The details on what will clearly be massive change from Broadcom’s acquisition of VMware have been gradually being made public, and Nutanix is one of the VMware competitors who see opportunities created by channel disruption.
The longstanding process of the acquisition of VMware by Broadcom, which finally closed recently, has many of the hyperconverged infrastructure [HCI] vendors in the industry excited, as it may give them the possibility of eating into what had been VMware’s market leading share. The issue, however, is that while Broadcom’s track record in acquisitions usually involve a radical shift, exactly what they are doing has had a few different interpretations.
Nutanix says that they have an advantage in this environment in that they had some advantages over VMware even before their acquisition.
“We have always started with emphasizing user experience and our NPS score has been over 90 for the last 8 years,” said Lee Caswell, the SVP of Product and Solutions Marketing at Nutanix. “Nutanix is also easy for partners to learn and support. We are server-based, so our hybrid multi-cloud experience is the same.”
Caswell also noted that the changes that are beginning to unfold – just because they are changes – are having a positive impact on Nutanix as well.
“Partners are unclear and people don’t move fast when they are unclear on strategy,” he said. “It coincides with the slowing down at this time when applications are the competitive currency for every business. All our financial aspects are deal-specific. We can offer a trusted relationship with bidirectional communication.”
Caswell also said that Nutanix is working from a solutions point of view to differentiate themselves.
“We are watching some of the major trends in the industry right now, he noted. “One is access to talent. We are also consolidating architectures that before were separate and discrete. We have also designed single models for block, file and object storage onto VMs and containers and across the edge to the data centre to the public cloud. This allows us to protect and restore data across all of those aspects, in the same way, which no one else does. We are also still committed to channel friendly relationships with good margins.”
Caswell outlined as well how Nutanix is working with partners in making themselves more attractive to them in the lightof the uncertainty Broadcom created. He started with what they knew as fact.
“The plan for Broadcom was to increase the profitability of VMware by 3.8 billion, through a likely combination of layoffs, changes in channel and changes in pricing,” he said. “The top 2000 customers would be treated differently – and would be taken directly. This was all in their early statements.”
Nutanix has spoken already about the likely negative impact of Broadcom taking VMware’s top customers direct.
“Treating VMware the same way as the chip and application business has both customers and channel concerned,” Caswell stated. The changes to the channel depend on the support model. The margin opportunity has changed for most partners. We have made a public statement saying those 2000 customers going direct could cost partners $650 million. In addition, the services for the largest customers like migration and disaster recovery are the really lucrative ones. That’s where a lot of partner training has gone.”
Much will depend on what is in the contracts that have been sent. These were supposed to go out last week, but many partners have not received theirs.
“Most partners do not know, so there is uncertainty,” Caswell said. “Partners ask if they still get a contract, what will be covered in it. There is also concern that if the top 2000 are out, which the remaining market opportunity for margin and services will be, given that services usually go to the largest customers.”
Selling costs are increasing for selling VMware products in any event.
“There is new pricing and packaging that eliminated many standalone SKUs,” Caswell noted. “That’s good in that it does simplify things, but it eliminates some of most popular SKUs and also will require retraining and recertification.
“The other thing that changes the calculation for resellers is that the amount of channel conflict is set to increase dramatically,” he added. “VMware has been sold with new hardware sales before. Now software will go direct and partners will be selling hardware. It will make things more complicated.”