Broadcom says VMware to grow revenue by double-digit percentages all year Broadcom has told investors its strategy of forcing VMware customers to buy only big bundles of software will see revenue increase by "double-digit percentage sequentially, quarter over quarter, through the rest of the fiscal year." Speaking on Broadcom's Q1 2024 earnings call, president and CEO Hock Tan said "This is simply a …
On one hand it's hard to see why they're not going to make loads of cash when what was ~£50 per core goes up to ~£400 per core on some sort of whim.
On the other hand, I suspect such increases may force people/businesses/etc to look elsewhere and not give VMware the money they thought they could rake in.
That is how the free-market works. Increase prices until profits starts to drop. Price discovery. Of course, the price may change at any moment depending on the the state of your competitor(s) or the client business.
Now one can argue that new businesses would rather go for something else more affordable. The new businesses might then stay with their choice and never migrate to VMWare. Old customers might decide that the long term savings justify switching from VMWare to something else. So VMWare might have significant short to medium term profit gains, but the long term outlook might be less rosy. Probably perfect for all the MBAs. I guess we'll find out.
>That is how the free-market works.
That is how a functioning free-market works. A free market requires competition to function, it fails miserably in the face of a monopoly. VMware has essentially had a monopoly in the virtualization space for a long time. MS gave up on Hyper-V, Redhat gave up on RHEV, Proxmox isn't large enterprise ready, Nutanix requires you to buy their whole stack so it isn't an actual hypervisor competitor.
This is a masterclass in why monopolies are bad, it doesn't reflect much of anything about the free market other than how horribly broken it is when there isn't proper competition.
If Ford decided to double the price of the F150, they'd find all their customers buying a Silverado or Ram within days. No such plug-in alternative exists for Global 500 VMware customers at the moment which is why Broadcom feels perfectly comfortable with this unapologetic money grab.
Not difficult at all, and when locking you in to a 3 year contract with the minimum core count set for that 3 years being what you have when april starts.
We are expecting around 8x increase in costs, so we are cutting esxi host core counts to a minimum, buying cpus and swapping them out. Our parent company has around 150000 cores running esxi.
The section I'm in has far less than that, so will find doing that easier.
We will be at the same cost, hopefully, as we were before the price increase, evaluating alternatives and moving off over the next year (being stuck on a 3yr contract).
We still haven't received all the terms for the licensing, if disabling cores is OK (why we are buying cpus), it has been only verbally stated, no, you can't disable cores to reduce the core count for pricing, disabled cores still count.
We haven't received how different add ons will be billed.
Discounts are still being negotiated, with overage (above agreed min core count) so far set at 100% no discount.
It's a shit show.
You must be new to broadcom. Tan has been doing this since 2015 and has shown no indication whatsoever that he plans on retiring or doing anything else. He has no reason to. The entire playbook is: acquire companies that are embedded in the very fabric of the fortune 500, then jack licensing costs to the moon, knowing that those fortune 500s will not be able to easily move off the technology. By the time they do, you just acquire whatever new technology they migrated to and rinse/repeat for another decade.
I have always been shocked at the loyalty and respect vmWARE's customers have/had for them.
Now that this has been spent, there is a great opportunity for other platforms to offer relief to those customers.
I think it will take AVGO a few years to drain the tank, since most customers were not ready nor in a position to change platforms.
I suspect for every dollar picked from their pockets, those customers have a fiver to invest in breaking the chains.
Sounds like a bit of hubris here. Not taking care of customers always ends up badly.
VMware are not the only place people can go to for those services. That push to make the huge profit may work for the first year but if the pain is too much then it's worth the effort to find a cheaper solution so I would expect to see those profits dip. Of course the CEO will get that big bonus anyway, regardless of the damage done to their reputation.
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