Can confirm a current Broadcom VMware customer went from $8M renewal to $100M
A reported VMware contract renewal jumping from $8 million to $100 million after Broadcom’s acquisition has raised alarm over extreme enterprise price hikes and vendor lock‑in. Commenters debate whether such increases are a deliberate strategy to “fire” smaller, high‑touch customers and focus on fewer, ultra‑large accounts, or simply aggressive profit extraction made possible by deep technical dependence. Many expect this to accelerate moves to alternatives like Hyper‑V, Nutanix, Proxmox, or public cloud, while warning that large enterprises may be too entangled to switch quickly despite growing mistrust.
Price Hike and Immediate Reaction
- Thread discusses a VMware customer’s renewal jumping from $8M to $100M.
- Some call it “extortion” and “predatory,” others frame it as a deliberate pricing/segmentation move.
- Follow-up information in the thread says the customer ultimately accepted the $100M contract, implying strong lock-in or prior underpricing.
Broadcom/VMware Strategy: High-End Focus vs. “Firing” Customers
- Several comments argue this is essentially a polite way to fire smaller or high-touch customers: quote a price they’re unlikely to accept.
- Others see it as classic Broadcom behavior: buy a vendor with lock-in, cut costs/features, hike prices, and accept losing many customers while maximizing revenue from those who can’t leave.
- Some liken the strategy to IBM mainframes or other “backbone” enterprise vendors that live off a relatively small number of huge accounts.
Enterprise SaaS Economics and Deal Sizes
- Repeated claim: at VMware’s revenue scale, $8M is “chump change,” especially if the account is support‑intensive or heavily discounted.
- Debate around whether $8M can realistically be unprofitable; some say support, TAMs/CSMs, travel, labs, and complexity can erode margins. Others remain unconvinced without concrete data.
- Broader theme: shift toward maximizing revenue per employee and margins, even if that means dropping merely “profitable” but lower‑margin customers.
Risk, Trust, and Long-Term Consequences
- Some argue that massive, sudden price hikes scare purchasing committees and increase perceived vendor risk, prompting contingency planning and PoCs with alternatives.
- Others respond that many large enterprises will still pay rather than risk disruption, and that committee-led procurement plus deep lock-in blunts the impact of reputational damage.
- There is concern that this erodes long-term trust and could eventually shrink VMware’s footprint as newer or smaller customers avoid it.
Alternatives and Migration Paths
- Various alternatives mentioned: Hyper-V, Nutanix, Citrix, Proxmox, KVM-based stacks (oVirt, OpenStack, KubeVirt), and cloud providers.
- Some report already migrating off VMware; others note that for large, legacy-heavy enterprises, migration is slow and may take a decade.
- View that this is an opportunity for open-source and newer vendors, though at high end, on-call support and feature completeness remain crucial.
Skepticism and Unclear Points
- A few posters question the Twitter source’s seriousness and the exact details of the deal; the precise structure (term length, scope changes) remains unclear.