Will Broadcom Make VMware More Expensive? Five Players Weigh In
VMware partners are confronting customers fears about future pricing under Broadcom with early renewals, exploring rivals, and leaning into the partner’s services.
Gartner Analyst Andrew Lerner
“Very Nervous VMware Installed Base”
There is a high degree of concern from Gartner clients regarding this deal and especially from Gartner clients that have prior experience from Broadcom. This is not the level of typical angst associated with any M&A. This falls into the category of major concerns, and from a large number of clients.
One of the top concerns is pricing behaviors, which has been a documented issue with Broadcom in the past. The client concerns are that Broadcom will take-over VMware and alter VMware’s existing customer experience.
Specifically, in order of concern, the types of customer experiences they’re most worried about are: a) pricing -- higher prices, different metrics, limited discounting flexibility, more software audits etc. -- b) product --will they discontinue or spin-out products, or limit future investment, and c) sales/support --- will they reduce my sales/channel resources, will support decline?
After Broadcom’s acquisitions of CA Technologies and Symantec, numerous customers complained to Gartner about dramatic out-the-door cost increases during renewals, with limited flexibility for negotiations.
This blog and other public statements from Hock basically indicate that they don’t need to increase prices.
The good news is it seems like Broadcom is not planning to run the CA/Symantec playbook verbatim, as it relates to pricing. However, to address a very nervous VMware installed base, this falls short of stronger statements like Broadcom won’t raise list prices for 12 months or something akin to that. I believe most enterprises will read this statement “we will invest in and innovate VMware’s products so we can sell even more of them and grow the VMware business within enterprises, deepening and expanding the footprint instead of potentially raising prices” and conclude that Broadcom will attempt to sell them more products, which begs the question – what happens if customers don’t want more products right now?