- VMware price increase chased by late fees demands.
- Broadcom attempts to claw back acquisition costs.
- EU and customers unhappy with newly ‘standardised metrics.’
Since the acquisition of VMware by Broadcom in 2023, the company’s new owners have been doing their utmost to alienate a broad swathe of
its customers. Or, as the company would have it, “build the world’s leading infrastructure technology company.”
In addition to discouraging the next generation of systems developers and architects from using the platform by nixing the free-to-experiment-with ESXi option, the company has tried to force many of its customers off the VMware platform with a series moves that include:
- VMware price increase can be in the hundreds of percent,
- tier-bundling so users pay for products they don’t wish to use (AKA portfolio simplification [PDF]),
- going back on previous contractual agreements,
- ending the sale of lifetime licences,
- ending support for products on perpetual licences.
The latest move by Broadcom/VMware is to charge its customers late fees for subscription-based services, or threaten to levy such fees if renewals are not taken up in a manner timely-enough for the commission-hungry account managers at the company.
Speaking to Business Insider, Ignacio Llorente, CEO of OpenNebula Systems, said: “Many customers who transitioned from perpetual licenses to […] subscription-based services are […] unaccustomed to the ongoing renewal process. This has led to some being caught off guard by unexpected additional costs, especially when renewals are missed.”
The threat of surcharges if subscriptions are not renewed is straight from the Sales 101 playbook, which also contains repartee familiar to many, such as the ‘discount is dependent on signing before [insert date]’ claim, and the ‘this price is only available to [insert small number] of my clients’ fabrication.
Resellers have also been quick to complain that they no longer receive gratis access to VMware software to assess its suitability for their clients, and that levels of support for them and their customers from VMware have fallen through the floor.
VMware price increase worries EU
In the EU, a cabal of resellers, trade groups and associations submitted a letter of complaint to European Commission President Ursula von der Leyen and EU Commissioner Thierry Breton. It said that “Broadcom’s contempt and brutality towards its customers are unprecedented in the recent history of the digital economy in Europe.”
In response to EU antitrust investigators ensuing enquiries in April of this year, Broadcom stated it was “standardizing the metric” for its pricing, and claimed that it had “dramatically reduced the price of VMware Cloud Foundation to promote customer adoption,” according to Broadcom CEO, Hock Tan.
The alarm expressed at government level for the price hikes from Broadcom for what the EU sees as essential infrastructure provision adds to the sense of disquiet in the bloc around the use of hyperscalers’ platforms to host public infrastructure. Issues around data sovereignty aside, many feel that citizens are being held to ransom by ‘standardisation of metrics’ dictated by shareholders many thousands of kilometres from the continent.
While some commentators have expressed surprise in the past that VMware has taken so long to transition to a subscription model, and may even consider the effects worth bearing, the manner by which Broadcom is applying its new policies will lead many to look hard at VMware’s alternatives.
Resellers and advocates of OpenShift, OpenStack and Nutanix, among others, continue to be presented with an open goal as Broadcom attempts to recoup some of its $65bn outlay for the acquisition of VMware. Its shareholders may welcome the proceeds of the VMware price increase, but long-term dividends may not be such rich pickings.
