VMware by Broadcom: The State of the Virtualization Market - Part 1

This is the first part in a three-part series on the state of the server virtualization marketplace following the Broadcom acquisition of VMware. While there have been numerous blogs outlining the myriad of perceived good and bad changes being driven by the acquisition, most have been focused on how Broadcom will be licensing the VMware product set and the initial cost of the conversion. I’ll touch on that too.

In my opinion there hasn’t been nearly enough examination of what the changes being implemented by Broadcom are (beyond the move to subscription licensing), what these changes mean to customers, or what the current landscape outside of the VMware ecosystem are. That is what this series will endeavor to do. 

A significant number of organizations are taking this as an opportunity to re-evaluate their virtualization and cloud strategies. Across these blogs I will dig into what I consider the 3 major players in the current server virtualization market: VMware by Broadcom, Nutanix, and Microsoft with discussion around approach, offerings and the decision points involved with evaluating each. While I realize that there are other platforms out there (XenServer, KVM, etc.) the reality is when it comes to their completeness of vision, ability to execute, and the extensibility of their platforms the “big 3” are well positioned to be tops in the marketplace. When evaluating the relative merits of these players the reality is that the discussion is really about the ecosystem that has been developed around them and not the virtualization layer itself. For the remainder of this blog, I will be covering the VMware by Broadcom strategy and offerings and what it means for customers evaluating their options.  

Let me start by addressing the biggest point of contention we’ve been hearing from customers (and the focus of the ample amount of FUD coming from VMware competitors) concerning the changes Broadcom has made – the implementation of subscription licensing for the VMware product set. This really shouldn’t come as a huge surprise to anyone given that the software and cloud-based portion of our industry has been going in this direction for nearly a decade. Even the biggest hardware OEMs are offering services that approximate a subscription based OPEX model (Dell APEX, HPE Greenlake, etc.). Quite frankly VMware was surprisingly late to the game here. Ultimately this is the right play for Broadcom along with most of its customers as well. Yes, the upfront cost for some customers may come with some sticker shock; but even that is mostly driven by it being unplanned expense than a significant or long term hit to their operating budget. 

Historically VMware’s server virtualization and cloud product set has been sold in an ala carte fashion; customers were free to pick and choose which pieces of the portfolio they would purchase and implement. The challenge presented in this model is two-fold. First, there was a significant amount of purchased but not deployed software out in the wild, sometimes referred to as “shelfware.” This presents an immediate risk to Broadcom’s business model focused on recurring revenues but more importantly impacted customers who had paid for capabilities they never realized. Secondly, the old model allowed customers to accrue a significant amount of technical debt by leveraging perpetual licenses to stay on outdated versions of software until the very end of extended support lifecycles, and far too frequently beyond them. This in turn prevented the adoption of newer technologies or increased the cost of such implementations due to compatibility issues thus stifling the innovation required to keep IT enabled to meet business requirements. 

The solution being offered by Broadcom is to simplify VMware’s purchasing model offering a series of packages intended to be purchased and deployed together and bundled with the appropriate support levels.  

The flagship product set is VMware Cloud Foundation which is targeted at the customer looking to adopt a fully hybrid cloud model. Included in the package are all the components needed to build a modern cloud datacenter. 

Figure 1 - VMware Cloud Foundation Components 

This allows the customer to build out a fully software defined datacenter and focus operations on being a cloud provider to its lines of business. For customers that are looking to provide a true cloud model in their on-prem datacenter and streamline operations through extensive automation – this is the obvious choice in the VMware portfolio. This model will also lend itself well to customers leveraging VMware public cloud deployments to augment their on-prem infrastructures (VMC on AWS, AVS, GCVE, etc.). 

For customers that may not net be ready to step into full blown cloud building and associated operating model VMware offers vSphere Foundation:

Figure 2 - VMware vSphere Foundation Components 

I believe initially this will be the package of choice for many (if not most) organizations who have a solid operations model for their data center, want to take advantage of the K8’s management capabilities offered by TKG, as well as the operations model supported by the standard offering of Aria Suite. This offering includes the tooling and capabilities to run a VMware based environment in an efficient and effective manner. For customers wishing to run hyperconverged, additional vSAN licenses can be purchased (per TiB) enabling them to run in a fully hyperconverged fashion should they so choose – this is definitely worth noting if you are and existing Dell VxRail customer or a vSAN Ready Node customer looking to make an early switch to the subscription model without leveraging the full blown VCF stack. Both the VCF and vSphere Foundation offerings have additional addons available such as the aforementioned vSAN licensing, VCDR/RW or SRM for disaster recovery, firewall options, Tanzu Intelligence, along with other offerings that can present additional capabilities and value. 

For customers that are only looking for core virtualization capabilities the options are vSphere Standard and vSphere Essentials Plus.  These offerings are largely targeted to small businesses that are looking to virtualize on an industry leading platform but will have only basic needs for virtualization management. 

Figure 3 - vSphere Standard Components 

Figure 4 - vSphere Essentials Components 

The most important consideration here (aside from desiring a basic hypervisor and management solution) is that vSphere Essentials is limited to no more than 3 nodes in a cluster. It is also worth the call out that both of these versions can add the subscription for VCDR+RW for disaster recovery scenarios.