Just an informal straw poll here, but how many of you are seeing customers actively reducing their VMware IB's? It seems like I am hearing of more and more customers reducing their VMW licensing counts every quarter, and the numbers are starting to really add up.
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Yes. And Vmware now charges per core to address licensing w latest hardware innovations
New servers/blades have great cpus and ram is now cheaper than it used to be. Most hardware refreshes are creating less licenses needed.
OP said "ba--s and strikes", no "kick me in the ba--s". Why is it flagged?
Not causing FUD. Just calling ba--s and strikes as they are actually happening.
Don't cause FUD
Many customers are flipping to VMC or other hyper scalers moving to subscriptions to start their journey from monolithic to modern architectures. Give it 10 years and the VM as we know it will be down to about 10% of what runs workloads. And don’t tell me Tanzu is the answer. Hence IB will reduce more and more over time. It’s starting to accelerate now with the cloud providers giving health paybacks for migrations if targets are made.
OP here - perhaps "reducing IB" was not the best choice of words. I meant to describe that I am now regularly hearing about customers significantly reducing their VMW spend where possible. I agree that the flips to subscription will give a temp boost to ARR, but then what? And agreed that too many large customers were getting a virtually (pardon the pun) free ride on vSphere licensing. It is way past time for them to pay up.
guaranteed the support experience is going to drastically improve
That's an optimistic view. Probably over optimistic.
Could get worse.
- IB's can't be reduced, they can only be broken apart and flipped to subscription. Under certain exemptions you can destruct assets in your IB but you're going to be spending something new. Otherwise if you had 5000 vSphere licenses at $Xm/yr of SnS and only need 4200 next year, tough.
It's a shell game, trading out perpetual renewals in exchange for subscription. They'll show some fantastic ARR growth in the short term then dwindle away.
Honestly, people were getting vSphere for way too cheap for how solid it was (they should have been giving away NSX - remember the $10k/socket license? lol). Wasn't abnormal to see discounts on enterprise deals in excess of 75%. Then they only had to pay 20% of whatever that discounted price was in annual support - broken down, you could have a two socket server running 20+ production apps @ $350/yr in support. Peanuts.
They're going to stop giving vSphere away (which is a good thing), lose some customers in the process and focus on taking care of the remaining ones - guaranteed the support experience is going to drastically improve. Also, the ability for customers to try to weasel their way into sweetheart deals is over, volume discounting via the rate card is the price. Take it or leave it.
Install Base
What’s IB
Customers REALLY don't like the new per core model. Customers haven't been wanting to do ELAs cause they are shopping around solutions and don't want to commit to VMware for over a year.
Horizon licensing is getting comically complicated and expensive.
I had new deals blocked by the management (bcom?) as they didn't have the 'required' ARR.
Sounds like a good old fashioned fishing trip.
SOYR