Broadcom is kicking some cloud service providers (CSPs) out of the VMware channel partner program, bringing uncertainty for the technological and financial futures of numerous businesses, especially small-to-medium-sized ones.
As reported by The Register today, Broadcom this week revealed to VMware CSP partners that it is launching a new invite-only channel program for CSPs on November 1. Fewer CSPs are expected to be eligible for this new program. The Register said that “some mid-size partners won’t be invited to the new program."
Current VMware CSPs that didn’t receive an invite for the new program by today have reportedly been cut and will receive a notice of non-renewal.
CSPs that are getting booted are allowed to continue conducting business as normal until October 31. Afterward, those CSPs and the organizations whose VMware-based deployments they serve will be heavily impacted. As explained by Australian IT service provider and VMware CSP Interactive, companies currently using VMware tech through a CSP that's being cut will have to find a new way to renew VMware licenses and may see “delays or confusion” amid service and renewal requests and changes to the support and service they receive. Furthermore, prices could go up since partner consolidation could lead to “additional costs for migration and re-onboarding and reduced bundling options that previously allowed for greater cost efficiencies,” Interactive said.
White-label program ending
Since acquiring VMware, Broadcom has been shrinking the number of businesses that are eligible to resell and provide support for VMware offerings. In January 2024, it replaced the old VMware partner program with an invite-only one, the Broadcom Advantage Partner Program, and shed many partners. Broadcom also cut business ties with many CSP partners by requiring CSP members of its new partner program to operate at least 3,500 processor cores. In March 2024, The Register reported that “hundreds” of CSPs weren’t invited to Broadcom’s new program. VMware had over 4,000 small CSP partners before Broadcom’s acquisition, The Register previously reported.
Broadcom subsequently launched a white-label program allowing smaller CSPs to work through CSPs that were still VMware partners, but that program is also shuttering on October 31.
Businesses relying on cloud platforms based on VMware tech licensed through the white-label program could suddenly be forced to migrate hastily, which has inherent risks, including high costs.
In response to the white label program ending, a Reddit user who claimed that their organization spent 300,000 pounds (about $402,500) a year on licensing through a VMware white-label partner, said:
I now have 6 months to design / procure / build a new multi region service provider virtualisation platform to support millions in revenue and an additional 12 months to migrate all our VMware clients.
I’m just astonished.
In a statement to The Register, Broadcom encouraged CSPs cut from VMware's channel to work with authorized partners to “ensure a smooth transition for customers who seek to renew a service at the end of their current term,” but it offered no incentive or resources.
“Stronger execution”
News of additional partner cuts follows last month's debut of VMware Cloud Foundation (VCF) 9.0. The blog post by VMware partner Interactive posited that Broadcom is paring down its CSP partner program in relation to VCF 9.0, which it said “underpins a small number [of] hyperscale private cloud platforms in each region.”
In a statement to The Register explaining the changes, Broadcom said:
Broadcom's strategy since closing the VMware acquisition has been to drive simplification, consistency, and innovation across the VMware Go To Market ecosystem, including VMware Cloud Service Providers (VCSPs).
Recent changes to this ecosystem are consistent with this strategy. Broadcom is focusing more and going deeper with the VCSPs who have demonstrated commitment to their cloud services built on VMware. This will enable us to deliver greater value, stronger execution, and a more streamlined experience for Broadcom’s VMware customers of all sizes and enable a truly competitive offering to the hyperscalers through our CSPs.
Broadcom hasn’t shared how many partners it has shed through previous VMware channel changes. Last month, it cut members of the VMware reseller program's lowest tier and claimed that most affected partners were inactive.
When Broadcom dropped those resellers last month, there was concern that its partner reductions were too extreme. At the time, 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." Sumit Bhatia, co-author of the book Navigating VMware Turmoil in the Broadcom Era, told Ars Technica that he expected the partner cuts to result in higher pricing for VMware customers.
As Broadcom continues to whittle away at VMware’s remaining partner base, the impacts of a smaller partner program will become harder to ignore, particularly for small-to-medium-sized businesses. The change aligns with the perception that Broadcom is mostly interested in conducting VMware business with large customers, despite repeated claims that its VMware changes benefit “customers of all sizes.”
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