Broadcom’s acquisition of VMware and subsequent pricing and distribution model overhaul has left customers divided on whether to stick with the subscription model or seek alternatives. Broadcom CEO Hock Tan is pleased with the transition, citing a significant number of top customers already switching to VMware‘s licensing model. However, market analysts warn of potential cost increases of up to 500% for businesses, leading many to explore other options. OpenStack, an alternative owned by the Open Infrastructure Foundation, has gained traction, with a reported 62% of respondents already migrating from VMware due to licensing issues and cost concerns.
Despite the backlash from some customers, Tan remains confident in the subscription model’s benefits, highlighting increased annual booking value since its implementation. He views the model as a way to offer customers comprehensive service and regular updates, likening it to receiving daily news updates compared to a weekly summary. Tan is not concerned about the slow pace of implementation, pointing to other major companies like Salesforce, Oracle, and Microsoft who have successfully transitioned to subscription models.
However, recent reports from Forrester Research suggest that VMware‘s pricing changes could lead to a fifth of its customers seeking alternatives. Concerns surrounding consistency in integration and management adjustments by Broadcom have also contributed to customer dissatisfaction. Despite these challenges, Broadcom has made efforts to optimize VMware‘s sales channels and adapt its existing networks to align with Broadcom’s model. Tan believes this approach will ultimately benefit both vendors and customers, providing greater flexibility in pricing and vendor selection.
Overall, the future of VMware‘s customer base remains uncertain, with some predicting a significant loss of customers due to pricing changes and management issues. While Broadcom remains confident in the long-term benefits of the subscription model, the opposition continues to explore alternatives such as OpenStack. As the market evolves, it will be essential for VMware to address customer concerns and adjust its strategies to maintain its customer base and competitiveness in the industry.
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https://cxotoday.com/news-analysis/is-vmwares-subscription-model-working/
