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VMware price hike forces Australian company with 24,000 virtual machines to jump ship

WTF?! After acquiring VMware, Broadcom announced it was “laser-focused” on larger organizations with tolerable price increases and enticing service bundles. However, the IT conglomerate, led by Tan Hock Eng, may have miscalculated. At least one large company that previously used VMware’s hypervisor found the price increases unacceptable, potentially leading to a loss of business for Broadcom.

Computershare is an Australian corporation that provides financial products to stock exchanges and investor services around the world. It was significantly involved with VMware virtualization technology before Broadcom acquired VMware. However, according to recent remarks by Computershare CTO Kevin O’Connor, the company will likely abandon VMware’s hypervisor soon to focus exclusively on Nutanix products.

Speaking at a recent Nutanix Next conference in Barcelona, O’Connor said that Computershare’s IT department had been using two different hypervisors for its VM-related workloads: Nutanix AHV and another product provided by a “well-known competitor,” likely VMware. After assuming his role as CTO, he initially tried to consolidate to a single hypervisor, but the migration project was ultimately scrapped.

Things suddenly changed, O’Connor said, when he received a phone call from the vendor of the second hypervisor. This vendor was now “offering” a 10x to 15x price increase to use their product plus additional services, which persuaded O’Connor to push ahead with his original plan to exclusively use Nutanix.

Computershare is now in the midst of a massive IT service migration, moving 24,000 virtual machines from the “other” hypervisor to Nutanix AHV. According to O’Connor, the plan will likely be completed next year and will pay for itself in just a few months. The company will emerge from this migration “stronger and leaner,” with costs lower than they were before the acquisition.

Although O’Connor did not mention Broadcom during his keynote, the US corporation has repeatedly expressed its intention to raise prices and make the entire VMware business a subscription-only affair. The VMware acquisition has already led to widespread layoffs and uncertainty about VMware’s ability to stay afloat, while countless rumors circulate about large corporations (or even US government customers like the DoD) willing to let the VMware ship sink and take their VM and cloud needs elsewhere.

The only known fact is that VMware’s powerful desktop hypervisors are now free for everyone, but Broadcom was never interested in this particular line of products to begin with. The corporation may have miscalculated VMware customers’ willingness to endure outrageous cost increases just to access more VMware-related services and technologies.

Computershare’s story could be just the beginning of a cascade that will ultimately bring the former leader in the virtualization business to its demise in the not-so-distant future.

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