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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

#91

Post by alephnerd »

markus_zhang wrote: post #79
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…

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.

> Does that mean there is a bigger market for mid-market and below now

Nope. Tech forward mid-markets (eg. every single tech startup) are all cloud first, and the legacy mid-markets will go thru MSPs and Resellers to buy these products.

No one likes IT spend. It's a cost center.

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

#92

Post by alephnerd »

pch00 wrote: post #88
alephnerd wrote: post #64

Earlier quoted context omitted.

> 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. A…

> 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. Indeed it is and while CFOs may not completely understand the technology they do understand risk and if the CTO has flagged "single vendor" as a risk then the CFO will go with that.

I also wouldn't be surprised if pre-Broadcom VMWare APJ AEs gave these guys a sweetheart deal just to make logo/ACV quota in their region. Shenanigans like that were VERY common at VMWare before the acquisition. Their SalesOps was horrid.

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

#93

Post by magicalhippo »

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

Could be they acquired another company that ran the other one. We see this with our customers all the time. They acquire a competitor, slap their name all over it, but we still have to treat them like effectively two separate customers for ages.

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

#94

Post by prmoustache »

alephnerd wrote: post #74
prmoustache wrote: post #61

Earlier quoted context omitted.

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?

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 release) and it is dead easy to do a rollback if you encounter issues in migration, stop the new one, restart the old one.

A company that is not staffed to migrate all its servers in less than 3 months is not staffed to have the most minimum level of IT security.

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

#95

Post by alephnerd »

magicalhippo wrote: post #93
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…

> I am VERY surprised how the previous CFO did not get fired for something like that Could be they acquired another company that ran the other one. We see this with our customers all the time. They acquire a competitor, slap their name all over it, but we still have to treat them like effectively two separate customers for ages.

Good point! UBS-Credit Suisse is dealing with that right now, and heads are about to roll over that.

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

#96

Post by JeremyNT »

alephnerd wrote: post #2

> he found the IT department using two hypervisors: Nutanix AHV, and ... VMware. The CTO felt two hypervisors was one too many and considered a consolidation Good move, and plenty more like this will happen. But like I've said before, the winners will be Nutanix, Citrix, and other existing enterprise infra vendors - not Proxmox. And companies like Broadcom are fine with that because market segmentation is a thing. (A…

> But like I've said before, the winners will be Nutanix, Citrix, and other existing enterprise infra vendors - not Proxmox.

It can be all of the above though. I work in higher education and Proxmox is the only option we are seriously considering right now.

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

#97

Post by alephnerd »

AtlasBarfed wrote: post #84
alephnerd wrote: post #45

Earlier quoted context omitted.

The issue is these old school blogs aren't some random dudes eating ramen who love technology for the sake of technology anymore. They are now owned by press wire publishers and corporate conference owners, and as companies have increasingly moved away from both these options, the tone has become increasingly uneven. Look at how much RSA flamed Palo Alto Networks for deciding to quit RSA and how Register never uses s…

You might be right, but at least it is SOME skeptical source to fight back against the unending gusher of marketing bullshit. The fact they may preferentially apply the snark based on "extortion" isn't great, but at least they are SOME voice, and like comedy some snarky sarcasm is often much more incisive that (shockingly) fluff. And considering the gushing amound of shadow-sponsored fluff in other magazines, aka the…

> is SOME skeptical source to fight back against the unending gusher of marketing bullshit.

They aren't though. They are also marketing bs. If you work at a vendor, go slack your content marketing team for a coffee chat to understand how it works.

This is the managing company for The Register [0]. We'd work with AMs at Situation Publishing to be looped to the right magazine (Register, Next Platform, Blocks and Files, etc) and could complain to them if we gave enough business to them.

[0] - https://situationpublishing.com/

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

#98

Post by icedchai »

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.

They'll be sitting around twiddling their thumbs most of the time. Seems like something to be contracted out when necessary.

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

#99

Post by mglz »

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!

Modern business seems to not care about resilience or having a plan B at all.

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

#100

Post by markus_zhang »

alephnerd wrote: post #91
markus_zhang wrote: post #79

Earlier quoted context omitted.

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.

> Does that mean there is a bigger market for mid-market and below now Nope. Tech forward mid-markets (eg. every single tech startup) are all cloud first, and the legacy mid-markets will go thru MSPs and Resellers to buy these products. No one likes IT spend. It's a cost center.

Gotcha, thank you. Yeah, no one likes a cost center...and IT is usually the first to layoff.
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