Broadcom’s VMware and the Changing Landscape of Cloud Partnerships
During a recent Gartner event, industry expert Palmer made significant observations regarding the relationship dynamics between Broadcom’s VMware and major hyperscalers like AWS. Palmer noted that Broadcom’s VMware operates under a mindset that does not perceive hyperscalers as strategic partners. In response, AWS has expressed its dissatisfaction with VMware’s policy that prevents AWS and its channel partners from reselling VMware Cloud on AWS. AWS communicated its disappointment to CRN in May 2024.
Despite this tension, hyperscalers, including AWS, still show a strong interest in engaging with VMware end-users. Palmer remarked that these major players are aware that over time, they may pivot customers to a more integrated “proper cloud” solution.
Navigating VMware Migrations
Another critical topic discussed was the challenge of VMware migrations. Many organizations have described these migrations as both costly and time-consuming. This is especially problematic for companies with limited IT resources or those juggling multiple large-scale IT initiatives. Given the current landscape with a lack of strong competitors to VMware, Palmer advocated for a strategy of partial migrations. She indicated that these partial transitions could be completed in roughly a year, compared to the at least three years required for total migrations.
“We are all addicted to hypervisors, and that needs to change,” Palmer stated, emphasizing the necessity for enterprises to rethink their reliance on specific virtualization technologies.
Financial Performance Amidst Challenges
Despite the challenges of losing customers, VMware is still proving to be a substantial revenue driver for Broadcom. The company’s new focus on subscription models, bundled services, and higher pricing strategies has clearly paid off. In its latest earnings report, Broadcom revealed that its infrastructure software revenue, primarily driven by VMware, surged by a remarkable 25 percent year over year, amounting to $6.6 billion.
As the industry evolves, VMware’s place within the ecosystem and its interactions with hyperscalers will play critical roles in shaping the future of cloud computing.
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Image Credit: arstechnica.com
