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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

#71

Post by gremlinunderway »

alephnerd wrote: post #14
gruturo wrote: post #12

Earlier quoted context omitted.

> Also I hate hate HATE The Register's tone I find the snark refreshing compared to all the corporate drones using their carefully worded lawsuit-proof, passive-voice, non-committal, lawyer-vetted style. You must work in a very, very sane environment - for most of us this is literally a breath of fresh air.

As I mentioned below: They are not snarky and they very gladly work with corporates as well. They are just writing in some weird pissy tone. Look at all the sponsored content they have from ZTE, as well as all the Nutanix specific articles because of Nutanix .NEXT Snark is fine if you are evenhanded by being snarky about everyone, but it ain't great if you're clearly picking and choosing and deciding to take money fr…

Hate to burst your bubble, but even the super tight-laced "serious" journalism, especially in tech, all works the same way too. Going super hardcore on "professionalism" makes it easier to sell objectivity whereas in the background you are also clearly picking and choosing to decide to take money from vendors.

It's just one aesthetic over another. The corporate-style is made to win over those naive to think their slick editing and wordsmithing means that they're objective about their reporting ("so professional! Real journalists!"). The snarky/edgy style is made to win over those naive enough to think that because they're "rebels" then they must be objective unlike those corporate stuck-up types.

It's Windows vs Mac for journalism, thats all.

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

#72

Post by [deleted] »

smallnamespace wrote: post #59
dbspin wrote: post #8

Earlier quoted context omitted.

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.

Tiny nitpick: complement means a good in an adjacent part of the supply chain (e.g. batteries and EVs are complements), you might have meant 'competitors'.

[deleted]

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

#73

Post by Devasta »

pmx wrote: post #5
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!

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!

In this case, if you increase your price 10X and they don't leave you, there must be some deep technical reason why they cannot move even if they want to.

You no longer have customers, you have hostages.

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

#74

Post by alephnerd »

prmoustache wrote: post #61
alephnerd wrote: post #52

Earlier quoted context omitted.

> 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.

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?

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

#75

Post by AtlasBarfed »

alephnerd wrote: post #58
alpaca128 wrote: post #44

Earlier quoted context omitted.

Acquiring new customers would become quite difficult, though. If you increase prices to a point where everyone who can leave will leave, who in their right mind would choose your product and risk another price hike in the future?

All prospects are not the same. You have 5 types of accounts: - Strategic: F500s or very well known startups - Enterprise: F1000s - Mid-Market: Companies below $1B a year in revenue - Federal: Federal Government - Channel/Reseller: For companies that are too small, you have a MSP sell for you because you can't be bothered to sell to them. Strategics, Enterprises, and Fed will always get good deals and will always hav…

Problem is, you are opening up the market for open source competitors by not servicing the mid market.

Customer service is becoming truly extinct.

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

#76

Post by alephnerd »

AtlasBarfed wrote: post #75
alephnerd wrote: post #58

Earlier quoted context omitted.

All prospects are not the same. You have 5 types of accounts: - Strategic: F500s or very well known startups - Enterprise: F1000s - Mid-Market: Companies below $1B a year in revenue - Federal: Federal Government - Channel/Reseller: For companies that are too small, you have a MSP sell for you because you can't be bothered to sell to them. Strategics, Enterprises, and Fed will always get good deals and will always hav…

Problem is, you are opening up the market for open source competitors by not servicing the mid market. Customer service is becoming truly extinct.

> Problem is, you are opening up the market for open source competitors by not servicing the mid market.

You aren't. They go to resellers or other large vendors (eg. this example of going from VMWare to Nutanix)

Open Source competitors (NOT open core companies) do not provide the SLAs on support needed if SHTF.

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

#77

Post by Spooky23 »

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…

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 visceral “fuck you” emotional response. But it’s one of the rare times when the quick take is correct. The reality is VMWare is dead and is too risky to keep in place. The smart move is not to play.

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

#78

Post by benterix »

alephnerd wrote: post #53
Jedd wrote: post #51

Earlier quoted context omitted.

> Even with severe churn, VMWare would make around $12.8-13B. Down from the $13.4B -- that's not 'severe churn' you're describing there, it implies only a few percent drop in revenue. We've yet to see if that's the likely outcome here, but touchy-feely sentiment suggests that it'll be worse than that. > Large customers are sticky. Isn't TFA a precise counter-point to that assumption?

> 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…

> (I am VERY surprised how the previous CFO did not get fired for something like that)

It always make me smile how fast people on the Internet would fire CFOs without knowing the context of the situation. (Not to mention that this case proves the guy was right.)

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

#79

Post by markus_zhang »

alephnerd wrote: post #58
alpaca128 wrote: post #44

Earlier quoted context omitted.

Acquiring new customers would become quite difficult, though. If you increase prices to a point where everyone who can leave will leave, who in their right mind would choose your product and risk another price hike in the future?

All prospects are not the same. You have 5 types of accounts: - Strategic: F500s or very well known startups - Enterprise: F1000s - Mid-Market: Companies below $1B a year in revenue - Federal: Federal Government - Channel/Reseller: For companies that are too small, you have a MSP sell for you because you can't be bothered to sell to them. Strategics, Enterprises, and Fed will always get good deals and will always hav…

Makes sense. Does that mean there is a bigger market for mid-market and below now? Maybe it is too annoying for the big companies to care, but could be lucrative for smaller ones.
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