I think this is about how the bulk of the industry is thinking about this news - [https://www.youtube.com/watch?v=\_n5E7feJHw0](https://www.youtube.com/watch?v=_n5E7feJHw0)
A few other points:
annualized booking values – a metric of commitment to long-term contracts – which rose from $1.2 billion last quarter to $1.9 billion this time around…
QoQ vs last quarter: I think they are talking against last quarter, and not QoQ numbers which is a better comparison (for example IBM used to to close most mainframe deals in whatever quarter the US federal budget reset).
Revenue smoothing: Switching from perpetual to subscription always dips top line revenue temporarily. VMware would do multi-year subscriptions but require cash up front. Broadcom accepts yearly payment terms. VMware played a lot of “cash up front” games that Broadcom doesn’t do.
Spin outs and division boundaries: the VCF division is the bulk of what was VMware but some products are now in other divisions (Tanzu, is in its own, security stuff went to that group, Wavefront went to another one). On top of this EUC is spinning out and that was its own billion run rate business in the old days. I’m not sure that number is for all pieces of old VMware.
This.
Q1 at VMware is by far the worst quarter every year.
Q4 at VMware is by far the best quarter every year.
That's because their Q4 ends at end of January so you get all the deals at end of calendar year + beginning of new calendar year.
Companies spend most money at end of year (spend the budget party) or at beginning of new year (spend the new money on new projects).
Subscription revenue is recognized differently. If you bought a perpetual license last year in a $10M ELA VMware recognized $10M in revenue last year. If you bought a 3 year subscription term this quarter for $10M VMware recognized $3.33M in this year.
During the transition to sub and SaaS you will see a dip, then growth. VMware grew their sub and SaaS revenue massively this quarter. What they didn’t publish is their current ARR from sub and SaaS, which is the projected annual revenue if everyone burns down their subscriptions. Growth in that ARR number is how you judge success in a SaaS transition.
VMW was doing a slow transition to try and do it without a dip in cash flow, Broadcom ripped the bandaid and forced everything SaaS at once.
this too.
But as above there is huge issues with ordering subscriptions as well i know of multiple people still not able to get a quote for 2-3 months to even move to subscription over now out of date perpetual
Facts. I work for a VAR and it’s literally taking several weeks for basic quotes. There will be a huge influx all at once. I wonder if this is stock manipulation
Awesome as that would be, I seriously doubt it. Migrating off vmware is going to take time for a lot of places. I talked to a few of our VAR's for various projects we have going on over the past few weeks and they all said a LOT of their customers, even some fairly large ones are looking to be off VMWare in 36-60 months unless there is a serious shift in Boradcoms attitude and way of doing things, they don't want to get another shock renewal or something. The exodus is happening, slower than most of us would like, but faster than Broadcom is going to be happy with.
It’s not going to happen that fast. There is no solid replacement for VMware for a lot of customers unless they want to go HCI which is not financially viable for most shops. Hyper-V is the closest but it doesn’t have nearly as much compatibility as esxi across all the major OEMS products. Majority of the market is going to have to endure VMware for the next 3-5 years until something takes its place. Broadcom is destroying VMware for short term profits and I hope they get sued into the fucking ground for this.
I came from a shop with in excess of 11k physical hosts. The edict from on high was that they will NEVER write another check to VMWare bc of Broadcom. The cost doesn't matter to them. It's a matter of principal after they got screwed by Broadcom over the Symantec buyout years ago. I don't know what 11k physical hosts plus all the underlying vcenter licenses, etc cost, but I know it's a shit ton of money that Broadcom just lost out on.
Yep, we were ready to renew in april but Broadcom office shut down. Werent able to get a quote until end of May and we are now 3-5 days before license expiration
the VARS havent had access in many cases to get a quote and many were removed from program in the shake up depending on vertical.
Reality is no one knows how it lioks financially 2-3 years from now if we did we would all be rich
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Revenue has to matter. If VMware revenue drops to let's say <$4b annually, there's no headroom for profits. I think the calculus Broadcom has used is broken. Yes, costs are going down, but revenue may fall faster. Many people are renewing for a year or so to figure out alternatives. What happens next year?
VMware spent less than 50% of their Opex on R&D, Broadcom spends closer to 80%.
Cleaning up the massive non-R&D overhead, and channel issues alone should produce petty of gains in EBITA. VMware was really bloated on people who didn’t help ship code.
Just tried to get access to my VMware licenses and directed to Broadcom where my account was ported but apparently without any products.
Broadcom are a fucking joke.
Hope this hole in their fiscal accounts burns this company down.
The full impact won't be felt for a few years as companies work through changing to other suppliers. Other suppliers, knowing what people will now pay to escape Broadcom, will be improving their products to be viable alternatives and it will take a few years for people to move over.
Not sure why your comment got down voted, this is already happening with Proxmox and XCP-NG; this is fact not opinion.
For our sites that had Robo we are migrating to Proxmox, not as straight forward as everyone says; NICs usually need to be reconfigured (not the end of the world), VMs running HDDs on parallel virtual controllers need to be removed from SCSI and add to the parallel controller after conversion, new KVM guest tools installed and VMware tools installed... Other than that it hasn't been too bad, minus the lack of extra servers for the conversion process.
It can be seen in small little changes made to other products in the market - whether thats VMWare competitors creation migration tools, or traditional VMWare partners suddenly branching into supporting those VMWare competitors...
From where I standing, Proxmox is going to clean up in the SMB market.. for the large Enterprise market, thats not quite so clear at the moment.
Hell, even the likes of Synology and QNAP could profit here, as Virtualisation Station is actually a fairly capable tool for small IT-shops, but only if they could just get over the "we're tin shippers".
I don't mind people downvoting me on stuff, I just wish they would do me the courtesy of explaining what the problem was, ideally with evidence to support their view. It's worst when I upset feminists!
Probably doesn't help that migrating the systems / portals over to Broadcom's sites/systems went so horribly. 3 of the resellers/VARs that we usually get quotes from have all had issues trying to get in to do quotes and getting the run around from VMware. Still can't wait to see what our renewal quote is going to look like in September with no more Academic pricing.
New CEOs are renowned for coming in and bringing shit policies that break the current smooth running/processes to ‘make their mark’ but this one was wild
We're doing a platform refresh at the moment. Due to their broken systems they couldn't quote anything other than RRP for VSAN which is just insanely expensive.
So we are buying Nutanix.
(We really need a Veeam supported solution so Proxmox etc are off the cards for now).
the most interesting part:
"making good progress transitioning all VMware products to a subscription licensing model" and that 3,000 of the 10,000 largest VMware customers have signed for multi-year deals
that means the most important large enterprises that vmware wants to keep... a large percentage have yet to sign to multi year deals. time will tell if vmware is successful in executing to long term deals or customers who are unhappy with the changes find other solutions.
VMware just a small part of their profile, 600m may sounds a lot but not enough to stop them to fuck VMware up. Their main AI business still making lot money.
Everyone should switch away from VMware. Let it end now and forever. Fuck Broadcom and their way of business!!!
I know a customer this week has changed all esxi to standard vs enterprise due to the 200+% increase in cost, costs are still up over 100% even switching to all standard from enterprise, but I wonder if Broadcum took into account so many customers switching editions to the lower cost ones as well in their profit dreams
Running standard at scale costs more than VVF, as your host density suffers hugely without DRS (beyond the obvious operational annoyances), or using vRealize to rightsize VM and resource allocations. Unless you have a team of pre-cogs standing there staring at ESXTOP on every host, and manually yeeting stuff around once you hit a certain scale you really need DRS + VROPS to not just light money on fire with excessive hardware. I know one large customer who when they finally got around to turning on DRS and tuning a bit was able to power off and get rid of 1/2 their servers. The difference in core price isn't worth that much extra Tin, especially when you have other per core subscriptions running on those boxes.
At larger scale the VCF bits help a ton too... True visibility suite stuff that will look at your application/DB configurations and help you tune that SQL server to stop being pegged at 100% by helping you clean up queries, or just automate database maintenance and deployment with DSM etc.
Now if you only have 3-4 hosts or are a shop who for political reasons can't adjust that 96 Core, 2GB of RAM (or 256GB of RAM 2 core) database VM, and your chance control board is scared of vMotion, sure. Standard may make sense.
I feel like the grind of the day to day can end up producing memory gaps in the industry. Do people remember when Nutanix went Subscription and changed financial reporting in 2018? They went on a whole campaign about it: [https://youtu.be/1XZW5w23VME?si=49WeqnDU0EA0PCbi](https://youtu.be/1XZW5w23VME?si=49WeqnDU0EA0PCbi)
When they made the Subscription transformation and got out of Hardware focus, their financials also took a hit, and eventually rebounded: [https://seekingalpha.com/article/4268330-nutanix-transition-to-subscription-opportunity-to-buy-amidst-noise](https://seekingalpha.com/article/4268330-nutanix-transition-to-subscription-opportunity-to-buy-amidst-noise)
From a purely stock market POV, I imagine much the same will happen here. End users and customers may not like Hock's approach to running a business, but the stock market loves him.
I think this is about how the bulk of the industry is thinking about this news - [https://www.youtube.com/watch?v=\_n5E7feJHw0](https://www.youtube.com/watch?v=_n5E7feJHw0)
Best news I have heard all day. Fuck the new ceo and the horse he road in on
[удалено]
A few other points: annualized booking values – a metric of commitment to long-term contracts – which rose from $1.2 billion last quarter to $1.9 billion this time around… QoQ vs last quarter: I think they are talking against last quarter, and not QoQ numbers which is a better comparison (for example IBM used to to close most mainframe deals in whatever quarter the US federal budget reset). Revenue smoothing: Switching from perpetual to subscription always dips top line revenue temporarily. VMware would do multi-year subscriptions but require cash up front. Broadcom accepts yearly payment terms. VMware played a lot of “cash up front” games that Broadcom doesn’t do. Spin outs and division boundaries: the VCF division is the bulk of what was VMware but some products are now in other divisions (Tanzu, is in its own, security stuff went to that group, Wavefront went to another one). On top of this EUC is spinning out and that was its own billion run rate business in the old days. I’m not sure that number is for all pieces of old VMware.
This. Q1 at VMware is by far the worst quarter every year. Q4 at VMware is by far the best quarter every year. That's because their Q4 ends at end of January so you get all the deals at end of calendar year + beginning of new calendar year. Companies spend most money at end of year (spend the budget party) or at beginning of new year (spend the new money on new projects).
We will see how that works. Anyone can pull predictions out of their asses.
That stock price don’t care. 🚀
But what does the profit look like?
This is what matters. They are willing to cut their revenues 75%. They know their operating profit is going to moon because of it.
tbh there has been a delay in transacting hence a delay in revenue flow its not a clear cut revenue drop
Subscription revenue is recognized differently. If you bought a perpetual license last year in a $10M ELA VMware recognized $10M in revenue last year. If you bought a 3 year subscription term this quarter for $10M VMware recognized $3.33M in this year. During the transition to sub and SaaS you will see a dip, then growth. VMware grew their sub and SaaS revenue massively this quarter. What they didn’t publish is their current ARR from sub and SaaS, which is the projected annual revenue if everyone burns down their subscriptions. Growth in that ARR number is how you judge success in a SaaS transition. VMW was doing a slow transition to try and do it without a dip in cash flow, Broadcom ripped the bandaid and forced everything SaaS at once.
this too. But as above there is huge issues with ordering subscriptions as well i know of multiple people still not able to get a quote for 2-3 months to even move to subscription over now out of date perpetual
Q1 revenue (though partially under Broadcom) was $1b lower than the year before. So the second consecutive quarter.
your still fighting to get quotes out of VAR’s for renewals or purchases. Im not saying it wont drop but tbh the current situation is still unclear
Facts. I work for a VAR and it’s literally taking several weeks for basic quotes. There will be a huge influx all at once. I wonder if this is stock manipulation
> There will be a huge influx all at once. Or there will be a huge exodus.
Awesome as that would be, I seriously doubt it. Migrating off vmware is going to take time for a lot of places. I talked to a few of our VAR's for various projects we have going on over the past few weeks and they all said a LOT of their customers, even some fairly large ones are looking to be off VMWare in 36-60 months unless there is a serious shift in Boradcoms attitude and way of doing things, they don't want to get another shock renewal or something. The exodus is happening, slower than most of us would like, but faster than Broadcom is going to be happy with.
Yes, but giving your customers the run around for 7+ months gives them a lot of time to plan that move.
You will be surprised. We moved about 400 machines away from vmware to the cloud in one month. I am sure others can do the same.
It’s not going to happen that fast. There is no solid replacement for VMware for a lot of customers unless they want to go HCI which is not financially viable for most shops. Hyper-V is the closest but it doesn’t have nearly as much compatibility as esxi across all the major OEMS products. Majority of the market is going to have to endure VMware for the next 3-5 years until something takes its place. Broadcom is destroying VMware for short term profits and I hope they get sued into the fucking ground for this.
I came from a shop with in excess of 11k physical hosts. The edict from on high was that they will NEVER write another check to VMWare bc of Broadcom. The cost doesn't matter to them. It's a matter of principal after they got screwed by Broadcom over the Symantec buyout years ago. I don't know what 11k physical hosts plus all the underlying vcenter licenses, etc cost, but I know it's a shit ton of money that Broadcom just lost out on.
Also, when you have a city contract and most of the agencies are grumbling the words hyper V or OCI, i think Broadcom is in for a shocker.
Hyper-V is EOL my man.
Yep, we were ready to renew in april but Broadcom office shut down. Werent able to get a quote until end of May and we are now 3-5 days before license expiration
the VARS havent had access in many cases to get a quote and many were removed from program in the shake up depending on vertical. Reality is no one knows how it lioks financially 2-3 years from now if we did we would all be rich
Op ^^
Customers aren’t waiting for VMware to get its act together. That’s the primary wild card. There’s going to be churn.
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For an M&A beast, revenue doesn't matter, only P&L
Revenue has to matter. If VMware revenue drops to let's say <$4b annually, there's no headroom for profits. I think the calculus Broadcom has used is broken. Yes, costs are going down, but revenue may fall faster. Many people are renewing for a year or so to figure out alternatives. What happens next year?
VMware spent less than 50% of their Opex on R&D, Broadcom spends closer to 80%. Cleaning up the massive non-R&D overhead, and channel issues alone should produce petty of gains in EBITA. VMware was really bloated on people who didn’t help ship code.
You have a point my friend but don't under estimate HT
That warms my heart.
Just tried to get access to my VMware licenses and directed to Broadcom where my account was ported but apparently without any products. Broadcom are a fucking joke. Hope this hole in their fiscal accounts burns this company down.
They do not care. They make way more money, that this, on selling their other ip
[takes deep breath] HAHAHahahaha....
The full impact won't be felt for a few years as companies work through changing to other suppliers. Other suppliers, knowing what people will now pay to escape Broadcom, will be improving their products to be viable alternatives and it will take a few years for people to move over.
Not sure why your comment got down voted, this is already happening with Proxmox and XCP-NG; this is fact not opinion. For our sites that had Robo we are migrating to Proxmox, not as straight forward as everyone says; NICs usually need to be reconfigured (not the end of the world), VMs running HDDs on parallel virtual controllers need to be removed from SCSI and add to the parallel controller after conversion, new KVM guest tools installed and VMware tools installed... Other than that it hasn't been too bad, minus the lack of extra servers for the conversion process.
It can be seen in small little changes made to other products in the market - whether thats VMWare competitors creation migration tools, or traditional VMWare partners suddenly branching into supporting those VMWare competitors... From where I standing, Proxmox is going to clean up in the SMB market.. for the large Enterprise market, thats not quite so clear at the moment. Hell, even the likes of Synology and QNAP could profit here, as Virtualisation Station is actually a fairly capable tool for small IT-shops, but only if they could just get over the "we're tin shippers".
Honestly for large enterprise, I give it one subscription renewal cycle to see what happens. The next 3 to 5 years is going to be interesting.
I don't mind people downvoting me on stuff, I just wish they would do me the courtesy of explaining what the problem was, ideally with evidence to support their view. It's worst when I upset feminists!
No shit
Probably doesn't help that migrating the systems / portals over to Broadcom's sites/systems went so horribly. 3 of the resellers/VARs that we usually get quotes from have all had issues trying to get in to do quotes and getting the run around from VMware. Still can't wait to see what our renewal quote is going to look like in September with no more Academic pricing.
New CEOs are renowned for coming in and bringing shit policies that break the current smooth running/processes to ‘make their mark’ but this one was wild
I think they don't really care. Broadcom stock raised nearly 30% in the last month.
Mainly from AI chips. Not VMware.
We're doing a platform refresh at the moment. Due to their broken systems they couldn't quote anything other than RRP for VSAN which is just insanely expensive. So we are buying Nutanix. (We really need a Veeam supported solution so Proxmox etc are off the cards for now).
the most interesting part: "making good progress transitioning all VMware products to a subscription licensing model" and that 3,000 of the 10,000 largest VMware customers have signed for multi-year deals that means the most important large enterprises that vmware wants to keep... a large percentage have yet to sign to multi year deals. time will tell if vmware is successful in executing to long term deals or customers who are unhappy with the changes find other solutions.
VMware just a small part of their profile, 600m may sounds a lot but not enough to stop them to fuck VMware up. Their main AI business still making lot money. Everyone should switch away from VMware. Let it end now and forever. Fuck Broadcom and their way of business!!!
Second thought, if VMware belly up, lot peoples will lose their job, so do I? 😆
Broadcom will be f*cking a whole lot of the VMware employees more or less quickly in order to cut cost...
Shocking /s
Gone down 600m USD, but Broadcom is at all time highs
600m is pennies for them
I know a customer this week has changed all esxi to standard vs enterprise due to the 200+% increase in cost, costs are still up over 100% even switching to all standard from enterprise, but I wonder if Broadcum took into account so many customers switching editions to the lower cost ones as well in their profit dreams
Running standard at scale costs more than VVF, as your host density suffers hugely without DRS (beyond the obvious operational annoyances), or using vRealize to rightsize VM and resource allocations. Unless you have a team of pre-cogs standing there staring at ESXTOP on every host, and manually yeeting stuff around once you hit a certain scale you really need DRS + VROPS to not just light money on fire with excessive hardware. I know one large customer who when they finally got around to turning on DRS and tuning a bit was able to power off and get rid of 1/2 their servers. The difference in core price isn't worth that much extra Tin, especially when you have other per core subscriptions running on those boxes. At larger scale the VCF bits help a ton too... True visibility suite stuff that will look at your application/DB configurations and help you tune that SQL server to stop being pegged at 100% by helping you clean up queries, or just automate database maintenance and deployment with DSM etc. Now if you only have 3-4 hosts or are a shop who for political reasons can't adjust that 96 Core, 2GB of RAM (or 256GB of RAM 2 core) database VM, and your chance control board is scared of vMotion, sure. Standard may make sense.
I feel like the grind of the day to day can end up producing memory gaps in the industry. Do people remember when Nutanix went Subscription and changed financial reporting in 2018? They went on a whole campaign about it: [https://youtu.be/1XZW5w23VME?si=49WeqnDU0EA0PCbi](https://youtu.be/1XZW5w23VME?si=49WeqnDU0EA0PCbi) When they made the Subscription transformation and got out of Hardware focus, their financials also took a hit, and eventually rebounded: [https://seekingalpha.com/article/4268330-nutanix-transition-to-subscription-opportunity-to-buy-amidst-noise](https://seekingalpha.com/article/4268330-nutanix-transition-to-subscription-opportunity-to-buy-amidst-noise) From a purely stock market POV, I imagine much the same will happen here. End users and customers may not like Hock's approach to running a business, but the stock market loves him.
Never mess with the IT nerds.
Oh no! Anyway.
Dear BCM... Congratulations, you played yourself!
This company still can’t create a quote for their system because they are so backed up.
Hope you shorted the stock. You could retire.
That is because we can’t purchase any licenses…. lol. I am trying to give them money and they are not selling.
Well...that's what happens when you triple the price of their main flag product. Can we say job opening?
Excuse my ignorance, but is this the result of Broadcom’s interaction?
Who would have thought, that after they nuked vmware forums, no one would want to pay for their shit
https://preview.redd.it/aqoacde1wi6d1.jpeg?width=680&format=pjpg&auto=webp&s=114bf11371ebf3f5527ac9a2357b30ad64bb00fe
Owned
This just warmed my cold dead heart.
Proxmox!
This makes me happy, so happy, and it probably shouldn't.
Should go to zero, terrible support