Broadcom Takes Top VMware Accounts Direct ‘Effective Immediately’

'Effective Immediately: Strategic customer segments are no longer eligible for Opportunity Registration,’ Broadcom wrote to partners in a newly issued Opportunity Registration Policies, according to material obtained by CRN.

Broadcom is taking VMware’s top customers direct—about 2,000 accounts, according to two estimates —and will reject attempts by partners to register deals with them, according to multiple sources and material from a partner presentation delivered Thursday, which was obtained by CRN.

“Effective Immediately: Strategic customer segments are no longer eligible for Opportunity Registration,” according to the new “Opportunity Registration Policies” issued by Broadcom, which was viewed by CRN.

“This was expected,” said one longtime VMware partner. “This means, effective immediately, these accounts are with Broadcom direct.”

As of press time, Broadcom spokespeople did not reply to CRN’s repeated requests for comment on the latest developments. CRN also reached out to Broadcom and VMware channel executives and did not get a response.

The document was shared during an informational session Broadcom hosted with VMware partners on Jan. 4. During the meeting, Broadcom also told partners any deal they attempt to register for a strategic account will be refused.

“If you submit new opportunity registrations for strategic customer accounts, they will be denied,” Broadcom wrote.

If a VMware partner’s deal with a strategic account is in a pending status, it “will be denied,” Broadcom wrote. Additionally, Broadcom said those deals that have been approved but are “without a quote will be denied.”

Sources: Around 2,000 Global Accounts Taken Direct

Multiple sources said the number of top accounts being taken direct, around 2,000 globally, is in line with what Broadcom CEO Hock Tan has said recently in closed-door sessions with insiders.

Broadcom announced two weeks ago that it would terminate VMware’s partner program, and it plans to invite selected partners to return. Those VMware partners who qualify will receive an invitation to Broadcom’s partner program beginning Jan. 15. According to sources, the qualifying threshold is based on partners who achieve at least $500,000 or more in annual revenue.

During Thursday’s meeting, Broadcom executives outlined new rules of engagement, according to partners on the call.

They said existing VMware partners will remain eligible and will be allowed to continue to register deals in VMware’s Partner Connect Portal until Feb. 4. Broadcom said this means Advanced, Principal and Pinnacle partners are still eligible for deal protection, Ad+ discounts and preferred pricing until that time.

VMware’s OEM partners are eligible for enterprise license agreement benefits only. Broadcom also said eligible product discounts will be in effect until Feb. 4.

VMware Partners Sound The Alarm

Several VMware partners have reached out to CRN out of concern for their business and what they view as a lack of information that has emerged from Broadcom since it closed the $61 billion acquisition for VMware on Nov. 22.

“The company I work for has been a long time Broadcom and VMware partner,” one VMware reseller in the western United States told CRN in an email. “We have certainly felt the wheeling effects that VMware partners are experiencing as we've gone through this transition with both CA Technologies and Symantec acquisitions. Both CA and Symantec used to be the highest revenue-generating business for product solution sales as well professional services. Since Broadcom’s acquisition, this business has completely dwindled.”

Another partner who contacted CRN said his company does not expect to be invited back to sell VMware under Broadcom. However, with annual VMware sales in the six-figures, the East Coast partner has customers with critical VMware infrastructure and no direction yet on how to sell or support those accounts.

“Am I supposed to buy from CDW? Am I going to get it from a master VMware partner? What are our [options]?” the partner told CRN over the phone, noting that it remains unclear what the options are for partners that don't get invited to join the new program.

The partner compared VMware to Microsoft as far as how deeply woven it is into customers’ stacks. He said, despite the upheaval, he isn't planning at this point to move customers to an alternative product.

“My only concern is how do I transact moving forward, and how do I get support when I need it,” the partner said. “We're going to stick with VMware. And even though we're not a partner, we're going to find an alternative way to purchase the product and support it because we have too much of an installed base on it. All our automation, everything’s built around VMware. Everything we do is built on VMware.”