# Broadcom Acquisition: A “Wake-Up Call” for SMBs Dependent on VMware
The purchase of VMware by Broadcom has reverberated across the IT sector, especially among small and medium-sized businesses (SMBs) that are significantly reliant on VMware’s virtualization technologies. The modifications Broadcom has enacted post-acquisition have compelled numerous SMBs to rethink their IT approaches, with some even assessing alternatives to VMware. The launch of a new subscription level, VMware vSphere Enterprise Plus, intends to alleviate some concerns, but it might be inadequate for certain customers.
## The Transition from Perpetual Licenses to Subscriptions
A major adjustment that Broadcom made after acquiring VMware was the cessation of perpetual licenses. Consequently, the company moved VMware’s products to a subscription-based model. This decision has encountered pushback, particularly from SMBs that appreciated the flexibility and long-term savings associated with perpetual licenses.
Alongside the transition to subscriptions, Broadcom also streamlined VMware’s offerings into a reduced number of SKUs (Stock Keeping Units), leading to increased expenses for many customers. This bundling approach compelled some businesses to finance features and products that they did not require, adding to their frustrations.
### Effect on SMBs
For SMBs, which generally operate under stricter IT budgets compared to larger corporations, these alterations have posed considerable challenges. Many SMBs perceived that they were being coerced into acquiring more extensive and costly packages than necessary. As a result, some organizations began looking into alternative virtualization solutions or even contemplating leaving virtualization behind entirely.
Rick Vanover, Vice President of Product Strategy at Veeam, underscored this problem, stating, “The challenge with the majority of VMware by Broadcom changes thus far is that it has compelled many entities to adopt a significantly higher offering with more components than they had intended to implement.”
## The Launch of vSphere Enterprise Plus
In response to the escalating discontent, Broadcom unveiled a new subscription tier, VMware vSphere Enterprise Plus, on October 31. This tier aims to provide increased flexibility to customers who require only VMware’s essential virtualization functionalities without the extra features that come with higher-tier packages.
The new vSphere Enterprise Plus tier exists between the vSphere Standard and VMware Cloud Foundation tiers, offering SMBs an option that better matches their requirements. Prashanth Shenoy, Vice President of Product Marketing in the VMware Cloud Foundation division at Broadcom, clarified the reasoning behind the new tier: “For customers focused on compute virtualization, we will now present two options, VMware vSphere Enterprise Plus and VMware vSphere Standard.”
This initiative is perceived as a constructive advancement for SMBs that were previously obligated to purchase more than what they needed. Vanover commented, “This new option will resonate with many customers where they currently are—and in my view, prompt them to rethink any migration possibilities.”
## SMBs Seeking Alternatives
In spite of the introduction of the vSphere Enterprise Plus tier, numerous SMBs are still contemplating alternatives to VMware. Broadcom’s changes have urged businesses to reassess their reliance on a single vendor and consider broader IT ecosystems. Some are exploring rival virtualization solutions, like Microsoft Hyper-V, while others are thinking about abandoning virtualization entirely.
Tony Harvey, a Senior Director Analyst at Gartner, noted that Broadcom’s changes have ignited a wider movement of revirtualization and devirtualization. “Many clients view this as a wake-up call regarding their dependency on a single vendor and are seeking more diversity in their on-premises environments,” Harvey remarked.
## The Importance of Pricing
Ultimately, the viability of the vSphere Enterprise Plus subscription tier will hinge on its pricing. SMBs are recognized for their cost sensitivity, and any significant price hike could lead them to pursue other avenues. Vanover stressed this aspect, stating, “[SMBs] are very cost-conscious customers and will actively seek alternatives out of necessity.”
While certain SMBs may find the new subscription tier attractive, others might have already started transitioning to alternative solutions. Microsoft Hyper-V, for instance, has gained popularity among SMBs due to its affordability and user-friendliness. Vanover observed that while market shifts are occurring, it remains unclear whether VMware will face a substantial drop in its SMB client base.
## Broadcom’s Focus on Larger Enterprises
Despite the rollout of a subscription tier that is more welcoming to SMBs, Broadcom’s primary attention seems to be directed at larger enterprises. The company has reportedly engaged its largest clients directly, sidestepping smaller VMware channel partners. This transition has raised concerns that Broadcom may not be as dedicated to meeting the needs of SMBs as VMware was prior to the acquisition.
For SMBs, this could indicate that while the vSphere Enterprise Plus tier presents some alleviation, the overarching changes in VMware’s business approach may still compel them to investigate alternatives.
## Conclusion
Broadcom’s acquisition of VMware has served as a “wake-up call” for numerous SMBs.
