Virtualization is defined as an intricate procedure that facilitates the creation of virtual versions of computer hardware elements like network, storage, memory, and processors to boost system efficiency and scalability.
Much of what we know about virtualization today has been shaped significantly by prevailing IT behemoths such as IBM, Microsoft, and Amazon. However, one company that cannot be left out of the virtualization conversation is VMware.
With the invention of the VMware Workstation in 1999, VMware became one of the pioneers of desktop virtualization. The VMware Workstation was the first hypervisor to successfully virtualize the x86 chip architecture present in most computers we have today, and it enabled PC users to run multiple operating systems on the same PC.
While this was a formidable breakthrough in and of itself, only two years later, in 2001, VMware brought virtualization to enterprise and small businesses with the introduction of the VMware ESX (now VMware ESXi) hypervisor, which empowered organizations to optimize their resources by simultaneously running multiple instances of virtual machines on a single physical server. Many industry experts credit the accomplishment of this particular feat by VMware as the foundation of today's cloud computing.
Since the early 2000s, VMware has expanded its product portfolio, consistently delivering virtualization solutions to enterprises and PC end-users. These include services ranging from cloud management and infrastructure to desktop, network, storage, and application virtualization.
VMware's wide array of product offerings and their built-in compatibility with each other have made the company's product line an industry standard of sorts among companies looking to adopt virtual machines as a means to maximize and scale their IT resources. So much so that as of December 2023, VMware had 44.8% of the virtualization market, servicing over 75,000 partners and 500,000 customers worldwide – a roster that includes all of the Fortune 500 companies.
The Broadcom Acquisition: Implications and Industry Response
For this reason, it came as a surprise to many VMware customers in May 2022 when Broadcom, the multinational semiconductor and software infrastructure provider, announced it would be taking over VMware in a cash and stock transaction valued at $61 billion. While it took Broadcom over 18 months to secure all necessary regulatory approval from pertinent authorities in the UK, US, China, and other territories where it had a stake, the deal was eventually finalized for $69 billion on November 22nd, 2023, in what is one of the biggest takeovers in tech history.
In the aftermath of the buyout, Broadcom's President and CEO, Hock Tan, came out stating that the acquisition of VMware is part of the company's broader strategic approach to building the world's leading infrastructure technology company. However, Broadcom's track record when it comes to acquisitions hasn't assuaged the concerns of many avid and lifelong VMware users.
Even though Broadcom hasn't explicitly said as much, many customers, particularly individual developers, and small and medium businesses, point to the pattern of the company prioritizing enterprise-level solutions over services for individual or small-time users; upon closer inspection, many of these concerns don't seem to be far-fetched.
Since the takeover, Broadcom has already implemented significant policy changes to VMware's business model that threaten to disrupt how customers assess and adopt VMware products. For instance, it set a date (April 30th, 2024) for the effective termination of all existing partnerships with cloud service provider partners in the VMware Partner Connect Program. A move that would most likely alter how users utilize and deploy VMware services.
But perhaps what many VMware customers would be most concerned about is Broadcom's changes to VMware's pricing and licensing model. The company has announced that new clients looking to adopt VMware services would no longer be able to do so under a perpetual license; they would have to subscribe to the service on a contractual basis. Not only that, but Broadcom has also discontinued the sale of support and subscription services to perpetual license holders.
What this means is that even though permanent license holders may continue using the service per the terms in their original contract, once their support subscription ends, they no longer have access to support from VMware. These measures are put in place to incentivize users to adopt the new software as a service (SaaS) model, helping Broadcom achieve its stated goal of amassing $8.5 billion in EBITDA revenue within three years of the acquisition.
Enterprises already accustomed to the old VMware way of doing things may face a few strategic impediments when transitioning into the VMware-by-Broadcom era. Firstly, they would have to rethink how they spend finances on software licenses. Rather than considering licenses as a one-time capital expenditure, they would have to make budgetary adjustments to accommodate ongoing subscription fees.
Furthermore, support costs are bound to increase. Under the old VMware perpetual license model, enterprises with perpetual licenses had the flexibility to subscribe to VMware support services or choose third-party support that best address their requirements. This starkly contrasts with Broadcom's new business model, where licenses are bundled with mandatory support contracts and sold as a subscription service. For businesses with permanent licenses, this means a significant increase in the cost of owning VMware software. They can no longer cut costs or scale by using a third-party service, they must now pay for Broadcom support services.
The Case For AWS
Amazon Web Services (AWS) is a subsidiary of Amazon with a focus on providing cloud computing services to individuals, corporations, and government on a pay-as-you-go basis. These services entail networking, storage, computing, machine learning, and IoT (Internet of Things) solutions that it provides via its server farms and data centers.
In 2023, Amazon Inc., the parent company of AWS, generated $574.8 billion in revenue. Of this sum, AWS accounted for 15.8%, totaling over $90 billion. This makes AWS the biggest cloud service provider in the world.
But beyond cloud services, AWS also offers a range of virtualization options for enterprises with its AWS Nitro System hypervisor. This presents an opportunity for VMware users looking to switch virtualization platforms in the wake of the Broadcom takeover – they can make the most of AWS's stand-out qualities over VMware, which include:
- Pay As You Go Pricing: Amazon Web Services operates on a pay-as-you-use pricing model that allows enterprises pay for only the cloud resources they use while they use it. No long-term contracts. No licensing agreements. This is in contrast to the VMware subscription-based model initiated by Broadcom, which demands significant financial commitments from businesses regardless of their specific resource requirements.
- Scalability: Using AWS, enterprises can scale resources up or down based on workload demand without having to purchase or maintain hardware. On the other hand, for enterprises to run a virtual data center on VMware cloud, they have to pay for a minimum number of host capacities regardless of how often they use them.
- Flexibility: AWS global data centers facilitate flexible virtualization by allowing enterprises the liberty to choose their pricing model, system configuration, and preferred region of operation globally.
- Diverse Service Options: Compared to VMware, AWS has a more comprehensive set of cloud services that can accommodate the needs of international businesses. This includes Amazon EC2 for computing, Amazon S3 for storage, Amazon VPC for networking, and Amazon Lambda for serverless computing, amongst others.
Factors and Best Practices to Consider Before Migrating to AWS
The impending VMware licensing changes by Broadcom are triggering some rapid cost analysis among enterprise IT teams. For shops running complex VMware environments, AWS could offset budget impacts significantly. Its dynamic resource scaling and pay-per-use model align business spending tightly to workloads, skipping VMware's now-fixed subscription fees.
With no long-term lock-in to worry about, some Tech leaders cite savings of up to 40% in some use cases. Also, by tapping AWS's advanced auto-scaling capabilities, systems can self-adjust to handle spikes seamlessly without overprovisioning. The savings here will quickly compound.
Looking beyond the balance sheet, AWS unlocks support depth and speed that is difficult to achieve otherwise. Their tiered plans blend internal offerings with vetted third-party tools, facilitating more tailored, enterprise-grade care. Features like proactive security warnings and workload optimization guidance help tech teams continually strengthen system performance and posture.
And we can't ignore AWS's blistering pace of innovation—new AWS solutions launch daily across domains like containers, analytics, and IoT. This expanding toolbox accelerates development cycles and unlocks more advanced capabilities. While lifting-and-shifting VMware environments as-is limit some complications in migration, re-architecting elements to leverage AWS-native tools will maximize these benefits. Some best practices businesses can adopt here include:
- Conducting methodical VMware environment analysis pre-move, detailing app/data flows and dependencies to shape a risk mitigation blueprint.
- Embedding robust security controls from the get-go in the AWS environment, leveraging tools like CloudTrail, GuardDuty, and KMS to maintain compliance.
- Phasing the migration meticulously, shifting non-critical apps first to validate processes before cutovers of tier-one workloads.
- Leaning on AWS support teams and purpose-built migration tools to ease transitions.
ReluTech provides cloud migration solutions to accelerate your migration to AWS. Additionally, ReluTech offers project-based or permanent talent placement services to address skill gaps in your migration team.
Conclusion
With VMware's direction pivoting under Broadcom, IT execs would be prudent to evaluate AWS alternatives based on their new economic realities. Gradual migration supported by AWS's seasoned engineers and efficiency arsenal can tame disruption risks. Prioritizing this shift will better position organizations to ride the cloud wave already well underway.
If you need help with your migration from VMware to AWS, request a quote from ReluTech and optimize your project’s budget and timeline today.
