Reflections on VMware Explore Barcelona

The first year of VMware’s existence under its new owner, Broadcom, has been somewhat of a roller-coaster ride. A huge consolidation of its sprawling number of products, a short sharp review and restructuring of its partner eco-system, and the move from perpetual licences to subscription-based services had garnered a huge amount of predominantly negative headlines and agitated a significant number of customers and partners alike.

In the past few years, I had only really been focused on its IT operations products like vRealize and Aria. So, I approached the analyst conference that was a part of this year’s VMware Explore event in Barcelona with a fairly open mind, wanting to understand more about what was making the company tick.

CEO, Hock Tan’s opening keynote speech set a very clear vision and tone of voice. There is a laser focus on Private Cloud and an emphasis on making the core elements of the historic VMware offering, vSphere, vSAN and NSX work better together under the banner of VMware Cloud Foundation (VCF). There was a recognition that the biggest challenge was getting customers to deploy as much of the software in the new subscription-based bundles as possible. But there was also a hint of exasperation as he alluded to “people not appreciating the value” of (all the products in) the VCF subscription bundle.

I was delighted when Hock Tan stated that Cloud was not a location. I have been trying to get across to people for some time that Cloud is first and foremost a consumption model. What makes Cloud possible and successful are the underlying tools and methodologies, such as, for example, micro-services architecture, DevOps, containerisation and Kubernetes. These can be run anywhere as a Private or Public Cloud, a point stressed by Mr Tan and backed up by the claim of both workload and licence portability of VCF across on-premises data centres, managed service provider and co-location facilities as well as the major Hyperscalers’ infrastructure.

I will come back to look at the key products and solutions, specifically VCF and Tanzu, in some follow up pieces. These are really solid, fully featured, successful products that have been providing a strong foundation for businesses. And they offer the prospect of doing that into the future. But I want to comment further on Broadcom’s strategic vision for VMware.

On the face of it, doubling down on Private Cloud is a perfectly reasonable strategy. Trying to take on the big 3 Hyperscalers in public cloud is not a realistic proposition. There is clearly a growing appetite for Private Cloud services driven by a combination of data privacy, security and cost concerns. At both the US and EMEA VMware Explore events, Hock Tan quoted a Barclays CIO Survey headline figure that 83% of CIOs are planning repatriating workloads “from the Cloud” in 2024. I can see why Broadcom would want to keep pushing that figure, but I believe that it may be counter- productive in the longer term. A more detailed analysis of the Barclays Report shows that 70% of CIOs expect to increase public cloud spend this year, while only 26% are outlooking an increase in private cloud spend. This translates to a prediction that public cloud spend will take 42% of budgets, while private cloud will account for 27%. There is still a sizeable market for Broadcom to focus on, but continuing to bang the repatriation drum quite so vociferously might install a level of marketing myopia inside the company that could, ultimately, be damaging.

The next 12 months will be crucial for Broadcom’s VMware strategy. It remains to be seen how the move to subscription services of large, bundled offerings, that increased headline prices by very large amounts, plays out. At Barcelona the mantra was about the value these subscription services deliver. Given the customer furore that ensued, it will be a challenge. For larger customers and partners there is already some evidence of flexibility on discounts, and the packaging in of free services (to increase adoption and implementation) to the value of 15% of the subscription demonstrates that VMware at least appreciate the concerns their licencing moves have made. Smaller customers, without as much leverage, may choose to look elsewhere. Time will tell.