With midmarket customers facing VMware renewal prices that are multiples higher after Broadcom switched to per-core subscription licensing model, MES Computing took a look at midmarket providers filling the void for price-conscious organizations.
Midmarket IT leaders are facing price hikes of three to as much as 10 times their current licensing arrangements, leading to a rush for alternate vendors.
Broadcom killed all VMware perpetual software licenses in favor of a move to subscription based on CPU cores. The change came after Broadcom finalized its $69 billion acquisition of VMware in December.
The changes come as VMware only offers its popular vSphere hypervisor as part of a bundle known as VMware Cloud Foundation. That comes with a new core-based licensing model versus the previous per-processor model. This requires customers to purchase a minimum of 16 cores per CPU.
Each core license purchased provides 1 Tebibyte (TiB) of vSAN capacity. Additional capacity can be purchased using the add-on SKU.
The VMware Cloud Foundation price increase came as Broadcom significantly reduced the vast number of separate product options for customers to two primary offers.
Forrester Principal Analyst Tracey Woo has said that VMware customers are seeking new virtualization vendors in the wake of sharply higher bills.
"To put it simply—yes. We have seen anywhere between 3X to 8X to 10X changes in pricing," Woo told CRN. "The per-core charging is another way of masking that you are also responsible for paying for a lot of shelfware given their product SKU simplification."
Market researcher Gartner, for its part, said the VMware licensing changes have increased run costs by a factor of two or more for many Gartner clients.
"Broadcom's enterprise commercial practices are creating negative sentiment, and many clients have expressed a desire to investigate alternative approaches and vendors," said Gartner.
Richard Richson, who is the director of IT infrastructure and operations at Repligen, a biosciences company, was an early adopter of VMware alternative Nutanix. He told MES Computing he is relieved he moved his infrastructure in 2019, since Broadcom's pricing changes to VMware would have meant a "drastic price increase" for his current budget.
"Trying to come up with an extra 25 [percent], 50 percent or more budget on something that's already been reduced, I mean, what do you expect?" Richson said. "Especially if you've been a long time VMware customer ... and now you're kind of handcuffed ... they're telling their customers, ‘Either you pay the increase or go find another solution. You have to make that decision,'" he said.
Here's A Look At Five Midmarket Alternatives To VMware
- Hyve Managed Hosting
Hyve Managed Hosting is a VMware Cloud Service Provider partner at the Premier Partner level in the Broadcom Advantage Partner Program.
Jake Madders, co-founder and director of Hyve, said that after fallout from the acquisition, Hyve strategized to help customers who were potentially threatened with significant price increases for their VMware infrastructure.
"We looked at each customer individually and tried to get their bill back to where it was. We changed their servers to accommodate cheaper licensing," Madders said.
"VMware changed their billing based on how much memory you've got to how many CPUs you've got, so what we've had to do is reduce the number of CPUs [customers are] using and increase their memory," he said.
Madders went further in-depth about Hyve's strategy:
"We give [customers the] most powerful cores, but less of them, and that saves them money. Then we give them lots of memory -- RAM -- so that they can make use of other components within the server that doesn't add license fees. So, you can get 20 cores running at 2 GHz or you can get 10 cores running at 5 GHz or 4 GHz. It keeps the compute power the same, but in a clever way," he said.
2. Rackspace
Josh Villarreal, general manager of OpenStack at Rackspace, said the company has seen demand and inquiries about Rackspace solutions increase "exponentially," since the acquisition.
Villarreal said that's because "Rackspace in general, is a big VMware shop as well as doing OpenStack ... we give customers a choice."
"We've done a lot over the last couple of months to put some TCO analysis together," he said. "'This is what my VMware spend is currently and now that the licensing has gone up, I'm facing a cliff moment," he added about some customers' concerns.
Rackspace customers, he said, don't pay for licensing, they pay for support.
"You're trading a license from VMware for support from Rackspace, but ultimately you get a private cloud that is upstream, Open Stack reference architecture and something that you can take in-house if you own your own destiny, you have that portability, but you also have a partner that's giving you a fully managed solution," he added.
While Rackspace can support virtually any hypervisor, Kevin Carter, OpenStack product manager at Rackspace understands the need for some customers to stay with VMware even if they face pricing hikes.
"VMware is a good solution and some workloads require that VMware solution," Carter said. "Let me help you manage those must-haves on that VMware environment and then let me give you a platform ... that gives you longevity to keep your business operational and then save you 60 percent on the back end."
"We can make it so that customers can come in and leverage our services at a more optimized cost for their infrastructure in our data centers -- users who want to leverage APIs and infrastructure as a service -- then I want to talk to them about OpenStack, because OpenStack is the multi-cloud solution that gives them the ability to run their public and private clouds with a single SDK software library. There's no vendor lock-in here," he added.
3. Scale Computing
Jeff Ready, CEO and co-founder of Scale Computing, said his company has a couple of programs running currently for those looking for a Broadcom-VMware alternative.
"Our Seamless Switch campaign has a few key elements," he said. "One is if you're an existing VMware customer, and you have time remaining on your VMware license, if you switch over to Scale, we will credit you that time that you have remaining effectively for free."
In the past, the only time an end user would really think about switching from VMware was when they were doing a refresh with their entire infrastructure, Ready said, noting that typically, they would buy servers and storage and networking. Now, they see even if they have time remaining on their VMware contract, they know the price hits are coming, he said.
"We're giving them an opportunity to move sooner rather than wait until the end and feel like they had to go back to their boss – their president or CFO – and say, ‘Oh sorry, we made a mistake in buying VMware for a three-year contract," he said.
In addition, Ready said, "If you have hardware running your VMware environment, and you need to upgrade that hardware at some point again, knowing that often times these things were purchased at the same time, we're allowing customers with credit in that hardware to trade in that hardware … so Scale will sell both software only if you have hardware that's on our list of compatible systems, or we'll also sell appliances where it's all bundled together. "
Ready said Scale also has migration tools to assist customers in the migration from VMware to Scale.
There is currently no end date to the Scale Seamless Switch campaign, said Ready.
4. Neudesic
Richard Sedlak, the director of cloud infrastructure services (national) at IBM-owned Neudesic, detailed what Neudesic can offer those affected by the acquisition.
"Broadcom, if they've done anything really well for me this year, is they've been an excellent marketing player for us," he said.
"We've heard anecdotally of some of their customers, who had development deals with VMware before, [say], ‘I'm getting charged a very high price,' when before they were developing tools for the ecosystem."
One of the reasons Neudesic is excited about Azure's VMware solution is it can set it up to run completely in the Azure environment, he said.
"We can get you a solution up very rapidly and then have you migrating … with little to no downtime because VMware has these great tools," said Sedlak. "One of them is called vMotion, where you can move a server between hypervisors very quickly, and it doesn't even have to go down," he said.
Sedlak said Neudesic has noticed that the risk mitigation is very low going from VMware to an Azure VMware solution, and it's still cheaper than having to pay for additional licenses.
"You're really just picking up all of your software and moving it on top of a different stack," he said. "Your typical operators who are good in vCenter and know how to use that interface, they're still using that interface. It's just a different URL they're going to."
5. ComputerVault
"We're a standalone hyperconverged infrastructure – we don't license any third-party applications or software products," said Marc Zarrella, vice president and head of revenue and partnerships at ComputerVault.
Zarella said the company has been keeping close watch on the ripple effects from the Broadcom-VMware acquisition.
"What we're hearing a lot in the VM world right now is, 'Well, I had a perpetual license and all I did was pay for my support contract.' Now they're being charged a subscription and the support contract," he said.
ComputerVault offers a one-time licensing fee, he said.
"We sell a software license, so it's sold as an annual seat license based on the number of virtual machines. If there's 100 virtual desktops and 150 servers, they pay for 250 on an annual basis," he said.
ComputerVault's annual software licensing includes installation and deployment, migration, and support.
With ComputerVault, Zarella said, customers, "don't have to worry about hiring any administrators. They don't have to worry about training or certifying any technical personnel."
For users looking to circumvent price hikes that may result from the post-acquisition changes, Zarella urged customers to give ComputerVault a chance to prove its mettle.
"Give us a chance to beat the pricing because if we can, we're going to do it even if we have to go down to our wholesale levels," he said.
O'Ryan Johnson contributed to this story.
