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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

#61

Post by prmoustache »

alephnerd wrote: post #52
prmoustache wrote: post #49

Earlier quoted context omitted.

> Large customers are sticky. You can't migrate your hypervisor or cloud provider overnight. These are multi-year projects. In VM's case it is not that long really. It really depends how much priority you put into it.

> In VM's case it is not that long really It is. You have teams critical apps running and you do not want to cause downtime for customers (internal or external). I've seen this saga happen dozens of times and it is a very delicate and intricate process that requires a lot of planning. A failed migration can become news, for example - https://www.bloomberg.com/news/articles/2023-11-15/ubs-says-...

It only is because companies usually don't staff to be ready for large migrations. They should.

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

#62

Post by markus_zhang »

alephnerd wrote: post #46
yokaze wrote: post #38

Earlier quoted context omitted.

> 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…

When you have a sticky existing customer who's about to churn, you end up discounting below the price of the migration, then slowly rise the cost again, then do the same thing again (this is easy because margins are 80% in our industry). All vendors do this - you can't escape it. This is why companies began leaving for the Cloud - sure it's upfront more expensive, but the negotiations are not as protracted.

Sorry just to clarify, leave for the cloud or leave cloud? Looks like in this case it is indeed leave for the cloud (leave VMs) but I also heard a lot about leaving cloud for self hosting.

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

#63

Post by AtlasBarfed »

"Nutanix, he said, is now his champion for databases, all 128,000 of them, after delivering 1,000 percent better performance than another unnamed rival and pulling off tricks like recovering a forty-terabyte database in eight minutes."

... yeah. I like El Reg, but... come on. ONE THOUSAND MEGAPERCENT vs unnamed rival.

Nutanix has an in-house cassandra fork I believe, I wonder if they are weasel wording some linear scaling.

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

#64

Post by alephnerd »

pch00 wrote: post #56
alephnerd wrote: post #53

Earlier quoted context omitted.

> that's not 'severe churn' Companies do not churn 100% customers. Most cases "severe churn" is counted as 80-100% NRR as customers are on multiyear contracts that are much more expensive to break than they are to wait out. > Isn't TFA a precise counter-point to that assumption? The customer was already a Nutanix customer, so the hard work was already done. Basically, this customer was using BOTH Nutanix and VMWare i…

> Basically, this customer was using BOTH Nutanix and VMWare internally (I am VERY surprised how the previous CFO did not get fired for something like that), and because they already had the Nutanix knowhow and licenses, migrated fully to it. Why do you think that? Not putting all of your eggs into a single vendor basket seems like a solid plan - if anything the Broadcom/VMware disaster supports it.

> Why do you think that

Have you ever seen Nutanix's pricebook as well as VMWare's?

Spending 2x on hypervisors is dumb because now you need 2x the headcount on SMEs because you'll need both a Nutanix and VMware SME, as well as 2x the contract negotiations, and the money you are spending on both could have been better spend improving your product or hiring more people to sell your product.

It's a bad use of capital. At the end of the day, Infra is a cost center. It's something used to keep the lights on, but doesn't expand your TAM.

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

#65

Post by benterix »

alephnerd wrote: post #21
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!

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.

I can assure you first hand than not only F1000 but also F100 consider migrating away from companies that introduce sudden price hikes counting on inertia. It's not a question of "if", only "when".

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

#66

Post by AtlasBarfed »

bombcar wrote: post #47
cjk2 wrote: post #20

Earlier quoted context omitted.

I remember my father doing this one. He was an SME support company. With two clients. He cranked the price up 4x and said ”we’ve got them by the balls” . They both opened a tender process and shot him and he was bankrupt 6 months later.

4x and in one go is too much for many to bear. If you do it at 25%-50% a year or so you can boil the frog with much more reliability. Everyone and everything is replaceable. The question is if it’s worth it.

A shakedown price increase means that your vendor isn't your partner. Because major vendors are business partners.

It's like blackmail. If you pay up, how do you know another one isn't coming the next year?

But... Oracle stays in business, so what do I know.

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

#67

Post by Log_out_ »

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!

Sounds like a plan to invest into competition

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

#68

Post by alephnerd »

markus_zhang wrote: post #62
alephnerd wrote: post #46

Earlier quoted context omitted.

When you have a sticky existing customer who's about to churn, you end up discounting below the price of the migration, then slowly rise the cost again, then do the same thing again (this is easy because margins are 80% in our industry). All vendors do this - you can't escape it. This is why companies began leaving for the Cloud - sure it's upfront more expensive, but the negotiations are not as protracted.

Sorry just to clarify, leave for the cloud or leave cloud? Looks like in this case it is indeed leave for the cloud (leave VMs) but I also heard a lot about leaving cloud for self hosting.

Leaving/left for the cloud. There is some scaling down of cloud resources for self hosting, but as a whole all CSPs have seen growth in users across all buckets.

On-prem doesn't give you flexibility, and leaves you open to getting arm twisted by vendors. Similar stuff happens in cloud ofc, but it's easier to implement a multi-cloud strategy than a multi-hypervisor strategy.

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

#69

Post by sidewndr46 »

m0llusk wrote: post #36
rapsey wrote: post #30

Earlier quoted context omitted.

I'm guessing those examples are legion. Always treat your costumers and partners with respect. Another famous example is BeOS thinking they have Apple by the balls to be the basis for OSX. Demanded an outrageous price, Apple just used a BSD.

That is not a good comparison. NeXT was far more than "a BSD". It was a whole bunch of frameworks, development tools, applications, and a hardened team that had already ported to several other architectures. BeOS was still mostly vision at that point.

wasn't Next actually developed by the former CEO of Apple as well?

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

#70

Post by benterix »

alephnerd wrote: post #46
yokaze wrote: post #38

Earlier quoted context omitted.

> 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…

When you have a sticky existing customer who's about to churn, you end up discounting below the price of the migration, then slowly rise the cost again, then do the same thing again (this is easy because margins are 80% in our industry). All vendors do this - you can't escape it. This is why companies began leaving for the Cloud - sure it's upfront more expensive, but the negotiations are not as protracted.

> All vendors do this - you can't escape it. This is why companies began leaving for the Cloud - sure it's upfront more expensive, but the negotiations are not as protracted.

I don't get your point here: if you mean the public cloud, it's the synonym of vendor lock-in now.

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