Let’s dig into the mindset behind the VMware price increases that have been happening since Broadcom acquired the company in 2023.
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BROADCOM IS FITTING VMWARE INTO THEIR BUSINESS MODEL
- At least with acquisitions, Broadcom has a well-defined set of business metrics they expect from their companies
- Broadcom acts somewhere like private equity in terms of investment, innovation, revenue generation
IT'S A BOLD STRATEGY BROADCOM, LET’S SEE IF IT PAYS OFF FOR THEM
- In essence, the bet is that there is no replacement for VMware in the Enterprise
- The timing is interesting with the shifting of budgets for AI projects
- It puts customers in a position to pay more for limited upside, but having to distinctly cut other areas of their technology budget (risk the business)
- Customers have some options, but again they risk the business (e.g. hold off on security patches)
- Once a company accepts the new pricing, what guarantees are there about no additional big increases in the future?
- How much will this impact the longer-term vendor-customer relationship?
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