The 10 Most Controversial Companies Of 2024
A solution provider behemoth bankruptcy, turmoil at a onetime chip market leader, a faulty content update from a security superstar and a channel antagonist that left partners reeling are among those companies that made our list of the most controversial companies in 2024.
2024 was yet another year of falling fortunes, sudden changes in channel strategy, and technology and security shortcomings in the high-stakes technology market.
It was a year with no shortage of controversy, from a $1.5 billion solution provider filing bankruptcy protection in the midst of rising interest rates to a faulty content update from a security superstar that shook the world.
Security issues were once again in the spotlight with a VPN provider hit with a mass exploitation by threat actors in two high-severity, zero-day vulnerabilities.
One of the original pioneers of backup data protection for MSPs stunned partners by suddenly terminating cloud services, leaving MSPs scrambling to find a replacement.
A channel infrastructure stalwart that pulled off a blockbuster acquisition went through several rounds of layoffs, executive shakeups and introduced a landmark new partner program.
A top cloud provider faced U.S. Department of Justice pressure and backlash from partners following a decision to cut renewal margins on a mainstream offering by 40 percent. As the year came to a close, the cloud provider also changed the discount structure for its cloud platform.
The biggest fallout in the year was the drama that left partners scrambling to pick up the pieces from sweeping changes that included a direct sales assault, termination notices and astronomical price increases. In the midst of the chaos, competitors swooped in to fill the channel void.
Here then are the 10 Most Controversial Companies of 2024.
10. C1 Files For Bankruptcy; $1.8 Billion In Debt Forces Company To Reorganize
C1, one of the nation’s largest solution providers once known as ConvergeOne , filed for Chapter 11 bankruptcy protection on April 4 in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
C1, No. 40 on the 2024 CRN Solution Provider 500, cited rising interest rates as one of three primary challenges that led to its Chapter 11 bankruptcy filing.
The company’s highly leveraged capital structure resulted in increasing interest costs as interest rates in the U.S. continued to rise. C1 said the Federal Reserve raised interest rates by about 5 percent from March 2022 and August 2023. The result was interest costs on C1’s funded debt rising by about $55 million on an annualized basis.
As a result, while C1, with over $20 million in cash and over $1.8 billion in debt, filed to reorganize under Chapter 11 bankruptcy protection.
C1 declined to discuss the bankruptcy filing with CRN. However, CEO Jeffrey Russell, in a prepared statement, said the company is pleased to have reached an agreement to allow it to continue working with customers and vendor partners.
“Over the past year, we have been taking actions across the organization to help position C1 for success in the market and harness the full value of One C1. To support our ongoing efforts and ensure the Company has a strong financial foundation for the future, C1 is proactively taking steps to reduce our debt levels, strengthen our overall liquidity profile and, in turn, invest in near-term growth and grow market share,” Russell said in the statement.
C1 was founded as ConvergeOne in 1993 as an Eagan, Minn.-based solution provider. The company was acquired in 2014 by private equity company Clearlake Capital Group. The company went public in early 2018, with Clearlake as its biggest shareholder.
C1, still known as ConvergeOne at the time, started a fast-growth acquisition strategy in 2019 when it was acquired in a $1.8 billion all-cash deal by Luxembourg-based CVC Capital Partners’ Fund VII as part of a strategy to build a platform MSP with a mandate to acquire other MSPs to build a national presence. That deal opened the door for C1 to acquire over 20 other solution providers.
The primary debtor in the Chapter 11 filing was PVKG Intermediate Holdings, a financial services company formed in 2018 when ConvergeOne was acquired by CVC. PVKG Intermediate was the direct or indirect parent of each of the other debtors, including C1 Holdings and C1 Inc. as well several of the largest solution providers acquired by C1.
In June, C1 said it had “successfully completed its financial restructuring process,” emerging with what it called an “even stronger financial foundation.”
As a result of the restructuring, C1 said it had reduced its debt by approximately 80 percent and CVC Capital Partners, as well as Silver Point Capital and Monarch Alternative Capital, among others, have become the majority owners of C1, investing $245 million in new equity into the company.
“Completing this highly consensual, expedited process positions C1 to expand investments in near-term growth initiatives,” said Russell. “We remain focused on driving modernization and innovative outcomes for our customers across infrastructure, communications and security solutions. As always, C1 is committed to bringing together the best of services, products and channels so organizations can take full advantage of technology to create elevated connected experiences for their customers.”
In November, C1 announced the expansion of its board of directors led by Bob Pryor, a 40-year veteran of the IT services industry who most recently served as CEO of NTT Data Services.
Also joining the board were: Arjun Bedi, formerly a member of Accenture’s Global Management Committee; David Shirk, most recently president of travel technology company Sabre; and Greg Patterson, currently an executive director at Silver Point Capital.
Last but not least in December, C1 announced that Dale Gerard, former CFO of fitness subscription tech company iFit, had joined the company as CFO and Viral Tripathi, former global CIO for AI software services company Ascendion, had been named CIO.
9. Ivanti Connect Secure VPNs Hit With Mass Exploitation; Cybersecurity Agency Warns Of ‘Significant Risk’
Ivanti’s widely used Connect Secure VPNs saw mass exploitation by threat actors following the January disclosure of two high-severity, zero-day vulnerabilities in the systems.
Researchers said thousands of Ivanti VPN devices were compromised during the attacks, with the list of victims including the U.S. Cybersecurity and Infrastructure Security Agency (CISA). Other victims included Mitre, a major provider of federally funded R&D and the promulgator of a cyberattack framework that’s become ubiquitous in the security industry.
While several additional vulnerabilities ultimately were disclosed, researchers at Google Cloud-owned Mandiant reported that the two original Ivanti VPN vulnerabilities saw “broad exploitation activity” by a China-linked threat group tracked as UNC5221, as well as “other uncategorized threat groups.” The attacks by UNC5221— a “suspected China-nexus espionage threat actor”—went back as far as early December 2023, the researchers at Mandiant said.
The attacks prompted CISA to issue an urgent order to civilian executive branch agencies, requiring the unusual measure of disconnecting their Ivanti Connect Secure VPNs within 48 hours. Ivanti released the first patch for some versions of its Connect Secure VPN software on Jan. 31, three weeks after the initial vulnerability disclosure. “In this case, we prioritized mitigation releases as patches were being developed, consistent with industry best practices,” Ivanti said in a statement provided to CRN.
Caleb Gross, director of capability development at Tempe, Ariz.-based offensive security company Bishop Fox, told CRN that he wanted to see more of a “sense of urgency” in the Ivanti response to the exploitation.
“[Ivanti’s] response to a new vulnerability being announced was, ‘Hey, there’s a patch coming—not in a matter of days, but in a matter of weeks.’ That’s concerning,’” said Bishop Fox’s Gross. “You want to see more of a sense of urgency.”
In February, CISA warned organizations to “consider the significant risk” that may be posed by continuing to use widely exploited Ivanti VPNs, in part based on newly disclosed independent lab research performed by the agency.
In CISA’s advisory, the agency shared results of its independent lab research showing that even a factory reset of Ivanti Connect Secure VPNs may not be sufficient to remove a threat actor’s foothold on the devices.
“A cyber threat actor may be able to gain root-level persistence despite issuing factory resets,” CISA wrote in the advisory, which was released in conjunction with numerous other agencies including the FBI and units from Australia, the U.K., Canada and New Zealand.
“The safest course of action for network defenders is to assume a sophisticated threat actor may deploy rootkit level persistence on a device that has been reset and lay dormant for an arbitrary amount of time,” CISA said the advisory.
Ivanti appeared to offer a different interpretation of the CISA lab environment findings in its own advisory update, suggesting that a factory reset would in fact be effective.
“It is important to note that this lab-based finding has not been observed by CISA, Ivanti or Mandiant in the wild,” Ivanti said. “Based on the evidence presented and further analysis by our team, we believe that if a threat actor were to attempt this remotely, they would lose connection to Ivanti Connect Secure, and not gain persistence in a live customer environment.”
In October, CISA urged organizations to prioritize patching for a previously disclosed, critical-severity vulnerability affecting Ivanti Endpoint Manager, which had been exploited in attacks.
The remote code execution (RCE) flaw in the product, also known as Ivanti EPM, was discovered in the spring and patched in May. However, the vulnerability (tracked at CVE-2024-29824) was confirmed to have been exploited by threat actors, according to CISA and Ivanti.
In an update to its own advisory about the vulnerability, Ivanti said it “confirmed exploitation of CVE-2024-29824 in the wild.”
“At the time of this update, we are aware of a limited number of customers who have been exploited,” the vendor said.
In a statement provided to CRN, Ivanti said the Endpoint Manager vulnerability was “previously identified and patched” on May 21 and that “at the time of disclosure, there was no indication that any customers had been exploited as a result of this vulnerability.”
“However, we have now confirmed limited exploitation,” the company said. “We strongly urge customers to ensure they are on the latest version which is available through our standard download portal.”
8. Arcserve Makes Sudden Cloud Services Exit, Leaves MSPs Scrambling
In a February missive to partners, storage and data protection software developer Arcserve, one of the original pioneers of backup data protection for MSPs, stunned partners by suddenly terminating sales of its Arcserve Cloud Services and Arcserve OneXafe Solo service, leaving MSPs scrambling to find a replacement.
Sales of the technologies were available via distribution until March 8, the memo said, with support for those products ending July 31.
“We couldn’t believe they would get out of the cloud and leave us no path forward,” said Erik Semmel, vice president of client services at Tab Computer Systems, an East Hartford, Conn.-based MSP, which is Arcserve’s third largest partner in the U.S.
The company said the decision to end-of-life those technologies was a strategic decision that aligns with the company’s support policy and cloud services terms and conditions. The company said the shift would enable Arcserve to invest in innovative solutions to best serve its partners and customers.
Vitali Edrenkine, Arcserve’s executive vice president of worldwide sales and marketing, told CRN at the time that his company knows this is a big deal to many of its MSP partners.
“We regret the impact that it’s having,” Edrenkine said. “But this was not a decision that we made lightly. It is something that we carefully thought through. We spoke to many of them and listened to their feedback. We also took a really hard look at our own operations and the state of the market. And this decision became imperative to us.”
Arcserve sought to provide MSPs with a reasonable timeline, taking into account its own constraints and decision-making, Edrenkine said.
“That’s effectively just under six months in this whole process,” he said. “We will provide them with some guidance and support as to how to migrate away from Arcserve Cloud Services during the process.”
Just one month later, CRN learned that Brannon Lacey, who served as CEO of Arcserve, had quietly left the company.
An Arcserve spokesperson, responding to a CRN request for further information, declined to provide details about Lacey’s departure.
“Arcserve does not comment on personnel matters. We remain focused on serving our partners and customers and executing our strategy. Expect an update on our leadership team in the coming days,” the spokesperson wrote.
7. Dell Fiscal Year 2024 ‘Didn’t Go As Planned;’ Channel Stalwart Cook Departs; Restructuring, Layoffs, And False Claims Act Settlement
Dell Technologies started the year with a financial announcement in February that annual sales for Fiscal Year 2024 ended Feb. 2 came in at $88.4 billion, off 14 percent from a year before and $13.5 billion less than its record $101.9 billion haul in 2022.
Dell’s market-leading infrastructure category decreased 12 percent in Fiscal Year 2024 to $33.88 billion compared with $38.35 billion in the year-ago quarter.
Dell Client Solutions Group sales, meanwhile, were down 16 percent in Fiscal Year 2024 to $48.91 billion compared with $58.21 billion in the prior fiscal year.
“FY24 was one of those years that didn’t go as planned,” said Dell Vice Chairman and COO Jeff Clarke. “But I really like how we navigated it. We showed our grit and determination by quickly adapting to a dynamic market, focusing on what we can control and extending our model into the high-growth AI opportunity. Our operating margin rate improved as we delivered higher gross margins with disciplined operating expense management.”
One month after the fiscal year results, Dell Technologies channel stalwart Cheryl Cook announced that she was planning to retire at the end of May.
“After an incredible journey and discussions with my sons, Garrett and Logan, I shared internally this morning that I will retire at the end of May after nearly 40 years in the industry. I am incredibly proud of our partner team and the work we have accomplished together,” wrote Cook, Dell’s senior vice president, global partner marketing, in a LinkedIn post. “I am confident they will continue to drive partner success.”
Dell in August cut some sales jobs and added others, as it reorganized its business for the AI era to become “leaner” and focused on growth.
“Through a reorganization of our go-to-market teams and an ongoing series of actions, we are becoming a leaner company,” the company said in a statement. “We are combining teams and prioritizing where we invest across the company. We continually evolve our business so we’re set up to deliver the best innovation, value and service to our customers and partners.”
The company did not release the number of employees it was cutting in this most recent round of layoffs.
One month later, Dell said it expected layoffs to be an ongoing part of business with more cuts expected before the end of the year as it seeks more “disciplined cost management” to prepare for the future.
The Round Rock, Texas-based tech giant stated in a regulatory filing that in the first half of this fiscal year ended Aug. 2 it had paid severance costs of $400 million. It said that dollar figure is identical to the workforce reduction costs it paid during the entire previous year when it eliminated 13,000 jobs during two layoff announcements in February 2023 and August 2023.
“Throughout Fiscal 2025, we remain committed to disciplined cost management in coordination with our ongoing business transformation initiatives and will continue to take certain measures to reduce costs, including limitation of external hiring, employee reorganizations, and other actions to align our investments with our strategic priorities and customer needs,” the company stated in a 10-Q filing. “We anticipate these actions will result in a continued reduction in our overall head count.”
In November, Dell Technologies and Dell Federal Systems L.P. agreed to pay $2.3 million to resolve allegations that it violated the False Claims Act by “submitting and causing the submission of non-competitive bids” and “overcharging” the Army on a desktop and mobile computing contract, the Department of Justice said.
Dell solution provider partner Iron Bow Technologies LLC (Iron Bow), located in Herndon, Va., also agreed to pay $2.05 million for what the government called its “role in the scheme,” the DOJ said.
Over a period of four years, the DOJ alleged that Dell Technologies knowingly submitted high bids on U.S. Army hardware contracts to ensure that its reseller Iron Bow Technologies would win the deal with a lower bid. That conduct, the DOJ said, violated the False Claims Act and remains under investigation by the DOJ, according to court filings.
“Dell submitted bids to the Army that Dell and Iron Bow knew would be higher than the Iron Bow’s bid, thereby creating the false appearance of competition,” the civil settlement with the U.S. Department Of Justice stated. “The United States contends that this influenced the Army’s source selection process and caused Iron Bow to overcharge the Army.”
Both Dell Technologies and Iron Bow, No. 41 on the 2024 CRN Solution Provider 500, agreed to settle civil claims that it violated the False Claims Act without admitting to wrongdoing. Dell told CRN the settlement is “not an admission of guilt.” Iron Bow provided a statement to CRN, saying it has not admitted any liability in the investigation.
“Iron Bow settled this matter without any admission of liability to avoid further delays, uncertainty, inconvenience, and the expense of potential litigation. Iron Bow cooperated with the Department of Justice throughout its investigation of Dell pursuant to a Qui Tam Complaint against Dell and has maintained its position throughout that investigation,” the statement read.
As a part of its settlement, the government requires Dell to “cooperate fully” with its investigators as they look at a four-year pattern of conduct involving technology bids to win billions in sales contracts.
In the initial case, Brent Lillard, co-founder and CEO of Charlottesville, Va.-based solution provider GovSmart, alleged Dell was violating the False Claims Act and had an unfair pricing advantage when making bids on federal government contracts.
Lillard told CRN that while his initial lawsuit didn’t go anywhere, it was during the auditing of the facts he presented that investigators uncovered the material laid out in the settlement reached with Dell and Iron Bow.
“I hope that if anything comes out of this, it is a more fair and even system for all of us who are competing in the federal market,” Lillard told CRN.
Lillard said he doesn’t blame Dell. He said the government’s incredibly complex bidding process has made it difficult for businesses to operate fairly when competing for federal bids.
6. Cisco Layoffs, Executive Shakeup And A Landmark New Partner Program
For Cisco it was a year of blockbuster changes after it completed its $28 billion acquisition of Splunk, including layoffs, executive leadership changes and the biggest change in its channel program in the history of the company.
The first round of layoffs hit the company in February —a month before Cisco closed the Splunk acquisition—with pink slips for about 5 percent of its workforce, or about 4,250 employees.
Cisco Executive Vice President Maria Martinez, who joined the company in 2018, left the company in February, just ahead of the layoff announcement.
Following Martinez’s departure, Cisco reshuffled executive responsibilities among its executive leadership team, with Cisco Executive Vice President and General Manager of Applications and Chief Strategy Officer Liz Centoni being appointed executive vice president and chief customer experience officer.
Alistair Wildman, Cisco’s then senior vice president of global customer experiences and services who had been with the tech giant for more than five years, worked with Centoni in an advisory capacity before leaving the company.
Thimaya Subaiya, the company’s chief transformation officer, was named executive vice president of operations. Mark Patterson, chief of staff to Chair and CEO Chuck Robbins, was named executive vice president and chief strategy officer.
The second round of layoffs for Cisco came in August with the company reporting that it would lay off 7 percent of its workforce. At that time, Cisco said the global workforce reduction would result in up to a $1 billion restructuring charge. The layoffs came with Cisco reporting a 10 percent drop in its revenue for its fourth fiscal quarter ended July 27 to $13.6 billion in revenue. For the fiscal year, Cisco brought in $53.8 billion in revenue, down 6 percent year over year.
The next executive leadership change came with the departure in May of Executive Vice President and Chief Customer and Partner Officer Jeff Sharritts, who left the networking giant after more than 20 years as an employee. As part of the changing of the guard, Gary Steele, former Splunk CEO, moved from the role of executive vice president and general manager of the cybersecurity subsidiary Splunk to a new role as president of go-to-market.
Steele joined Jeetu Patel, formerly Cisco’s executive vice president and general manager of security and collaboration, who was promoted to chief product officer in August as part of the new leadership team.
Steele and his organization—which includes sales, partner and global marketing teams— “will evolve our sales and go-to-market motions to execute against strategy, align with customer needs, and drive a culture of intense competition, agility, and continuous improvement,” said Robbins in a blog post.
The next blockbuster change at the company came in October with the launch of Cisco 360, the biggest refresh of the iconic Cisco partner program in the company’s history. The new program was built to attract more MSPs and MSSPs with its focus on the value partners bring to the table in a new era in which security, AI and networking services are king. It represents a marked break from the biggest payouts going to partners landing large, Capex infrastructure deals.
Rodney Clark, senior vice president of partnerships and small and medium business for Cisco, told CRN in an exclusive interview that the program represented the “first material shift in how we evaluate partners since the original push into the [partner] ecosystem." The company’s pivot to rewarding based on value will open the door to “boutique” security and networking partners, Clark said.
At Cisco Partner Summit, Patel told members of the media and analysts that next year Cisco “should be a meaningfully different company for the better, and in two years, we should almost be an unrecognizable company for the better, and that would be the yardstick for success."
Robbins, for his part, told attendees at the 2024 XChange Best of Breed Conference, hosted by CRN parent The Channel Company, that his company’s acquisition of Splunk gives Cisco a big advantage over a combined Hewlett Packard Enterprise-Juniper Networks.
“We have the most comprehensive portfolio, whether you’re looking at cloud infrastructure today, AI infrastructure under training models, the technology that we’re going to deliver for an end-to-end stack for how our enterprise customers are going to deploy AI applications with HyperFabric,” said Robbins. “You look at the combination of networking and security and the importance of those two coming together—which they [HPE] do not have—and you look at data center infrastructure, you look at campus networking, with wireless, with all of the observability, the security and everything that we have—I mean, we have more technology that brings more value to our customers in the infrastructure layer than anybody else.”
5. Google Faces DOJ Pressure, Slashes Google Workspace Renewal Margins, Changes Google Cloud Platform Discount Structure
Google faced antitrust pressure with the U.S. Department of Justice requesting that the company be forced to sell Chrome, the most popular web browser on the planet, and potentially its Android business in an unprecedented government move that would reshape the $88.3 billion tech giant.
“For more than a decade, Google has unlawfully maintained its monopolies in general search services and search advertising through a web of anti-competitive practices,” said the Department of Justice in a filing with U.S. District Court of Columbia Judge Amit Mehta on November 20.
“Google has manipulated its control of Chrome and Android to benefit itself, while sharing monopoly profits under conditions to induce third parties across the ecosystem to help Google maintain its monopolies,” said the DOJ in its filing. “The playing field is not level because of Google’s conduct, and Google’s quality reflects the ill-gotten gains of an advantage illegally acquired. … The remedy must close this gap and deprive Google of these advantages.”
In a blog post, Kent Walker, president of global affairs and chief legal officer for Google, called the DOJ proposal “staggering.”
“[The] DOJ chose to push a radical interventionist agenda that would harm Americans and America’s global technology leadership,” Walker said. “DOJ’s wildly overbroad proposal goes miles beyond the Court’s decision. It would break a range of Google products—even beyond Search—that people love and find helpful in their everyday lives.”
For partners, 2024 brought big changes in incentives with a number of partners fearing for their business following the tech giant’s decision to cut Google Workspace renewal margins by 40 percent effective April 1.
The changes set channel margins for Google Workspace renewals at 12 percent, down from 20 percent previously, as the company aims to shift its focus toward closing new business, solution providers said.
“This is not just a 40 percent cut to some margin that’s a small part of the business, this is a 40 percent cut to our bottom line,” said one longtime Google Workspace partner, who asked not to be identified. “We’ve been with Google for 15 years now, and for the first time ever we’re now at a negative as of April 1. That’s the impact of Google’s shift here. And with only a 30-day notice to us—it’s insane.”
In a statement to CRN regarding the matter, a Google Cloud spokesperson said, “We’re growing our rewards for partners overall to help them address the significant opportunity to deliver high-value services in areas like generative AI, cloud migrations, and data analytics and Google Workspace.”
One partner, who did not want to be identified, said the change amounted to Google using the “stick instead of the carrot’ to get partners to focus on net-new accounts rather than renewals.
“What Google is doing is [depreciating] the long-term value of our client relationships,” said the executive. “We are adapting to this, but for some small partners this is an existential moment. I think some partners, because of the size of their business, will not survive this.”
In November, Google Cloud told partners it was planning to change its discount structure for Google Cloud Platform (GCP) resale by offering only one consistent discount when a channel partner resells GCP to large enterprises or in multimillion-dollar deals.
Google declined to provide details on the one consistent partner discount being implemented for large enterprise deals. The change doesn’t go into effect until the second half of 2025.
Colleen Kapase, vice president of channels and partner programs for Google Cloud, told CRN the company is removing the option for a partner, in some cases, to offer custom GCP discounting in deal sizes of around $5 million or more.
“We are just flattening and simplifying the way we do custom discounts at the top end of the market, in the largest deal sizes,” said Kapase, adding that partners still can resell GCP to existing and new customers.
Many Google partners said they saw this coming since Google Cloud had been telling them for years to shift away from traditional GCP resale and move into more strategic services like transformational professional services and AI offerings.
However, one partner said the move could make it harder for his company to win net-new deals when going head-to-head against competitors like Amazon Web Services or Microsoft partners when price is a factor.
“It might affect us winning new deals because that discount can help us win customers who are looking at [Microsoft] Azure or Amazon because we can offer a better price through a discount,” said one CEO of a national Google Cloud partner, who declined to be identified.
4. Microsoft Security Shortcomings, Co-Pilot+ PC Recall Recall, Monthly Billing Premium Criticism
Microsoft continued to be a source of controversy in 2024, grappling with security shortcomings, including an executive email breach and a stinging government report on its “inadequate” security culture.
On the AI front, Microsoft faced privacy issues with a recall of its AI Recall search feature. The company also took heat from solution providers for its 5 percent monthly billing premium for various subscriptions.
The year started with Microsoft disclosing on Jan. 19 that a Russia-aligned threat actor was able to steal emails from members of its senior leadership team as well as from employees on its cybersecurity and legal teams.
The names of Microsoft executives whose accounts were impacted were not disclosed.
Microsoft said that the incident began with a late November 2023 password spray attack, which compromised a “legacy non-production test tenant account.”
Microsoft said that its security team uncovered the compromise after detecting “a nation-state attack on our corporate systems on Jan. 12, 2024.”
The detection led the security team to activate its response process “to investigate, disrupt malicious activity, mitigate the attack, and deny the threat actor further access,” Microsoft said. “Microsoft has identified the threat actor as Midnight Blizzard, the Russian state-sponsored actor also known as Nobelium.”
In April, Microsoft was hit with a stinging report from the U.S. Cyber Safety Review Board (CSRB) regarding a cloud email breach. The CSRB pinned the blame for that breach, which impacted multiple federal agencies in 2023, squarely on an “inadequate” security culture at Microsoft in need of reform.
The U.S. Department of Homeland Security board singled out the security failings as urgent in light of Microsoft’s “centrality in the technology ecosystem and the level of trust customers place in the company to protect their data and operations.”
The Microsoft cloud email breach, first discovered in June 2023, saw the compromise of email accounts belonging to multiple U.S. government agencies. The attack is known to have impacted the emails of Commerce Secretary Gina Raimondo and other officials in the Commerce Department, as well as U.S. Rep. Don Bacon and U.S. Ambassador to China Nicholas Burns.
The CSRB’s 34-page report examined, in the authors’ words, a “cascade of Microsoft’s avoidable errors that allowed this intrusion to succeed.”
Failures attributed to Microsoft included its inability to “detect the compromise of its cryptographic crown jewels on its own, relying instead on a customer to reach out to identify anomalies the customer had observed;” the company’s “failure to detect a compromise of an employee’s laptop from a recently acquired company prior to allowing it to connect to Microsoft’s corporate network in 2021;” and “Microsoft’s decision not to correct, in a timely manner, its inaccurate public statements about this incident.”
Notably, the CSRB said it also assessed “security practices at other cloud service providers, which maintained security controls that Microsoft did not.”
In a statement provided to CRN, Microsoft said it appreciates the work of the CSRB and agreed that “recent events have demonstrated a need to adopt a new culture of engineering security in our own networks.”
Pointing to its Secure Future Initiative, Microsoft said that it has “mobilized our engineering teams to identify and mitigate legacy infrastructure, improve processes and enforce security benchmarks.”
The May unveiling of Copilot+ PCs became mired in controversy after critics took aim at the Recall search feature.
In June, Microsoft said it would delay Recall’s public release to improve its privacy and security safeguards in response to customer feedback.
Security and privacy experts voiced concerns about Recall periodically taking a screenshot of a user’s screen to build an explorable visual timeline of nearly every action they take.
When Microsoft did reveal the feature, it said Recall won’t hide any sensitive or confidential information captured in the screenshots unless a user filters out specific applications or websites or browses privately on supported browsers such as Microsoft Edge, Firefox, Opera and Google Chrome. It was also confirmed at the time that Microsoft would keep recall on by default for Copilot+ PCs.
For Microsoft MSP partners, the software giant’s decision to add a 5 percent billing premium for paying monthly for various annual subscriptions rather than a single annual payment was a source of consternation.
Randy Jorgensen, managing member of South Jordan, Utah-based Microsoft partner RJNetworks, told CRN at the time that he was “baffled” by the new premium that he said would hurt small businesses.
“Most small businesses are completely trapped into using their [Outlook] mailboxes, and at least they could pay monthly to help swallow the cost,” Jorgensen said. “Now they have to pay more or come up with a bunch of money once a year.”
The Redmond, Wash.-based tech giant launched the premium on Dec. 1 for Microsoft 365 Copilot, Copilot for Sales and Copilot for Service annual subscriptions bought through the vendor’s Buy Online, Cloud Solution Provider and Microsoft Customer Agreement for enterprise motions, Microsoft revealed.
Starting April 1, Microsoft will raise by 5 percent the annual commitment monthly billing option for all new and renewing subscriptions, including popular offerings such as Microsoft 365 and Office 365, across Buy Online, CSP and MCA-E. Customers will have the ability to switch from monthly billing to annual billing at renewal date, according to the vendor.
Wayne Roye, CEO of New York-based Microsoft partner Troinet, said that the “ridiculous” premium could be a hindrance when talking to prospects about switching to Microsoft offerings.
The vendor’s licensing and what products and services are included in each license can be difficult for customers to understand, and price changes can throw off customer budgets for the rest of the year, Roye said.
3. Turmoil At Intel: CEO Pat Gelsinger Resigns Amid Layoffs And Budget Cuts
When Pat Gelsinger—a onetime 30-year Intel veteran—rejoined the company in 2021 as CEO he was determined to bring the company he loved so dearly back to the top of the technology innovation pyramid.
That journey ended on a Monday morning in December with a missive that Gelsinger was retiring. “Today is, of course, bittersweet as this company has been my life for the bulk of my working career,” said Gelsinger in a prepared statement.
Bittersweet indeed. Gelsinger’s ambitious comeback plan ended with financial struggles, layoffs and a growing lack of confidence among investors.
The Gelsinger era came to a close just four months after the onetime undisputed leader in the chip market announced it would lay off more than 15 percent of its workforce as part of a plan aimed at reducing costs by over $10 billion in fiscal 2025.
In the Sales and Marketing Group—which includes the partner business—Intel told staff that it planned on cutting costs by more than 35 percent by reducing head count and simplifying programs as part of its broader cost-cutting efforts, CRN exclusively reported.
During Gelsinger’s tenure, Intel’s market capitalization plummeted from $226.43 billion to $96.62 billion. Intel rival Nvidia’s market capitalization hit $3.39 trillion on the day that Gelsinger stepped aside.
In the wake of Gelsinger’s sudden exit, the Santa Clara, Calif.-based company said it was conducting a search for a new CEO and named two interim co-CEOs: CFO David Zinsner and Client Computing Group General Manager Michelle Johnston Holthaus.
Intel channel partners said the sudden departure of Gelsinger raised questions about the company’s current strategy, which has put an extra emphasis on expanding its manufacturing capabilities on top of its chip design business.
Randy Copeland, president and CEO of Richmond, Va.-based Velocity Micro, told CRN that he expects the new Intel CEO to bring a “whole new vision and a whole new road map” to the company.
“I think it’s going to mire them some more,” he said. “Pat’s plan was extremely aggressive, but they’re so far into it now I am concerned about what’s going to happen next. Are they going to pivot again and go in another direction? I feel like they just can’t seem to get anything finished.”
2. A Faulty Crowdstrike Update Leads To The Biggest Outage In IT History
Call it the security content update that shook the world. When Crowdstrike updated its Falcon Sensor security software on July 19 with a faulty content update, it led to what has widely become known as biggest global IT outage in history.
The content update resulted in an estimated 7,000 flight cancellations at Delta alone, disrupted health-care operations, led to 911 outages and left countless customers unable to conduct business.
Ultimately, the faulty content update demonstrated the precariousness of the IT infrastructure we take for granted, leading to the dreaded “blue screen of death” for 8.5 million devices running Microsoft Windows.
Within hours, Crowdstrike had issued a fix, but the systems required manual reboots with many partners going on-site to get customers back up and running.
Crowdstrike CEO George Kurtz went on the “Today Show” in the early hours of July 19 and apologized to all those impacted. “The system was sent an update and that update had a software bug in it and caused an issue with the Microsoft operating system,” he said. “We identified this very quickly and remediated the issue. … Now we are working with each and every customer to make sure we can bring them back online.”
The massive Crowdstrike outage was predicted to cost U.S. Fortune 500 companies $5.4 billion in total direct financial loss, with an average loss of $44 million per Fortune 500 company, according to cloud monitoring and insurance firm Parametrix.
The New York-based insurance services company said insured losses from the outage will total from $540 million to just over $1 billion for the Fortune 500 companies.
Microsoft responded to the fallout from the massive outage with a Windows Endpoint Security Summit on Sept. 10 with top security vendors, including CrowdStrike, to “discuss concrete steps” it can take with partners to “improve security and resiliency for our joint customers.”
What’s more, Microsoft Chairman and CEO Satya Nadella made an appearance at the CrowdStrike Fal.Con conference via teleconference to evangelize the Windows Endpoint Security Summit emphasis on “best practices around secure and safe deployment” along with a focus on “technical ways” to provide access to the Windows kernel with a “new abstraction layer.”
At CRN parent The Channel Company’s Best of Breed Conference in October, Kurtz said the outage ultimately “helped transform” CrowdStrike into a stronger company.
“I think even our relationships with our partners are stronger because of this,” he said. “I think when you hit some adversity, that’s really when you see the level of partnership, the engagement and the commitment that partners and customers have with CrowdStrike.”
CrowdStrike also continues to contend that it has the “best architecture” of major cybersecurity vendors, something that isn’t tainted by the bug in the vendor’s validation process that led to the July outage, Kurtz said.
Ultimately, in the wake of the incident, “there's a lot of noise, and I think candidly, a lot of competitors trying to take advantage of a situation that we had,” Kurtz said. “But I think customers see through a lot of the misinformation and it’s backfired in many cases.”
1. Broadcom’s VMware Changes Hit The Channel Hard; Competitors Court Partners
The fallout from Broadcom’s $69 billion acquisition of VMware—a once-admired solution provider champion—hit the channel hard in 2024.
The fallout was fast and furious with CRN exclusively reporting in January that Broadcom was taking VMware’s top 2,000 accounts direct.
Broadcom issued the edict in an informational session with VMware partners on Jan. 4. During the meeting, Broadcom also told partners any deal they attempted to register for a strategic account would be refused.
The direct sales initiative came even as Broadcom terminated partners with plans to invite a select number of partners back if they met its new criteria, canceled OEM relationships and implemented dramatic price increases that left both partners and customers reeling.
Alan Dumas, CEO of VMware partner Secberus, which primarily sold VxRail to midsize state and local governments up to enterprise-size customers, told CRN at that time that he was done trying to work with the Palo Alto, Calif.-based virtualization juggernaut.
“Our go-forward in the market is, ‘How do you replace VMware?’” he said. “The big mistake [Broadcom] made was telling the partners, ‘We’re canceling the program and we’ll let you know if you are invited to the new one.’ That would leave a bad taste with anybody, especially those companies where VMware is a big part of the business. Everyone received the same letter, so that’s obviously not the way to handle things.”
Besides the direct sales assault and terminations, partners were inundated by customer complaints of huge price increases from a new Broadcom-imposed per-core pricing model.
Partners told CRN they were taking calls from angry customers seeing price increases of 200 percent, 300 percent and higher. Forrester Principal Analyst Tracey Woo told CRN that customers were seeking alternatives in the wake of “3X to 8X to 10X” increases in pricing.
In the midst of the chaos, VMware competitors swooped in to court partners and to assist customers grappling with price increases in the wake of the move to the new per-core pricing plan.
Scale Computing was one of the most aggressive at courting partners with a “rip and replace” program that had angry VMware partners champing at the bit to get on board with Scale Computing.
Scale Computing CEO Jeff Ready told CRN that Broadcom’s “profit harvesting” was helping to fuel Scale Computing’s record growth. “It is just blowing up,” said Ready. “It’s hard to stay ahead of the inbound requests from VMware partners and end users looking to move to Scale. It is a four-times increase sequentially month to month [in inbound inquires] and an eight- to 10-times increase from a year ago.”
In February, Nutanix CEO Rajiv Ramaswami told analysts that Broadcom’s VMware actions “created a significant, multiyear opportunity for us to win new customers and to gain market share.” In fact, he said, Nutanix had put in place new incentives for partners. “As partners bring new customers to us, we give them more incentives,” he said. “We are also helping end customers with migration.”
Microsoft Chief Commercial Officer Judson Althoff said that the Broadcom changes were “the greatest gift of all” for Microsoft and its partners. “Everyone wants to get off of VMware and get into the cloud,” Althoff said during a virtual event for partners.
“The migration opportunity is alive and well,” Althoff said. He also pointed partners to “a really, really specialized offer with AVS [Azure VMware Solution]” to take advantage of the VMware tumult and “get customers unlocked out of the VMware pricing challenges they're having, and/or even bring their own licenses to the cloud.”
In response to a question from CRN during a virtual press conference, Kirsten Newcomer, Red Hat’s senior director of hybrid cloud platforms, said with continued frustrations over price changes at rival VMware, partners should see “a huge opportunity with OpenShift virtualization.”
One of the biggest rounds of applause for a VMware alternative came at longtime VMware OEM stalwart Hewlett Packard Enterprise’s Discover conference, where partners roundly cheered the preview of a new HPE VMware virtualization offering.
HPE CTO Fidelma Russo told CRN HPE decided to enter the hypervisor market with its own open-source KVM hypervisor in the wake of the response from customers and partners to changes in licensing, pricing and product after Broadcom’s acquisition of VMware.
When HPE formally unveiled its VM Essentials offering in November, partners hailed it as an antidote to the big price hikes facing Broadcom VMware customers.
“What’s most exciting to me as a solution provider is we now have an answer, a choice, an option for our customers who are really upset about what is going on,” said Dan Molina, co-president and CTO of Nth Generation, San Diego, No. 278 on the CRN Solution Provider 500. “These customers have built up a dependency on a hypervisor that powers their workloads. Being forced to pay these types of [price] increases is creating a lot of heartburn. We love the idea of being able to present options to our customers.”
HPE President and CEO Antonio Neri told CRN that VM Essentials is a “huge” opportunity for HPE and its partners given that customers “don’t want to be locked into” one virtualization layer or stack. “Once partners move to HPE VM Essentials they can save up to five times the TCO,” he said.
As the year came to a close, Ingram Micro, the world’s second largest technology distributor, dropped Broadcom from its lineup after it failed to reach an agreement with the company.
"We were unable to reach an agreement with Broadcom that would help our customers deliver the best technology outcomes now and in the future while providing an appropriate shareholder return,” Ingram Micro said in a statement provided to CRN.
The distributor said that beginning in January 2025 “Ingram Micro will no longer be doing business with Broadcom and have limited engagement with VMware in select regions.”
A solution provider CTO, who did not want to be identified, told CRN via email that price quotes through distributors that used to take two to three days before Broadcom acquired VMware now take four weeks.
“The distributors are not the issue, Broadcom is,” said the CTO in the email. “They need to empower their distributors to be able to make quotes or Broadcom should double their sales force if they want full control of every quote that is requested by a partner or end user. … The average is four weeks from deal [registration] and request to [distributor] for a quote.”
Broadcom CEO Hock Tan told analysts on its fiscal fourth-quarter earnings call that his company had cut VMware’s expenses in half since taking over the company a year ago, dropping quarterly operating costs from $2.4 billion to $1.2 billion in that time frame and boosting its margins from 30 percent to 70 percent.
Tan said VMware was installed on 21 million CPU cores last quarter versus 19 million CPU cores in the previous quarter. What’s more, he said, 4,500 of the company’s largest 10,000 customers have converted their virtualization estates to Broadcom’s bundle of software called VMware Cloud Foundation.
Market research firm Forrester expects VMware customers to “shrink their deployments by 40 percent in favor of alternatives this coming year.”
For the full fiscal year, Broadcom reported VMware sales of $13.8 billion, compared with
$13.35 billion in March 2023, in its last full fiscal year as an independent company.
As the year of upheaval for VMware partners came to a close, Broadcom confirmed that Broadcom Global Channel Chief Cindy Loyd, who presided over the sweeping VMware channel changes, is taking a new job within the company.
“Cindy Loyd remains at Broadcom and is transitioning into a new role within the company,” Broadcom said Wednesday in response to a query from CRN. “We will publicly announce our new channel chief in the new year.”
Loyd, a six-year Broadcom channel veteran, took on the role of vice president of global partners and global commercial sales for Broadcom Software in November 2023, just as the chip and software behemoth acquired VMware.
Following the acquisition, Loyd was the highest ranking channel executive overseeing the series of changes in the VMware channel that rankled partners.
“Broadcom has abandoned the channel market by making it nearly impossible to work with them due to constantly changing requirements, packaging and changes to the program,” said longtime VMware partner Jason Slagle, president of Toledo, Ohio-based MSP CNWR, who has been frustrated with Broadcom’s approach to VMware’s channel. “Before Broadcom it was fine. They were easy to work with and I was selling a decent amount. They've basically made it impossible to transact with them, and Ingram being out basically seals the fact I won't sell it anymore.”