Broadcom distrust drives sales for VMware competition

Discontent over VMware licensing changes and shifts to the partner program has sent customers looking elsewhere, and at least two competitors say they are benefiting from the discord in the form of increased sales.

Scale Computing, which specializes in hyperconverged software systems, said in its most recent quarterly earnings announcement that sales have taken off, thanks in part to Broadcom’s changes to VMware sales operations. Scale executives said the company saw significantly increased demand for both its edge computing and virtualization platforms, driving record growth for the quarter. The number of new customers and new partners doubled compared to the same period last year.

“…we are seeing our business explode to the upside in the aftermath of the Broadcom-VMware acquisition. In Q2, we closed an unprecedented number of new business opportunities, keeping us on pace to exceed 50 percent year-to-year revenue growth in 2024,” said Jeff Ready, CEO and co-founder of Scale Computing, in a statement.

And Rajiv Ramaswami, president and CEO at Nutanix, said via email: “What we’re hearing from customers over and over is that they’re concerned about Broadcom’s impact to VMware, from pricing increases, to support changes, and lack of innovation … We have benefitted from customers leaving VMware, like Treasure Island Hotel & Casino and Computershare, and we see this as a significant multi-year tailwind.”

While rip and replace of a virtual environment would seem complex, time-consuming, and impractical, another VMware competitor says that’s happening.

“In terms of what we have seen, savvy customers – having broadly seen this before – did multi-year renewals ahead of the close of the acquisition and have now deliberately put themselves on the clock to remove VMware entirely from their information infrastructure,” said Bryan Cantrill, CTO at Oxide Computer.

Since closing the acquisition of VMware late last year, Broadcom has made sweeping changes to VMware that haven’t sat well with customers, such as ending perpetual licensing and moving to subscriptions instead. It also discontinued certain products and consolidated other products into into two main bundles, VMware Cloud Foundation and VMware vSphere. This forced some customers to buy software they didn’t need as part of a bundle, increasing their costs.

And VMware’s competition was ready to pounce, with Scale being the most vocal competitor. It has a “VMware Rip & Replace” promotion, offering a 25% discount on Scale Computing software and services for each new customer implementation. It also offers the “Seamless Switch: Trade-Up to Scale Computing” promotion to existing VMware customers.

Read more about the Broadcom-VMware deal