Broadcom has cut the lowest tier in its VMware partner program. The move allows the enterprise technology firm to continue its focus on customers with larger VMware deployments, but it also risks more migrations from VMware users and partners.
Broadcom ousts low-tier VMware partners
In a blog post on Sunday, Broadcom executive Brian Moats announced that the Broadcom Advantage Partner Program for VMware Resellers, which became the VMware partner program after Broadcom eliminated the original one in January 2024, would now offer three tiers instead of four. Broadcom is killing the Registered tier, leaving the Pinnacle, Premier, and Select tiers.
The reduction is a result of Broadcom's "strategic direction" and a "comprehensive partner review" and affects VMware's Americas, Asia-Pacific, and Japan geographies, Moats wrote. Affected partners are receiving 60 days' notice, Laura Falko, Broadcom’s head of global partner programs, marketing, and experience, told The Register.
Moats wrote that the “vast majority of customer impact and business momentum comes from partners operating within the top three tiers.”
Similarly, Falko told The Register that most of the removed partners were "inactive and lack the capabilities to support customers through VMware’s evolving private cloud journey."
Ars asked Broadcom to specify how many removed partners were inactive and what specific capabilities they lacked, but a company representative only directed to us to Moats' blog post.
Canadian managed services provider (MSP) Members IT Group is one of the partners that learned this week that it will no longer be a VMware reseller. CTO Dean Colpitts noted that Members IT Group has been a VMware partner for over 19 years and is also a VMware user. Colpitts previously told Ars that the firm's VMware business had declined since Broadcom's acquisition and blamed Broadcom for this:
The only reason we were "inactive" is because of their own stupid greed. We and our customers would have happily continued along even with a 10 or 20 percent increase in price. 50 percent and more with zero warning last year after customers already had their FY24 budgets sets was the straw that broke the camel's back ...
We have transacted a couple of deals with [VMware] since the program change, but nothing like we previously would have done before Broadcom took over.
Members IT Group will be moving its client base to Hewlett Packard Enterprise's VM Essentials virtualization solution.
According to Moats, the smaller reseller program will allow Broadcom to "focus on deepening" relationships with channel partners that demonstrate preferred “historical performance levels, technical and other relevant expertise, and ability to make the investments necessary to offer customers the levels of service they expect and deserve.”
Sumit Bhatia, infrastructure solutions architect at SLB, a technology company focused on energy, and co-author of the book Navigating VMware Turmoil in the Broadcom Era, told Ars that the announcement may evoke "a sense of betrayal" among lower-tier partners.
The changes could also lead to "significant investment costs for end consumers" due to restricted competition, per Bhatia:
This may also further restrict their access to support and services. Clearly, when customers are forced to work with a new partner, they often lack the same depth of engagement they had previously, which can result in difficulties with support.
More stringent standards for VMware’s remaining partners
Moats' blog suggested that some of VMware's remaining channel partners could be on the chopping block too, noting that in addition to killing the Registered tier:
We are beginning the process of transitioning partners who no longer meet the minimum program requirements or have not demonstrated consistent engagement.
Falko told The Register that "consistent engagement" includes "regular deal activity," "sustained, proactive commitment to a partner’s VMware customer base," participating in joint sales efforts, and keeping up with training.
As it carries a smaller channel, Broadcom is expecting its remaining VMware partners to pick up some of the slack and fill some gaps that inevitably arise from eliminating channel partners. Moats' blog explained that Broadcom is introducing new requirements for VMware partners.
Participants in the highest channel tier now have to maintain Expert Advantage Professional Services Partner status or maintain a "dedicated Small and Medium Business practice that supports scalable adoption.” the exec wrote. The latter, however, may be challenging, considering that Broadcom has made it harder for SMBs to keep buying VMware through higher prices that stem from the end of perpetual license sales and Broadcom bundling VMware products.
Broadcom will also require Pinnacle and Premier Partners to have "dedicated sales and technical resources" and "execute joint business plans with VMware," per Moats.
As it stands, some solution providers have already been forced to work through larger VMware resellers or distributors instead of directly with VMware post-acquisition. This is due to Broadcom's decision to work only with large VMware partners directly. According to some solution providers that Ars has spoken with, wait times for receiving quotes have increased since Broadcom acquired VMware. Notably, distributor Ingram Micro significantly reduced its VMware business after Broadcom's acquisition. Last month, Colpitts said Members IT Group ordered a VMware quote, but nearly a month passed between Broadcom sending its distributor a quote and the MSP receiving the quote. Another 24 days passed between the MSP requesting a second quote and receiving it from their distributor.
Bhatia believes that recent changes to VMware reselling are attempts at creating a "feeling of exclusivity surrounding VMware products," adding:
This is an age-old marketing strategy designed to enhance sales and enforce arbitrary pricing ...
Broadcom perhaps understands that they may have only a limited number of years before partners and customers discover alternative solutions and market dynamic shifts. Time is crucial for Broadcom to enhance their profit margins.
Broadcom’s risk
Broadcom is culling the VMware partner program after previously making it harder to qualify as a VMware reseller. After buying VMware, Broadcom only invited select VMware sellers into the new reseller program and ended its relationships with many cloud service provider (CSP) partners.
Some believe that obstacles for resellers to work with VMware will have a negative impact on the industry. Gartner VP Analyst Michael Warrilow, for example, told The Register:
Broadcom seem intent on destroying what was one of the most successful partner ecosystems in the industry.
Reducing the number of partners will only further galvanize the industry to find alternatives. These partners will rush in to the waiting hands of Microsoft, and Nutanix, and AWS.
Ars reached out to Gartner for further comment.
As Moats noted, however, the smaller partner program could also present an opportunity to acquire new customers whose resellers had been removed from the program. But VMware users may also be perturbed to find themselves without a VMware solution provider.
“As we streamline our partner ecosystem, some customers will need to transition to a new partner relationship," Moats wrote.
AI company files for bankruptcy after being exposed as 700 human engineers