The word ‘disruption’ has been co-opted in the technology sector recently to mean positive change. We know, for example, that AI is creating a wave of opportunity to automate content creation and accelerate decision-making and time to insight.
That sort of wave can provide companies with tremendous opportunities for those that spy them early and act accordingly. But disruptive change can lead to uncertainty too, as we are witnessing with Broadcom’s deal to acquire VMware that closed in November.
What’s happening?
After a long period of speculation, it appears that many of the concerns we heard among channel partners at the time Broadcom first said it had reached an agreement with VMware were well founded. As Krish Prasad, SVP and GM of the VMware Cloud Foundation Division, stated in December 2023, many standalone products are being discontinued and licensing is moving to a subscription-based model in a “dramatic simplification” of the previous portfolio.
Strengthening channel partnerships and fortifying defenses in the technology sector
Some observers are spotting a pattern familiar from previous big Broadcom deals to buy CA and Symantec. As Forrester principal analyst Tracy Woo has noted, those purchases led to “stunted” innovation and reduced customer support.
The effects of these changes for the channel are varied, and none of them are good. Partners may have deployed VMware products that will no longer be offered or will be sold to another company. That could mean unwanted and unnecessary change for those partners and their customers.
The multi-vendor future
Are these just teething troubles? No, Broadcom has made big calls early and it can’t fix the subsequent concerns with anything short of a (highly unlikely) massive U-turn, and the changes are unlikely to stop making an impact. For example, going back to the point made by Forrester, it’s still too early to say how fears over the depth of Broadcom’s commitment to research and development and dynamic innovation across the VMware portfolio will play out. Certainly, Broadcom’s track record in this regard is inauspicious.
Yet another concern among channel partners pertains to churn. Channel partners may worry that they will see a carousel of changing reps that will undermine the relationships that let them go to market and win over customers and prospects, and then support them when challenges and opportunities arise.
But partners still have options and those that haven’t already done so will now look urgently for solutions that offer freedom and open choice with strong support options and reliable roadmaps, rather than lock in and pricing penalties for being loyal customers of pre-acquisition VMware. A multi-vendor approach is pragmatic and helps to de-risk any post-merger environment. More than ever, partners require a safe harbor and a plan B as they navigate through the uncharted, post-Broadcom VMware future.
The channel needs to look both forward and back. As AI continues to reconfigure the IT landscape, partners need confidence that new workloads in Kubernetes containers are protected but also that critical legacy apps and workloads will still run anywhere that customers prefer. The job of the channel is to advise and support, not dictate, so it’s important to cover all bases and offer a range of deployment platforms, whether that’s on-premises, in the public cloud or at the network edge – and with full license portability to support future change.
M&A has become a critical aspect of how large technology companies pursue growth and, over the years, what was once a strategy with a poor track record has become refined and improved as vendors have learned the tricks of the merger trade. But channel partners can still get caught up in the crossfire when changes are as profound and sudden as in the case of Broadcom-VMware.
VMware was a pioneer of modern IT. It reshaped the data centers, changed perceptions of server utilization, running costs, and more. VMware created an ecosystem of enormous value but that value is today under threat because nobody – not customers, systems integrators, or developers – want wholesale change. The changes outlined so far by Broadcom may help Broadcom’s bottom line but partners need to take notice and act now.
