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It looks a lot like VMware just lost a 24,000-VM customer

theregister.com

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Re: It looks a lot like VMware just lost a 24,000-VM customer

#101

Post by BurningFrog »

helsinkiandrew wrote: post #4

> Steve McDowell, chief analyst at NAND research, told The Register that VMware by Broadcom is “laser focused on high-revenue, high-margin business” and has priced its wares “just below the pain threshold for customers they care about.” If you hike your prices by 10-15x, you only need 6-10% of customers to stay to maintain your revenue, reduce costs and massively increase profit margins!

For a while.

This is a massive invite for competing businesses to offer the same service 20% cheaper, and still make lots of money.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#102

Post by mbesto »

yokaze wrote: post #38
alephnerd wrote: post #21

Earlier quoted context omitted.

Broadcom makes $35B a year in revenue. VMWare made at most $13.4B. Even with severe churn, VMWare would make around $12.8-13B. VMWare is just a BU now, not a company, and the economics of managing "just another product line" is different from a company with a flagship product As I've mentioned before on HN, the math is different and it makes sense to up prices and only concentrate on F1000s at that size. > Pinning al…

> Large customers are sticky. You can't migrate your hypervisor or cloud provider overnight. These are multi-year projects. Yes, but that scale, everything is an multi-year effort. The contracts likely as well. That doesn't mean, it's not going to happen. And it's not like all has to happen in one go. So before you were all in VMware, and that vendor is practically promising to hike up the prices to make you bleed. W…

Also, where are ESXI customers at the enterprise level going to go? Do we really think they're going to magically switch over to HyperV (and get Win admins) or Proxmox (and have a lack of IBM-enterprise level support)?

Re: It looks a lot like VMware just lost a 24,000-VM customer

#103

Post by alephnerd »

prmoustache wrote: post #94
alephnerd wrote: post #74

Earlier quoted context omitted.

Why should I hire an additional 50 Infra Engs who are underutilized when I can use that to hire 50 additional SWEs or Salespeople to expand my TAM?

Because migrations should happen all the time. If things are done right requires the same effort to patch and have downtime of all your systems than it is to migrate from one hypervisor to another. I've migrated tons of systems, sometimes p2v and v2v makes it simpler/faster but more often than not it is more useful and as fast to reinstall system then redeploy app (you can often use that time to migrate to major OS r…

> Because migrations should happen all the time

Hypervisor migrations? Complete DC migrations? If you are doing that every single quarter you are doing something VERY wrong (or you should migrate to the cloud).

Re: It looks a lot like VMware just lost a 24,000-VM customer

#104

Post by 9cb14c1ec0 »

I don't think I've ever seen to this degree such a misguided focus on short-term profit at the expense of driving away ALL future customers. At this point, who ever would even consider VMware for a new project or business? Vmware will exist only as long as their current customers exist. Being a VMware salesperson has to be a brutal job right now.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#105

Post by benterix »

alephnerd wrote: post #90
benterix wrote: post #85

Earlier quoted context omitted.

And yet, every single large company I worked for had AWS, Azure and Google Cloud, without exception. Many also have extensive on-prem resources. Also, the contract negotiations you mentioned work much better if the competitor is already well present in your company.

> every single large company I worked for had AWS, Azure and Google Cloud, Multi-cloud is different from on-prem related stuff like multi-hypervisors, because there are multiple billing methods, the muscle to migrate is much better built in the industry, and your cloud costs can be placed within R&D (which traditionally gets way more leeway due to tax benefits) whereas any IT Infra spend will inevitably fall under th…

Of course it's very different, but it's the same in how buying the same functionality from a competitor is not a reason to get you fired unless there are other specific conditions.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#106

Post by mschuster91 »

dbspin wrote: post #8
pmx wrote: post #5

Earlier quoted context omitted.

This massively increases risk too, right? Pinning all your revenue on a much smaller customer base means losing one or two of them has a huge impact!

Also pretty much guarantees flight of your former customer base to close compliments - who then have improved revenue to bring their products closer in alignment to yours. You'd better have a hell of a moat to follow this strategy.

> Also pretty much guarantees flight of your former customer base to close compliments - who then have improved revenue to bring their products closer in alignment to yours.

Classic VM hosting is a dead end anyway. Customers are shifting to the hyperscalers wherever they can, if only to reduce the headcount of their IT departments due to acounting wizardry making it worth it for the stonk markets even if the cloud costs more in the end.

And then, there aren't that many alternatives to VMware, and none of them (bar OpenStack) as comprehensive.

As long as Broadcom manages to squeeze enough out of the large customers who are vendor-locked too hard over the next 3-5 years, it'll be worth the money for them, and chances are the gamble pays off, with a small trail of extremely large customers paying for a decade until they can get their internal chaos sorted out to migrate off.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#107

Post by OccamsMirror »

Spooky23 wrote: post #77
alephnerd wrote: post #21

Earlier quoted context omitted.

Broadcom makes $35B a year in revenue. VMWare made at most $13.4B. Even with severe churn, VMWare would make around $12.8-13B. VMWare is just a BU now, not a company, and the economics of managing "just another product line" is different from a company with a flagship product As I've mentioned before on HN, the math is different and it makes sense to up prices and only concentrate on F1000s at that size. > Pinning al…

Don’t attribute this stuff to strategy. The people running “the BU” are just counting on friction to hold on to revenue. They aren’t able to even meet the commitments they make and are disrespectful to customers in other ways. I think they overestimated their market power. I have 2 years left on my main ELA. I have budget to spend 5x to exit. My spend will go from 8 figures to under $1M. Personally, I resisted the vi…

Exactly this. Any smart CTO will be planning their exit. It’s pretty obvious that what made VMware great is now just a zombie.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#108

Post by alephnerd »

benterix wrote: post #105
alephnerd wrote: post #90

Earlier quoted context omitted.

> every single large company I worked for had AWS, Azure and Google Cloud, Multi-cloud is different from on-prem related stuff like multi-hypervisors, because there are multiple billing methods, the muscle to migrate is much better built in the industry, and your cloud costs can be placed within R&D (which traditionally gets way more leeway due to tax benefits) whereas any IT Infra spend will inevitably fall under th…

Of course it's very different, but it's the same in how buying the same functionality from a competitor is not a reason to get you fired unless there are other specific conditions.

> buying the same functionality from a competitor is not a reason to get you fired unless there are other specific conditions

There are different expectations depending on the kind of bucket you are spending from.

The amount of capital you have to spend in the R&D bucket is much larger than the Finance&IT bucket and who you report to (CTO vs CFO) is different.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#109

Post by rekoil »

9cb14c1ec0 wrote: post #104

I don't think I've ever seen to this degree such a misguided focus on short-term profit at the expense of driving away ALL future customers. At this point, who ever would even consider VMware for a new project or business? Vmware will exist only as long as their current customers exist. Being a VMware salesperson has to be a brutal job right now.

And you can bet that many of them are currently looking at removing or severely reducing their VMware dependance, maybe even decommissioning projects that are deemed unfeasible to move to another platform.

Re: It looks a lot like VMware just lost a 24,000-VM customer

#110

Post by icedchai »

prmoustache wrote: post #94
alephnerd wrote: post #74

Earlier quoted context omitted.

Why should I hire an additional 50 Infra Engs who are underutilized when I can use that to hire 50 additional SWEs or Salespeople to expand my TAM?

Because migrations should happen all the time. If things are done right requires the same effort to patch and have downtime of all your systems than it is to migrate from one hypervisor to another. I've migrated tons of systems, sometimes p2v and v2v makes it simpler/faster but more often than not it is more useful and as fast to reinstall system then redeploy app (you can often use that time to migrate to major OS r…

The reality is that in many organizations, nobody wants to update or reboot anything unless absolutely necessary. I once took a contract job at a company that wanted me to migrate and upgrade some Linux VMs running on a 5+ year old distro. This was a decent sized, established company, not a startup (1000's of employees, 100 million+ revenue)

The existing VMs had not been updated or rebooted in years. Several had 1200+ day uptimes! These systems were accessible from the Internet and regularly used by customers for an important, highly specialized product. The only reason they were even bothering was they had failed some security scan and nobody there could even understand how to use SSH.

The minimum level of IT security is apparently barely anything.

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