The speed of innovation in public cloud computing is unparalleled. Fueled by over 100 billion dollars in annual R&D investment, more IT solutions have come to market in the last decade than ever. The sheer scale of innovation, combined with the OPEX investment model, has democratized technical agility and leveled the playing field for many organizations. Still, this vast amount of innovation also comes with unique challenges that IT leaders must manage.

Rapid innovation in solutions sometimes leads to chaos; as features evolve, solutions are replaced or even deprecated entirely. Cloud service providers and solution vendors typically provide their customers with a gracious offramp when solutions are at the end of a lifecycle. While this continuous innovation can result in constant architecture management, the required technical vigilance is simply a cost of doing business.

When a major solution vendor like Broadcom abruptly changes its offerings, the consequences can be severe. In the case of Broadcom’s recent announcement that VMware Cloud on AWS would no longer be directly sold by AWS or its channel partners, the impact is not just a technical change but a complete disruption of a business model that many have relied upon. This change has the potential to shred enterprise architecture roadmaps and force organizations into unplanned responses.

For many IT leaders and CFOs, Broadcom’s history of aggressive price increases and renewal strategies has been a bitter pill to swallow, driving some to abandon the vendor entirely. For customers who have built their financial models on consuming VMware on AWS under a pay-as-you-go model, Broadcom’s less than 60-day timeline for transition feels a lot like extortion.

When the first commercially available cloud computing solutions came to market in the early 2000s, VMware was the undisputed market leader in compute virtualization, with an estimated 84% market share across all hypervisors. Faced with growing momentum around public cloud computing, VMware recognized the threat and worked to redefine its value in the context of a cloud-first future.

VMware launched early access to its first attempt at an IaaS platform in 2013. Initially named vCloud Hybrid Service, the solution was later renamed vCloud Air. The service targeted legacy customers looking to secure a foothold in the cloud while maintaining their traditional VMware investments. Boasting none of the advantages of microservice architectures, vCloud was merely VMware’s traditional private cloud architecture hosted in one of VMware’s data centers. The vCloud platform struggled to gain any recognizable market share and was finally sold to French cloud hosting provider OVH in 2017.

Faced with the possibility of future irrelevance in an industry rapidly adopting cloud-first technology postures, VMware pivoted to announce a strategic partnership with AWS in 2016. Addressing the shortcomings of vCloud, VMware on AWS was designed as a true cloud-native offering, providing customers with a robust hybrid cloud option fully integrated with their existing VMware investments. 

For organizations with deep investments in VMware technologies, administrator certifications, and capital IT investments, VMware on AWS was a comfortable first step in their cloud journey. Most importantly, with AWS offering VMware directly on the public marketplace with flexible commitment terms, CFOs could elect pay-as-you-go billing to avoid the massive multi-year impact of costly capital investments.

In short, it was a win-win for everyone involved until Broadcom acquired VMware for $61 billion.

With notable examples such as CA Technologies and Symantec enterprise software, Broadcom’s history of aggressively squeezing acquired companies’ business lines and operations in favor of near-term profits has led many to derisively name their strategy “acquire and axe.” A Wakefield Research survey commissioned by CloudBolt Software noted that 95% of respondents viewed Broadcom’s acquisition of VMware as very disruptive to their IT strategy, with a further 73% expecting VMware costs to increase by 100% or more.

As Broadcom’s VMware strategy for channel consolidation and revenue increases has come into focus, customers and channel partners are feeling the squeeze. Long-term VMware customers have complained of massive increases in licensing renewals, while educational and charitable organizations have struggled with Broadcom’s cancellation of VMware’s non-profit discount rates. The 4,000 partner organizations that sold and supported VMware solutions have been consolidated to under 400 eligible providers, with AWS becoming the most notable elimination.

After Broadcom abruptly ended the rights for AWS and partners to sell VMware on AWS cloud on April 30, 2024, Broadcom’s CEO attempted to spin the change as a simplification of its channel strategy, even suggesting that its valued customers would not be affected. While some may be unmoved by the change from an AWS marketplace procured VMware to a direct-licensed model, Broadcom’s termination of VMware on AWS under an On-Demand model has caused heartburn for many unfortunate customers.

In the second quarter of the year, several of Deep Blue Cloud Computing’s clients were abruptly notified that VMware would no longer support VMware on AWS On-Demand subscriptions after August 1st. In the notifications, Broadcom openly threatened to disrupt access to all hosts if these organizations did not directly procure a minimum one-year VMware subscription within 60 days.

For one client with over 100 business-critical machines in VMware on AWS, this unexpected business challenge may have proven fatal without a rapid and competent response. Leveraging our proven methods in helping clients rapidly and successfully adopt VMware on AWS to achieve technical objectives, we were able to present and execute a rapid divestment strategy and convert all the organization’s VMware instances to native EC2 ahead of Broadcom’s imposing deadlines. With Deep Blue at their side, our client executed a rapid technical pivot to avoid a long-term and costly license agreement and divested from legacy VMware technologies a full year ahead of schedule without any impact on business continuity.

With our extensive experience in successfully guiding organizations through the adoption of VMware on AWS, Deep Blue is actively assisting numerous organizations in transitioning from VMware on AWS to EC2 on AWS. As Broadcom’s deadline looms, we are poised to help these organizations transition entirely or minimize their VMware exposure, thereby reducing the impact and enhancing future technical agility. Our expertise and commitment to our client’s success instill confidence in the face of these changes.

In a world where the only constant is change, the speed of the cloud has dramatically accelerated the rate of challenges a business must solve. Deep Blue Cloud Computing, with its unique blend of technical and business adaptability, offers our clients an experienced and technology-agnostic partner to help navigate the seas of change, making us the ideal choice for organizations seeking to mitigate the impact of unexpected changes. 

Schedule a consultation today to learn how we can help you solve unexpected technology problems so you can propel your business forward.

Stay adaptable and stay agile, my friends.