StorMagic reviews VMware options with partners in light of Broadcom changes

StorMagic also indicated to their partners that they have been redoing their own channel program, which they say will add new features while taking nothing away, and should be announced in the next 4-8 weeks.

Bruce Kornfeld, Chief Marketing and Product Officer at StorMagic

On Wednesday, edge hyperconvergence provider StorMagic held a webinar for channel partners giving their take on the meaning of Broadcom’s acquisition of VMware for both partners and customers. The webinar, “VMware Upheaval: Time to Jump Ship and Consider Alternatives,” looked at what StorMagic believes to be the imminent product and licensing changes coming under Broadcom, as well as the likely changes on the channel front.

“The acquisition of VMware by Broadcom has been the talk of the industry for well over a year now,” said Bruce Kornfeld, Chief Marketing and Product Officer at StorMagic. “The industry knew that changes were coming because people know what Broadcom does when they acquire a company and that usually involves a radical shift.”

Kornfeld acknowledged that exactly what Broadcom is doing with their product strategy is not 100% clear, because some changes appear to be continuing to appear on the fly, but based on what they know now from information coming from customers, they have some good ideas.

“Products are being limited to specific bundles, which are being sold on subscription model only,” he said. “Perpetual licenses are being eliminated with this abrupt transition to full scale bundles. VMware is looking to simplify the product lines by bundling together things that were sold individually. Hypervisors are still available in Standards or Essentials Plus bundles.”

Kornfeld pointed out two ways in which these changes specifically applied to StorMagic

“vSphere is not part of this, and we are a vSAN alternative, so this opens new opportunities for us,” Kornfeld said. “Under Broadcom, VMware is very interested in enterprise and big business and cloud. They are not interested in small edge computing and SMB.”

“On the surface, they have simplified part numbers, and that makes perfect sense,” said Brian Grainger, StorMagic’s President and Chief Revenue Officer. “That makes sense, because they moved thousands of SKUs into four common buckets. The devil is in the details though. That’s why they are forcing SMB accounts and enterprise edge accounts out, because those groups don’t need the stuff in the bundle. Because of the bundles, we are seeing anywhere from a 30% to 300% increase in costs per customer.”

“Pricing is the concern with the changes,” said Paul Wozniak, Director of Services at PBG Networks, a long-time StorMagic partner. “Margins are tighter. We have  seen the  playbook when they acquired Symantec, and the customers can’t stay on perpetual license. That’s not an option for them. VMware is already sending out cease and desist letters to customers who are trying to do that. So our clients are very concerned about the options they would have.”

Exactly what the new costs will entail is still something of a mystery, Wozniak stated.

“For SMBs, they will be looking at spending more money,” he said. “Everyone seems to be expecting it in both client and partner discussions. The questions are where will it fall, and will the new model price these customers out of VMware.”

“vSphere will still cost them more money,” Grainger said. “We always come in significantly less expensive.”

Wozniak said the difference now though is that many customers are seriously considering non-VMware environments.

“They are scrambling now to find alternatives,” he indicated. “We’ve had great success being able to push envelopes around what we can run. We got one client’s whole virtual environment solution down to a two-host solution using StorMagic SvSAN. The customer moved from four servers to two, which StorMagic enables, and other HCI alternatives were 3 and 4 host solutions.”

Grainger indicated that StorMagic itself has seen this surge in inquiries.

“We are 100% channel, but we have sales resources that touch customers directly and bring them back to the channel,” he said. “In the last 3-4 weeks, that number of inquiries has increased 4x. We have customers with 100-200 TB deployments, but most of our customers are SMB.”

Grainger also reviewed what they know about the channel program changes at VMware, which are still a little cryptic.

Brian Grainger, StorMagic’s President and Chief Revenue Officer

“They terminated the VMware partner program, but that made sense because Broadcom had their own,” he said. How partners are being added to it still isn’t completely clear.

“On February 5th, partners were either invited to the program or not,” Grainger noted. “But some people who haven’t been invited just didn’t get any  communication. We don’t know what it means, but it causes chaos. For example, without being in the partner program, there is no deal registration. We do know that there is no price protection in the top 2000 accounts.”

The number of distributors has been reduced as well.

“There is still so much uncertainty, but it is a great opportunity for distribution partners,” Grainger said. “Partners’ choices become less, with fewer distis to pick from. It’s good for Broadcom shareholders, but it’s more work for partners, and there will be longer turnover periods to get quotes. For those who Broadcom would not consider an elite partner, watch your back.”

“It seems to be a repeat of Symantec, although sometime late tomorrow we are supposed to get more information, Wozniak said.”

At the end of the call, Grainger dropped a major piece of news.

“As all the Broadcom stuff was going on, I was working on expanding the channel program,” he said. “During the next 4-8 weeks, we will be announcing expansion to the program. Nothing will be taken away from our program, but we will be adding things to it, especially marketing support.”