New SMB subscription may not end VMware migrations

Broadcom has a new subscription tier for VMware virtualization software that may appease some disgruntled VMware customers, especially small to medium-sized businesses. The new VMware vSphere Enterprise Plus subscription tier creates a more digestible bundle that's more appropriate for smaller customers. But it may be too late to convince some SMBs not to abandon VMware.

Soon after Broadcom bought VMware, it stopped the sale of VMware perpetual licenses and started requiring subscriptions. Broadcom also bundled VMware's products into a smaller number of SKUs, resulting in higher costs and frustration for customers that felt like they were being forced to pay for products that they didn't want. All that, combined with Broadcom ditching some smaller VMware channel partners (and reportedly taking the biggest clients direct), have raised doubts that Broadcom's VMware would be a good fit for smaller customers.

“The challenge with much of the VMware by Broadcom changes to date and before the announcement [of the vSphere Enterprise Plus subscription tier] is that it also forced many organizations to a much higher offering and much more components to a stack that they were previously uninterested in deploying," Rick Vanover, Veeam's product strategy VP, told Ars.

On October 31, Broadcom announced the vSphere Enterprise Plus subscription tier. From smallest to largest, the available tiers are vSphere Standard, vSphere Enterprise Plus, vSphere Foundation, and the flagship VMware Cloud Foundation. The introduction of vSphere Enterprise Plus means that customers who only want vSphere virtualization can now pick from two bundles instead of one.

“[T]o round out the portfolio, for customers who are focused on compute virtualization, we will now have two options, VMware vSphere Enterprise Plus and VMware vSphere Standard," Prashanth Shenoy, vice president of product marketing in the VMware Cloud Foundation division of Broadcom, explained in a blog post.

SMBs considering ditching VMware

Broadcom's VMware sales changes have led many customers seriously investigating other options, including rival virtualization software—and even moving away from virtualization altogether.

But the new subscription tier could be viewed as a plus for SMBs that were being forced to buy more VMware products than desired and typically have smaller IT budgets than enterprise-sized firms. "This new option will find many customers where they are—and in my opinion make them rethink any migration options," Vanover said. "So much depends on pricing, but this at face value is a very positive move. You never want to lose a customer; this is a step in that direction.

Broadcom, which closed its VMware acquisition last November, has already pushed customers towards its rivals. As such, Gartner has pointed to Broadcom's changes as being drivers for the small but notable revirtualization and devirtualization (which Gartner says is smaller and growing more slowly than revirtualization) IT trends. The new vSphere subscription tier may not be enough to sway recalcitrant SMBs. "Many clients are looking.. at this [as] a wake-up call to how dependent they had become on a single vendor and are looking for more diversity in their on-premises environments, said Tony Harvey, a senior director analyst at Gartner.

Ultimately, the price points that Broadcom is able to offer through the subscription tier will be decisive.

"[SMBs] are a very cost-conscious customer and will put forth the work to move as a matter of necessity," Vanover said. "I know of many very happy customers running Microsoft Hyper-V, which is very attractive to the SMB. Will they move? This remains to be seen. Veeam telemetry shows that there are changes in the market, but is the sky falling on VMware in the SMB? We do not yet know.”

Broadcom may have stymied some frustration from SMBs with the vSphere Enterprise Plus subscription tier. But the company's focus is likely to remain on larger shops.