“Extreme” Broadcom-proposed price hike would up VMware costs 1,050%, AT&T says
“Extreme” Broadcom-proposed price hike would up VMware costs 1,050%, AT&T says
Broadcom “preventing some vendors from selling products to us,” AT&T alleges.
Surely this is self defeating? Everyone seeing these insane price increases will scare off any potential new customers and drive away the customers they do have. Sure it might increase revenue in the short term but ultimately it'll kill the product. Or is that the point? Make as much money as they can with as little effort as possible and then let it die?
It is the point, this is exactly what Broadcom does.
Yup, this is on form for them. This isn't the first product they've done it to and surely won't be the last.
The moment the news broke we started migration planning, a short while later their new pricing came through and immediately justified the project spend. Tens of thousands of VMs migrated, a ton of labour, and even some hardware refreshes thrown in - and still cheaper than renewing, by a looong shot.
Shame, I liked VMware.
Standard private equity form behavior
The fact that it's called Broadcom at all... They just bought the company a while back and started using the brand because it's recognizable in the tech industry. It's not really Broadcom, just a shell.
It's very much the Oracle model.
A long time ago, Oracle DB could handle workloads much, much larger than any of their competitors. If you needed Oracle, none of the others were even a possibility. There are even tales that it was a point of pride for some execs.
Then Oracle decided to put the screws to their customers. Since they had no competition, and their customers had deep pockets (otherwise they wouldn't have had such large databases), they could gouge all they wanted. They even got new customers, because they had no competition.
Fast forward and there are now a number of meaningful competitors. But it's not easy to switch to a different DB software, and there are a ton of experienced Oracle devs/DBAs out there. There are very few new projects built using Oracle, but the existing ones will live forever (think COBOL) and keep sucking down licensing fees.
VMware thinks they are similarly entrenched, and in some cases they're right. But it's not the simple hypervisor that everyone is talking about. That can easily be replaced by a dozen alternatives at the next refresh. Instead it's the extended stack, the APIs and whatnot, that will require significant development work to switch to a new system.
To add a concrete example to this, I worked at a bank during a migration from a VMware operated private cloud (own data center) to OpenStack. In several years, the OpenStack cloud got designed, operationalised, tested and ready for production. In the following years some workloads moved to OpenStack. Most didn't. 6 years after the beginning of the whole hullabaloo the bank cancelled the migration program and decided they'll keep the VMware infrastructure intact and upgrade it. They began phasing out OpenStack. If you're in North America, you know this bank. Broadcom can probably extract 1000% price increase and still run that DC in a decade.
Short term is all that matters. Did the line go up this quarter? Then they're good.
Killing the product is the future CEOs problem.
think of it similar to consumer examples like adobe products. there are a lot of people/industries tied to it where they can start to charge ludicrous prices. while there are alternatives, there is also a cost attached to retooling and retraining people with the new tech.
Any one want to guess who will really end up paying for the price hike?
It's not AT&T.
They know customers will pay, but mostly they can lock in long term contracts on favorable terms.
Hock is scarily good at his job, depending on how you define his job.