WSJ: Broadcom's VMware Overhaul 'Draws Attention of CIOs'

The Wall Street Journal reports:Moves by Broadcom to shore up its $69 billion VMware acquisition, completed in November, include a streamlining of product bundles and new billing models - efforts in line with the chip giant's past acquisitions, but not necessarily welcomed by all of VMware's customers... Broadcom has also recently laid off at least hundreds of VMware workers, disclosures from the Worker Adjustment and Retraining Notification show.... VMware has approximately 330,000 customers, according to the company. Chief information officers say they are closely monitoring what comes next. "Any CIO that's not taking stock of what they have and mentally considering alternatives and monitoring what else is out there is probably not doing their job," said Jay Ferro, executive vice president and chief information, technology and product officer at clinical research data-management company Clario. All these changes, plus past remarks by Broadcom that its go-to-market strategy is to focus completely on the needs and priorities of its top 600 customers, has left some CIOs rethinking the relationship. Price increases and degrading levels of support are among their biggest concerns. "I'm not one of their top, probably 600 customers, so they've been very clear to me where I fit in that pecking order," said Todd Florence, CIO of trucking company Estes Express Lines. Florence said he's started looking into alternatives. "It certainly doesn't make you feel good, like you're going to get lots of support going forward...." Goya Foods CIO Suvajit Basu said he is thinking about how to reduce the food company's reliance on VMware as the sole and longtime dominant provider of virtualization for the data center. "They're going to increase their prices or change their licensing so the customer pays more," he said. "And I think this is starting to hit us right now...." Forrester estimates that in 2024, 20% of VMware customers will begin the process of exiting VMware in favor of alternatives. On the other hand, a group VP at market researcher IDC tells the Journal that on the upside, now VMware and Broadcom will have to engage more actively with customers on the value of new produces included in their bundles...

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