A Broadcom VMware Alternative: Partners See ‘Massive’ Opportunity For HPE VM Essentials

'I think our customers are going to be really receptive to the (HPE VM Essentials) price-point, the licensing model, and how this can be a bridge and transition strategy that HPE has thought through to enable them to transfer VMs,’ says Milestone Tech founder and CEO Sarah Miles.

Sarah Miles, founder and CEO of Milestone Tech, Castle Rock, Colorado, has already trained her entire team as part of an “all hands on deck” sales offensive to take advantage of the “massive” opportunity to provide HPE VM Essentials as a much-needed alternative to the high-priced path Broadcom has taken with its VMware strategy.

Given that literally every Milestone customer is interested in a VMware alternative, Miles (pictured above) said she wanted to make sure her entire company can have a conversation on the benefits of HPE VM Essentials versus VMware.

“Is every customer wanting to have this conversation? Yes,” she said. “Is (HPE VM) Essentials going to solve every problem for every customer? Not yet but HPE is tracking in that direction. I think it is going to be significant.”

The Broadcom-VMware per-core pricing subscription strategy has led to across the board four and five times price increases and in some cases as much as 10 times to renew VMware licenses, said Miles. Customers are “considering any option to jump ship ASAP to get away from this,” she said.

“I don’t have any customers that are happy with VMware,” said Miles. “Some are begrudgingly doing what they have to do in tandem, but everybody is sort of hungry for plan B…I think our customers are going to be really receptive to the (HPE VM Essentials) price-point, the licensing model, and how this can be a bridge and transition strategy that HPE has thought through to enable them to transfer VMs. I think it’s pretty compelling so we are excited to start the journey with some of our clients.”

Milestone Tech is one of a number of HPE partners stepping into the maelstrom created by Broadcom’s acquisition of VMware by offering HPE VM Essentials as an alternative.

HPE this week announced VM Essentials as a standalone global offering with a no-holds barred “channel only” go to market model backed up by a 10.5 percent rebate.

The channel-only HPE sales model is, indeed, in sharp contrast to the channel strategy taken by Broadcom in the wake of its acquisition of longtime virtualization market leader VMware in November 2023.

After the deal was closed, VMware took the top 2,000 accounts direct, terminated partner agreements and invited select partners to rejoin the channel program, reduced the product portfolio and initiated a new per-core processor pricing model that resulted in sharp prices increases for many customers.

VMware declined to comment on the HPE VM Essentials launch and the differences between HPE VM Essentials and VMware.

Miles, for her part, said she is not surprised by HPE’s commitment to partners with the HPE VM Essentials channel only sales strategy. “HPE has continually put their money where their mouth is with us,” she said.

HPE Leadership That ‘Lead And Bleed’ With Partners

Miles credited HPE North America Managing Director Paul Hunter and HPE North America Head of Channel Sales Phil Soper for the “authentic leadership” that has made a difference to partners in the sales trenches. “They both lead and bleed with the channel and it has made a difference in our business and our ability to get deals done,” she said.

Pat O’Dell, managing partner at Clinton, N.J.-based CPP Associates, one of HPE’s top enterprise partners, said he also sees VM Essentials as a “massive” opportunity given the “uncertainty” that has resulted from Broadcom’s acquisition of VMware.

“Broadcom now is a very large organization ($51.7 billion in annual sales) and VMware is just a piece of the portfolio instead of the main part of the business,” he said. “Customers are questioning whether Broadcom is going to put the same time, focus and energy into improving the product as VMware did on its own or are they going to look at VMware as a cash cow.”

O’Dell compared Broadcom to an investment property owner with 15 houses to look after rather than a homeowner focused on a single home. “When I own 15 houses, which house am I focusing on?” he asked. “Which one do I decide to use as an Airbnb? Which one do I rent out? Which one do I sell?”

Among the questions customers have raised with CPP is whether there could be additional changes coming in the future with regard to support, pricing and product development, said O’Dell. “There is uncertainty with what Broadcom will do with VMware and how they will act moving forward,” he said. “That is as important or even more important to our clients than the price increases. Customers are questioning whether VMware is losing the focus and the predictability they had in the past.”

As for the VMware price increases, O’Dell said it has been a big issue for commercial and low-end enterprise customers that CPP serves and has not been as big an issue for enterprise customers using VMware Cloud Foundation. “Some of our clients really got hammered and are paying three and four times more than they were a year ago,” he said. “These are good clients of ours and they are asking for alternatives. I am grateful that HPE has a great alternative that is only going to get better.”

With the per-core pricing model put in place by Broadcom, a typical CPP customer with 16 core dual socket servers now is being charged as much as $4,800 per system for VMware Enterprise Plus licensing – a whopping 400 percent price increase versus approximately $1,200 per server for the same server for HPE VM Essentials, said O’Dell. “When the price discrepancy becomes so large you have to pay attention,” he said.

A Big Plus For HPE: Morpheus Technology

A big plus for HPE is that the VM functionality it is providing is based on the “proven” technology from HPE’s acquisition in August 2024 of multicloud software management superstar Morpheus, said O’Dell. “It is Morpheus proven, nine year, eight different iterations backed by HPE which is an 86 year-old organization with tremendous customer support,” he said. “That is why people are coming to us and asking to discuss this.”

Even though as many as 90 percent of CPP’s VMware customers are not ready to make the move off VMware, the other side of the coin is that most of those 90 percent are interested in looking at an alternative like HPE VM Essentials, O’Dell told CRN. That is in sharp contrast to before Broadcom acquired VMware in 2023 when 90 percent of CPP’s customers would not even consider a VMware alternative, said O’Dell.

CPP is advising customers to not make a fast “decision” based on price alone but rather conduct an assessment with CPP of their VMware workloads with a look at potential alternatives like HPE VM Essentials. “Our plan is to help our clients to optimize their current VMware environment in a low to no cost manner,” promised O’Dell.

O’Dell said that the companies and teams he has led over the last 25 years have probably sold upwards of $100 million in VMware-based solutions so it pains him to see what he called the “uncertainty” that is driving his customers to look at alternatives.

“I have seen a couple of times over the past 38 years when a company that seemed invincible lost focus and then lost dramatic market share,” he said. “VMware is far from being at that point today, but having clients actively want to look at alternatives for the first time ever is undoubtedly a significant red flag.”

An Appetite For HPE VM Essentials As A VMware Alternative

Erik Krucker, chief technology officer for Comport Consulting Corp., Ramsey, New Jersey, No. 275 on the CRN SP500, said “100 percent” of his customers are looking for VMware alternatives in the wake of price increases as high as three to ten times in the wake of the Broadcom acquisition. “There is an appetite for (HPE) VM Essentials,” he said.

To HPE’s credit, the company has put together a strong offering with the Morpheus technology with a robust management and orchestration plane, said Krucker “It’s a complete solution from that perspective,” he said. “VM Essentials is heading down the right road.”

That said, Krucker said, VMware has built a robust offering that took a decade to pull together into a blue chip, bullet-proof virtualization product.

As for the channel-only model, Krucker said that is “positive” for Comport and other channel partners. “It definitely matters that there is no direct go to market and they are relying on partners,” he said. “We are starting to see HPE flip direct customers to the channel.”

C.R. Howdyshell, CEO of Advizex, No. 115 on the CRN SP500, a Fulcrum IT Partners company, said he “welcomes” HPE VM Essentials as an alternative to VMware.

“If HPE can execute with this channel-only model it is going to be extremely well-received by customers and partners,” he said. “The way HPE is bringing this to market could give them a real competitive advantage. Customers are looking for options and we need to give them more options.”

Howdyshell said has not met with a single customer that “feels good” with the path taken by Broadcom since it acquired VMware. “Customers feel there is not much flexibility with VMware,” he said.

Dan Molina, co-president and chief technology officer of Nth Generation, San Diego, No. 298 on the CRN SP500, said HPE VM Essentials comes to market with the “large majority” of customers looking for a VMware alternative in the wake of price increases of 200 to 300 percent. “Customers that use bare-bones virtualization are the ones in the most pain because they are being forced to pay for stuff that they don’t use,” he said.

Molina credited HPE with bringing an “amazing” virtualization alternative to market so quickly. “There will be a lot of workloads that are going to be ideal candidates for VM Essentials,” he said. “There will also be other workloads that customers decide to keep on VMware for now. But now customers have a path to transition so they don’t have all their eggs in one basket where they are at the mercy of that one basket where prices have increased 200 to 300 percent.”

Molina said in 30 years in the IT business he has never seen the kind of price increases that customers have been hit with in the wake of the Broadcom acquisition of VMware. “To my best recollection, I have not seen anything even close to this,” he said.

Molina said HPE VM Essentials is just one more example of HPE making “customer choice’ a top priority. “HPE is giving customers an option to manage both their existing VMware and perhaps new workloads in a new strong alternative which is VM Essentials,” he said. “I love the HPE go-to-market path, which is not rip and replace. It is all about getting a new management platform that will help you manage your existing VMs and then start adding new workloads. The more you shift the more you will save over time. This allows the customer to do that at their own pace. That is real customer choice!”