With interest in AI at an all-time high late last year, the biggest tech acquisition of 2023 was somewhat overlooked.

Semiconductor and infrastructure software provider Broadcom completed its US$69 billion purchase of VMware in November, and soon after flagged major changes for the leading provider of virtualisation software for desktop computers and cloud platforms.

Datacom has been a partner of VMware for over a decade and we’ve implemented many virtualisation projects for our customers over that period in our data centres, private cloud, and with our public cloud partners. We have a deep understanding of the VMware product line-up and licensing options. We are also one of only two VMware Pinnacle Partners in New Zealand.

Classed as a visionary leader in Gartner’s Magic Quadrant for distributed hybrid infrastructure, VMware continues to be the gold-plated solution for virtualisation tools, which help businesses make more efficient use of physical computer hardware, and which have been integral to the rise of cloud computing.

Broadcom has indicated it plans to maintain that market leadership with ongoing investment in VMware. Broadcom is also simplifying the structure of its products, essentially condensing dozens of individual products into two main subscription offerings – VMware Cloud Foundation and VMware vSphere Foundation.

A new licensing model

This unified licensing model will serve to simplify the purchasing experience for VMware users by, as VMware puts it, “eliminating the need to manage multiple licences for individual components”.

But there are cost implications for many customers resulting from these changes. Chief among those changes is a move from VMware’s perpetual CPU-based model to a core-based subscription pricing model.

The consolidation of products is designed to reduce internal complexity in VMware to increase the speed of product development. However, customers will no longer be able to purchase products individually so may end up paying a subscription including products they don’t use. Some VMware advanced service costs are also increasing.

We’ve heard from a number of customers with concerns about what the change from perpetual licensing to subscription offerings will mean for pricing and how to manage the phase-out of product discounts that will no longer apply.

We understand those concerns and are working closely with VMware and our customers to resolve them.

Our new agreement with Broadcom allows for an on-ramp period leading into the new licensing arrangements, which lets us align price adjustments with the budgetary processes of our customers.

The changes also represent an opportunity for customers to re-assess their needs and, if necessary, look at alternative solutions to support their computing environments. At Datacom, we are agnostic on virtualisation, and on cloud computing technologies. That has been our strength over nearly 60 years in business.

We partner with the world’s best technology vendors and use their technologies and services to meet the specific needs of our customers. There are virtualisation alternatives to VMware that may be suitable for some current VMware customers. It has to make commercial sense, and every customer has different requirements. We are well-versed in those alternatives and are happy to help customers weigh up their options.

Weighing up cloud options

The VMware changes may also be a chance for some customers to consider moving more workloads to cloud platforms from self-hosted and on-premises infrastructure. Most organisations are on this journey as part of digital transformation programmes anyway.

Moving to a public cloud platform, such as Azure, AWS, or Google Cloud means that customers no longer have to license technology directly from VMware but pay indirectly for virtualisation services as part of a cloud subscription. The same goes for Datacom’s private cloud services, where we assume responsibility for virtualisation needs and associated product licensing.

And with other compelling developments around AI technologies and, for New Zealand customers, pending cloud region launches, the timing might be right to pursue more of a refined cloud strategy. Often, a hybrid approach is required to meet differing business needs. Our priority is to help customers settle on a solution or mix of solutions that make commercial sense, allow them to pursue their business goals, and which will set them up for success in the long run.

Between our cloud, data centre, engineering, and consulting teams, we have the expertise and experience to help you achieve the right outcomes, no matter what your business and technical needs are.

Technology continues to evolve and mergers and acquisition activity will continue to reshape the products and services businesses rely on to operate. Datacom’s role is to help our customers navigate these changes, putting their needs first. Few technology services providers are in a position to be able to do that. That’s our key advantage and why we are a trusted partner to so many businesses across Australasia. 

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