well as the combined entity relates to marketing the latter’s products and their engagement with long-term partners. In its latest move, Broadcom is taking over the distribution of the VMWare Cloud product running on AWS. 

The latest move to fiddle with its new subsidiary’s distribution strategy comes after a series of changes that Broadcom brought forth such as streamlining VMware’s product suite and tinkering with their long-standing partnership program – one that resulted in confusion and chaos amongst the partners and required the intervention of CEO Hock Tan. 

The latest shift was announced by the big boss via a blog post wherein he said that that the VMWare Cloud on AWS would no longer be directly sold by AWS or its channel partners. Hock Tan says he took it upon himself to clarify the company’s position following rumours that “VMware Cloud on AWS would be going away.” 

No! VMware on Cloud isn’t going off AWS

Since this was causing concern among customers who’ve used the service since its launch seven years ago, “we are acting quickly to correct this misinformation…” So, what exactly is changing and how will all these changes impact VMware customers and those that have acquired the service via AWS (Amazon Web Services)?  

“What this means is that customers who previously purchased VMware Cloud on AWS from AWS will now work with Broadcom or an authorized Broadcom reseller to renew their subscriptions and expand their environments. Customers who have active one- or three-year subscriptions with monthly payments that were purchased from AWS will continue to be invoiced by AWS until the end of their term,” says Tan in the post.

Because, it’s a journey that began in 2016

It was in 2016 that VMware unveiled AWS support through building on the VMWare Cloud Foundation, an integrated software stack with compute, storage and network virtualization that could be deployed on-premises as a private cloud or alternatively on a public cloud. The stack include vSphere, vSAN and NV NSX from VMware. 

This program was a major win for VMware and Tan acknowledges this too in the blog post claiming that the move “transformed the industry by providing a reliable solution to move enterprise VMware workloads onto the public cloud without the expensive, time-consuming and unpredictable refactoring and migrations that come with native public cloud services.”

In fact, the company has similar variants running on Microsoft Azure as well as Google Cloud Platform, who along with AWS control more than close to two-thirds of the hyper-scaler cloud infrastructure market. So, Tan’s latest commentary looks more like damage control after Broadcom’s initial hare-brained approach to restructuring something that was working well. 

“I am pleased to report the service is alive, available and continues to support our customers’ strategic business initiatives as it always has,” Tan wrote while quoting Sir Winston Churchill’s famous commentary on misinformation, “A lie gets halfway around the world before the truth has a chance to get its pants on.” 

Broadcom’s continued interventions in VMware

As Tan says in his blog, it’s just another way to give Broadcom’s channel partners something more to sell in the market. Once existing subscriptions (of between one and three years) with AWS runs out, users would have to renew the same with Broadcom resellers. How would this impact AWS? Well, that’s a topic for another post at another time. 

For now, we can safely say that Tan and his friends have wrung in yet another change to VMware’s legacy operations. In the past, they had streamlined the product portfolio for a sharper focus around the reconfigured VMWare Cloud Platform, the virtual private cloud and the vSphere Foundation offerings in order to boost consumption via cloud adoption. 

The next to face the Broadcom axe was VMware’s legacy perpetual pricing model that was replaced by a subscription model, which Tan said was critical as it provided a simpler pricing model for users and removed upsell practices common in the software industry that included branding incremental features as new higher editions of the same product. 

He took a moral high ground on the move stating that such practices did not represent true innovation in core products, and cause customer confusion and frustration about missing out on new features. Subscription licensing eliminates these incentives. The next on the chopping block was VMware’s partner program that was reconfigured to “deliver consistent customer experiences under the VMware Cloud Service Provider (VCSP) program. 

Essentially revolving around how customers moved their data between an on-premises data centre and a hyper-scaler environment, the move brought changes to per-core licensing of VCF among other things. All these strategic changes caused existing VMware customers as well as distribution partners some sleepless nights. 

In fact, even some Broadcom officials admit to the past few months being painful. Which is probably why Hock Tan has taken up pen and paper to assuage the consternation amongst his own teams as well as those that they interact with in the wide world outside Broadcom.