Another cloud provider bails on VMware after receiving a 900-percent price hike

[Cal Jeffrey]

Facepalm: Another cloud service provider just left VMware for an open-source competitor over its outrageous price hikes. The firm was a sizable client with tens of thousands of virtual machines. While it still runs a few VMware machines, most of the migration is complete, leaving Broadcom with another big hole in its customer base.

Private server provider Beeks Group, headquartered in the UK, offers virtual and physical servers to companies in the financial sector. The Register notes that the firm has over 20 data centers supporting "20,000-plus" virtual machines and about 3,000 bare metal servers. It recently migrated its VMs provided by VMware to open-source provider OpenNebula, leaving just a handful of virtual servers that proved more problematic to move.

Matthew Cretney, Beeks Group's head of production management, said that the migration was triggered when the company received a licensing invoice from VMware parent company Broadcom that was 10 times the previously billed amount. The massive rate hike is not unprecedented.

Recently, AT&T filed a breach of contract lawsuit saying that Broadcom refused to honor VMware's existing licensing agreement. Instead, Broadcom wanted to switch the telecom with over 75,000 VMs to a licensing subscription that cost 1,050 percent more. Of course, AT&T said, "We'll see you in court."

Before that, an Australian firm dumped VMware after Broadcom hit it with a rate hike 10-15 times higher than it had previously paid. That company switched its 24,000 VMs to VMware competitor Nutanix.

If you're keeping score, Broadcom has lost at least 45,000 VMs to competitors due to unreasonable price hikes, presumably chasing a quick ROI in a $61 billion investment. Meanwhile, AT&T's 75,000 VMs stand in limbo pending the lawsuit's outcome. Even if the judge rules that Broadcom must honor the previous agreement, the telecom plans to bail after running out that contract.

Also, consider that these are only the companies that have publicly complained. The number of firms that have quietly left Broadcom over rate hikes is undisclosed.

The method to Broadcom's madness is that it knows that the cost of migrating is often more than paying the expensive rate hike, especially for small to mid-sized businesses with less capital. AT&T said its migration of 75,000 VMs will cost between $40 million and $50 million. Smaller companies don't have that kind of money in the budget.

It will be interesting to see if Broadcom continues sticking it to its VMware client base. There has to be a tipping point, but I don't think we're there yet.

Image credit: Chad Scott

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Another cloud provider bails on VMware after receiving a 900-percent price hike

 

[Theinsanegamer]

Watching them lose money on this deal is friggin hilarious! Disney-level incompetence to be celebrated.

 

[Neatfeatguy]

Broadcom sounds like the extreme left state of California that has hemorrhaged dozens of large businesses over the past 4 years and is out billions of dollars of tax revenue because of it. Act stupid and win stupid prizes.

 

[yRaz]

All they had to do was shut their mouth and collect their checks, they couldn't even do that...

 

[Kashim]

Broadcom sounds like the extreme left state of California that has hemorrhaged dozens of large businesses over the past 4 years and is out billions of dollars of tax revenue because of it. Act stupid and win stupid prizes.

Ah yes, the far Right readers on here using every article they respond to as a political attack on anyone they don't like. It's getting really old. Not everything is about politics.

You want to attack California? Ok, sure. Here's a fun little fact from Google:

"California is the 5th largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior, according to the U.S. Bureau of Economic Analysis."

Say what you want, but California is definitely doing something right. An annual GDP growth of 6.1% is extraordinary. Hmm, maybe California should secede from the Union. Would that make you Right wing psychos happy? Keep in mind that California being the biggest economy of all 50 states also means they pay the most Federal taxes.

 

[brucek]

The method to Broadcom's madness is that it knows that the cost of migrating is often more than paying the expensive rate hike, especially for small to mid-sized businesses with less capital. AT&T said its migration of 75,000 VMs will cost between $40 million and $50 million. Smaller companies don't have that kind of money in the budget.

Maybe that works on your established customers, for a time. But what does it do to your efforts to gain new customers? Given their extortionary price increase has been widely reported at this time, I bet vmware sales folk can barely get their calls returned by anyone who isn't already hooked. And meanwhile their competitors and their ecosystems are only going to get more sophisticated at offering cost efficient migration services. And finally, for those companies who truly can not escape, the market may eventually render them moot when their increased cost structure means they can no longer compete with their own competitors - so vmware will end up losing them too when they eventually go out of business.

 

[unoficialoficial]

So they demand $5,000 per processor per year for their clients to run their own hardware with a zero-cost OS (Linux) via a virtual machine (VM)? A VM is merely a thin layer between the hardware and the OS. VM software contains less than 1% of the lines of code compared to an OS, so it cannot justify being more expensive than the OS itself; its price should be around 1% of the OS's cost. Someone will inevitably develop an easy transition program, leading to the potential bankruptcy of this (zombie) company.
They just give commercial software a bad name.

 

[VitalyT]

Broadcom is an extortionist, should be sued by everyone and forced to surrender VMWare to free public use, for the intent of massive market damage.

 

[Athlonite69]

Hey Broadcom if you keep playing this stupid game you're going to win a number of stupid prizes

 

[ZedRM]

Ah yes, the far Right readers on here using every article they respond to as a political attack on anyone they don't like. It's getting really old. Not everything is about politics.

You want to attack California? Ok, sure. Here's a fun little fact from Google:

"California is the 5th largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior, according to the U.S. Bureau of Economic Analysis."

Say what you want, but California is definitely doing something right. An annual GDP growth of 6.1% is extraordinary. Hmm, maybe California should secede from the Union. Would that make you Right wing psychos happy? Keep in mind that California being the biggest economy of all 50 states also means they pay the most Federal taxes.

Hey, not all of us Californians are goose-stepping-imbecils. You're right about this not being about politics.

 

[Mr Majestyk]

"Are these sound pricing decisions"

ROFLMAO. I am hoping that is tongue-in-cheek.

 

[opckieran]

Ah yes, the far Right readers on here using every article they respond to as a political attack on anyone they don't like. It's getting really old. Not everything is about politics.

You want to attack California? Ok, sure. Here's a fun little fact from Google:

"California is the 5th largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior, according to the U.S. Bureau of Economic Analysis."

Say what you want, but California is definitely doing something right. An annual GDP growth of 6.1% is extraordinary. Hmm, maybe California should secede from the Union. Would that make you Right wing psychos happy? Keep in mind that California being the biggest economy of all 50 states also means they pay the most Federal taxes.

By the time California manages to secede, half their population would have already fled their insanely high tax rates, energy prices, bloviating parasitic bureaucracies, and poop-and-needle filled city streets to go live in Texas, Florida, Tennessee, Idaho, or Utah…

Just because a state has a direct shot to Asia (and therefore a large amount of economic activity) that does not allow one to equivocate a large GDP as a result of said advantageous geographical position to “good policy”. There’s a reason businesses are fleeing and the populations of Cali and NY are decreasing after all. Bad bureaucracy, and worse policy.

 

[scavengerspc]

Hey, not all of us Californians are goose-stepping-imbecils. You're right about this not being about politics.

@Kashim Pay attention to this guy.
While few believe all the anti Cali stuff, I finally had a chance for a first hand look the last few months while searching for a west coast site for a branch office.
There will always be people like @opckieran that believe what he wrote above this post.
But in truth, it's just deflection fuel for the MAGA echo chamber's own misery.

 

[airbornex]

$40-$50 million for AT&T to migrate? Sounds like Broadcom’s pricing model includes an “Emotional Damage” surcharge for good measure.

 

[bladesong]

I know this is a US centric website and audience, and AT&T may be the biggest company to take Broadcom to court, but they are by far no means the only large multinational company to go to court over this stuff.

There was a large case in the European courts recently that I cannot possible comment on, that did not go Broadcom's way either.

 

[erickmendes]

Here where I work Atm we got some couple of hundreds VMs and I think 100 maybe 150 docker... Since 2022 everything new that can be made with docker is being made with docker.

In the end Broadcom is "helping" we transition to docker with it's predatory pricing...

That looks like Musk bussiness practices... pay 40 phabillions on a company then kill it with every bad decisions you can take.

 

[Sir Sparkles]

Watching them lose money on this deal is friggin hilarious! Disney-level incompetence to be celebrated.

Right now they're making bank, but they're hemorrhaging customers. They'll make 10 years of money (previous income)in 1-2 years and dump the shell of the VMWare on the curb. It's not the first time they've done this sort of thing.

 

[dielectric]

Here where I work Atm we got some couple of hundreds VMs and I think 100 maybe 150 docker... Since 2022 everything new that can be made with docker is being made with docker.

In the end Broadcom is "helping" we transition to docker with it's predatory pricing...

That looks like Musk bussiness practices... pay 40 phabillions on a company then kill it with every bad decisions you can take.

You referring to Twitter? The social media site that had 80% of it's staff removed and the website runs better than ever, that one?

Broadcom is a venture capitalist company, extracting wealth is so they do. Twitter was purchased to restore free speech on social media, not to extract wealth. Comparing the two Musk may never break even on it but he doesn't seem to care so that much.

 

[opckieran]

There will always be people like @opckieran that believe what he wrote above this post.
But in truth, it's just deflection fuel for the MAGA echo chamber's own misery.

Classic ad-hom. Too lazy to refute a single thing I said, instead opting for a pathetic “the mean orange man voter is in an echo chamber!”

 

[scavengerspc]

Classic ad-hom. Too lazy to refute a single thing I said, instead opting for a pathetic “the mean orange man voter is in an echo chamber!”

So you missed the part where I said I had a first-hand look at the claims people like you make?
And, there is the fact that your words were an almost carbon copy of the bullshit they say at rallies and right wing "news" media. People such as yourself are just press play, and repeat.
With no thought of your own allowed or caring about how ridiculous you sound.
"Poop-and-needle filled city streets"? No, none there.
Do you honestly think that is the norm? Are you willing to lie yet again?
Homeless camps pop up all the time. Everywhere. Would you like to read about Texas?

But I went way past 7th grade, so I know for a fact that camp does not represent the norm there.

 

[Tantor]

Ah yes, the far Right readers on here using every article they respond to as a political attack on anyone they don't like. It's getting really old. Not everything is about politics.

You want to attack California? Ok, sure. Here's a fun little fact from Google:

"California is the 5th largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior, according to the U.S. Bureau of Economic Analysis."

Say what you want, but California is definitely doing something right. An annual GDP growth of 6.1% is extraordinary. Hmm, maybe California should secede from the Union. Would that make you Right wing psychos happy? Keep in mind that California being the biggest economy of all 50 states also means they pay the most Federal taxes.

Amazing! Are you claiming that Leftism is responsible for California's success?

California's success is based on agriculture, climate, mining, great ports, location, etc. For most of its existence, California has been under hard core conservative management. Remember Ronald Reagan?

Trump won the election because regular folk are tired of Leftism.