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Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

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Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#91

Post by panick21_ »

Does VMWare software do much more then VM handling? Is there something extra they provide to make it worth paying that much? I have only ever worked a little with the free product.

Also, what are the alternatives proprietary and open? And what are those solutions missing? Hopefully this is good news for the open project, getting more commercial support and more users.

Also sounds like good news for people like Oxide. If costumers are already considering leaving VMWare and need to do a lot of software changes, they might be willing to make a larger step for new hardware as well.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#92

Post by alephnerd »

itsdrewmiller wrote: post #90
alephnerd wrote: post #33

Earlier quoted context omitted.

As I said in my comment - you can safely assume mean contract value is in the mid 8 or low 9 digits at a company the size of VMWare. If this scares away customers spending less than that, good for them. It doesn't make a dent when a F1000 is spending tens of millions a year on VMware and purchase by committee and will get sweetheart deals by being strategic accounts.

VMWare has 400k customers and 13.4b revenue according to google, which means their average customer is around 335k.

That's not how the average should be calculated.

It should be:

(Contract_1_yearly+...+Contract_n_yearly)/num_contracts

Anyhow the customer signed the deal (https://twitter.com/cioontherun/status/1761882689886433742), implying they were underpaying and had the capacity to pay the true rate.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#93

Post by ehvatum »

alephnerd wrote: post #49
rootlocus wrote: post #41

Earlier quoted context omitted.

That's what I don't get either. If they can shove off one of their top 1500 customers (probably much higher) and, as someone put it, "everyone is using them", that means unless you're one of the top few hundred customers, this can absolutely happen to you. Which is what people are upset about.

It's how companies work. I can guarantee for a fact that a F1000 will be spending 8-9 figures for a VMWare type product (I've worked on similar products as a PM). $8m is low. > Which is what people are upset about All that matters is purchasing committees are ok (not happy, not sad - just meh). All I see here is just IC engineers pouting.

> All that matters is purchasing committees are ok

Large enterprise purchasing committees are foremost concerned with risk, you absolute dolt.

The risk that price will jump 12x, requiring all kinds of scrambling, is fucking awful.

I don’t know what planet you’re from, but you gotta stop acting like it’s this one.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#94

Post by jve »

dvh wrote: post #45
amelius wrote: post #20

How much would it cost to build VMware from scratch?

Isn't virtual box free and open source?

You are comparing what a single windows host to business is compared to whole management environment: Active Directory/Entra and gazillion of other things that help manage the business.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#95

Post by bcaxis »

politelemon wrote: post #43
chgs wrote: post #5

You choose proprietary and you get screwed. I can’t wait for the AWS sob stories.

Aws pricing is listed though, you know what you're being charged. VMware is conversation based though isn't it.

All the pricing is subject to change.

When market conditions change significantly you can see massive degradation of the business somewhere.

VMware shake down could certainly affect the cloud market significantly.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#96

Post by itsdrewmiller »

alephnerd wrote: post #92
itsdrewmiller wrote: post #90

Earlier quoted context omitted.

VMWare has 400k customers and 13.4b revenue according to google, which means their average customer is around 335k.

That's not how the average should be calculated. It should be: (Contract_1_yearly+...+Contract_n_yearly)/num_contracts Anyhow the customer signed the deal ( https://twitter.com/cioontherun/status/1761882689886433742 ), implying they were underpaying and had the capacity to pay the true rate.

That’s going to get you basically the same number unless you think most of those 400k customers do not have contracts for some reason? My revenue-based approach would undercount in-year bookings but your approach would undercount NRR which I suspect is nontrivial for VMWare (but I haven’t checked).

Also just to be clear I agree with your initial comment - there are lots of reasons even big customers can be worth repricing based on their true costs and strategic relevance. And at less than 0.1% of revenue VMWare can certainly afford to risk it.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#97

Post by rwmj »

panick21_ wrote: post #91

Does VMWare software do much more then VM handling? Is there something extra they provide to make it worth paying that much? I have only ever worked a little with the free product. Also, what are the alternatives proprietary and open? And what are those solutions missing? Hopefully this is good news for the open project, getting more commercial support and more users. Also sounds like good news for people like Oxide.…

Depends what you mean by "more than VM handling". VMware handles everything you could possibly think to do with VMs and many you probably never thought about. For example: Scripted live migration. Single click to deploy a test network of VMs. Virtual desktops. Wrap up a VM in a single file that can be "played" remotely. Scan all your VMs for vulnerabilities.

Beyond VMs they attempted to branch out into containers with a version of Kubernetes (VMware Tanzu) which I believe didn't get many sales.

The competition are roughly:

- All the cloud providers

- oVirt (formerly Red Hat's RHV, probably the closest thing to vSphere in terms of UI and deployment)

- Kubenetes + Kubevirt

- Openstack, probably

- Virtuozzo

- Virtual Box

- Proxmox

- Nutanix

- Single node installations using things like virt-install

- Rolling your own management on top of KVM or Xen (surprisingly popular but I wouldn't recommend it myself)

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#98

Post by shrubble »

alephnerd wrote: post #7

This is basically a polite way to fire a customer. You don't want to sell to everyone - you need to make sure the cost of retention+support is significantly less than what they are paying. If a customer is too troublesome or spending too little (for a company like VMWare, a $8m contract is on the smaller end) this is the politest way to fire them. It sounds like this customer is a legal firm, which makes sense - they…

This strategy works... until it doesn't. You may well be correct for the next 3-5 years; but after that those customers will leave and they won't come back. Ever.

Tech is littered with the twittering ghosts of companies that had something "essential" and "irreplaceable". The strategy is "a retreat to the high end" and a self-serving re-definition of "who are customers are" and "what we do".

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#99

Post by red-iron-pine »

wjnc wrote: post #12
alephnerd wrote: post #7

This is basically a polite way to fire a customer. You don't want to sell to everyone - you need to make sure the cost of retention+support is significantly less than what they are paying. If a customer is too troublesome or spending too little (for a company like VMWare, a $8m contract is on the smaller end) this is the politest way to fire them. It sounds like this customer is a legal firm, which makes sense - they…

It is the most shitty (and stupid) way possible to act though. Old price x 12 is not in good faith. Contracts are based on good faith. Give them a rationale, give them a deadline 24 months hence and a fair price increase. Dare to say no to individual customers. Any customer should now start planning for the end of their Broadcom VMWare-contract. If they do not act in good faith to a random customer, why would they to…

> Give them a rationale, give them a deadline 24 months hence and a fair price increase

consider that, for shitty, demanding customers, the 'fair price' may be 12x more.

$8M probably doesn't justify the effort, and they may well use $10M+ in support, resources, or potential liability.

Good faith in the contract is expecting to give something in the contract and then meaning it. They will give good support -- for 100M.

Re: Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

#100

Post by red-iron-pine »

michaelt wrote: post #30
alephnerd wrote: post #14

Earlier quoted context omitted.

This is how I know you haven't been on an enterprise account team. The strategy you described has no upside for the vendor (in this case Broadcom VMWare).

> The strategy you described has no upside for the vendor (in this case Broadcom VMWare). The upside is you don't scare off other customers when they hear reports of a 12x price increase. Right now, in response to this post, VMWare's biggest customers will be drawing up plans for if they need to walk away at the next contract renewal. And they'll want those plans to be extremely credible - it's worth spending $5 mill…

VMwares biggest customers will be getting deals apropriate to their offerings.

It sounds like this was a (comparatively) PITA small-fry legal / law office.

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