HPE Unleashes VM Essentials Globally With A ‘Channel Only’ Model: Five Things To Know

'The message that we want our partners to understand is that we are all in with partners on HPE VM Essentials,' says HPE Worldwide Channel and Partner Ecosystem Leader Simon Ewington.

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

“We wanted to demonstrate our commitment to partners and therefore we made a decision that HPE VM Essentials standalone will be channel-only,” said HPE Worldwide Channel and Partner Ecosystem Leader Simon Ewington (pictured) in an interview with CRN. “The message that we want our partners to understand is that we are all in with partners on HPE VM Essentials…That is pretty unique in the industry. Most of the virtualization solutions in the market have a split route to market between direct and partners.”

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 price increases for many customers.

HPE has responded to partner and customer cries for an alternative with the new HPE VM Essentials standalone offering that are supported on HPE’s new ProLiant Gen12 servers and Gen11 servers.

VM Essentials is not preinstalled on those servers, but is available for partners to quote and to be installed on those systems. The software was available to be downloaded in the U.S. in December but is now available worldwide as a term-based software license for one year, three year and five year terms.

HPE also has put in place a road map to offer VM Essentials standalone on competing third-party servers.

HPE sees a “big opportunity” in the enterprise market and below, said Ewington. “Partners are screaming out for choice to provide their customers with virtualization solutions from a credible vendor in the market they know is going to be around tomorrow,” he said.

IDC, the global market research company, estimates the virtualization market as a $4 billion market. “We want our partners working with HPE to take a piece of that market with us,” Ewington said.

“What we are saying to partners is when you work with HPE VM Essentials standalone you know it’s going to be channel-only because channel only means it is only through partners,” said Ewington.

HPE Goes All In On Partner Incentives To Drive HPE VM Essentials

The 10.5 percent rebate HPE is offering to partners selling HPE VM Essentials is just one part of the lucrative opportunity HPE is bringing to partners, said Ewington.

The bigger opportunity is for partners to take advantage of the HPE Partner Ready Vantage channel program in order to “wrap their own services” around VM Essentials with a focus on areas like VMware migration services for customers.

”That’s the bigger opportunity,” said Ewington. “That’s the opportunity partners are most excited about…They are going to make huge amounts of margin out of some of those migration services.”

Beyond the rebate structure, HPE has put VM Essentials at the highest 3X compensation multiplier for partners under the HPE channel program.

All that said, Ewington stressed that the biggest issue for partners goes beyond the incentives being offered by HPE. “The first question we get asked by partners is not what’s the rebate?” he said. “They just want to know they have got a credible alternative in the market that they can offer to their customers. They are desperate for choice.”

HPE Vice President of Worldwide Partner Programs and Operations Jesse Chavez, for his part, said partners normally see a 5x services opportunity for every dollar of licensing sold.

HPE made the decision to go all in with a channel-only model for HPE VM Essentials because of the “huge excitement” surrounding the product, said Ewington.

“I think it demonstrates when partners talk, we listen to them and we deliver,” Ewington said. “I am expecting this to magnify the excitement in the partner community. I think what we are doing is quite unique. We are entering a new market for HPE, an incredibly exciting market. Partners and customers are after alternatives and choice and we are making a decision to make that alternative channel only. I would expect it is going to drive a lot of excitement and interest across the partner community – not just traditional HPE partners.”

A Compelling Total Cost of Ownership For Customers

The per-core pricing model put in place by Broadcom is in sharp contrast to the per-server pricing model for HPE VM Essentials.

In fact, Ewington said, the per-socket pricing model put in place by HPE for VM Essentials is driving a whopping five times lower total cost of ownership.

With virtualization solutions in general taking a larger slice of the IT budget, customers and partners are looking for “innovative ways” to reduce those costs, said Ewington. “I think it’s really applicable across all virtualization vendors” he said.

Pat O’Dell, managing partner at Clinton, N.J.-based CPP Associates, one of HPE’s top enterprise partners, said 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.

Ewington, for his part, said he sees the opportunity for partners to serve customers under cost pressure. “Which customers are not under cost-pressure these days?” he asked.

HPE VM Essentials Management Console - A Differentiator For Partners

HPE VM Essentials Management console provides the ability for partners to manage virtualization workloads not just for HPE VM Essentials but for the other leading industry hypervisors on the market, said Ewington.

That is critical for partners and customers who can now manage all their hypervisor environments on a single HPE VM Essentials control plane.

That management console capability is critical given the heavy investment customers have made in other virtualization products like VMware.

No customer is going to move all workloads lock, stock and barrel to another hypervisor, said Chavez. “They are going to have a dual environment or a multiple hypervisor environment this management console is going to be able to do that and provide the options to do migrations,” he said.

Dan Molina, co-president and chief technology officer of Nth Generation, San Diego, No. 298 on the CRN SP500, said the management console is “extremely important” for customers. “I love the HPE go-to-market path which is not rip and replace,” he said. “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!”

Among the other technology benefits, HPE pointed to in a blog post announcing the channel only model are: “simple VM provisioning with integration into external IP address management and DNS tools and task automation; high availability and integrated data protection including VM snapshots, native backup, and planned integration into third-party backup; and advanced cluster management and features such as VM live migration, storage live migration, and VMware to HPE VM Essentials image conversion.”

Another big benefit, HPE said, is access to the HPE global support network and ISV ecosystem.

The HPE VM Essentials Road Map: Support For Non- HPE Servers

HPE VM Essentials on ProLiant is just the first step in HPE’s virtualization market sales offensive

When asked when partners can expect support for non-HPE servers, Ewington said that availability on other server platforms will come “soon.”

HPE said it will provide updates on third-party vendors as they become available.

In a blog post, HPE Senior Vice President of Worldwide Hybrid Cloud Gilles Thiebaut said the global channel-only model continues the “momentum” HPE has seen since it unveiled HPE VM Essentials in December at HPE Discover Barcelona.

HPE VM Essentials, Thiebaut said, has allowed partners and customers to address “ongoing challenges” including “unplanned cost increases in virtualization due to CPU core-based pricing and changes in product packaging; the need for lower-cost virtualization options that include enterprise-level support and access to partner services; and runtime options from other vendors which trade one lock-in for another or fail to integrate with existing environments.”

Thiebaut said HPE VMware Essentials addresses those “pain points” by “offering predictable, socket-based pricing, integration into VMware and our VM hypervisor, and a path to hybrid cloud simplicity with upgradeability to the Morpheus cloud management solution.”

HPE said partners can contact their HPE VM Essentials Geography channel leader for an invite to access an NFR (not for resale) trial software license of the product via the HPE partner portal.

“Partners can download trial versions of the software which they can play with,” said Ewington. “We are also putting in place all the tools and accreditations for our partners like the HPE VM Essentials accreditation which is already available.”

HPE, in fact, has already seen a big uptick in partner accreditation from HPE Tech Jam earlier this month. “It was super popular,” said Ewington. “We captured the imagination (of partners).”

As of Feb. 14, 319 partner individuals have passed the HPE VM Essentials assessment.

HPE Partners See A ‘Massive’ Opportunity As Alternative to Broadcom VMware

HPE partners say they see a ‘massive’ opportunity to provide HPE VM Essentials standalone as an alternative for VMware customers that have seen dramatic price increases in the wake of Broadcom’s acquisition of VMware in November 2023.

Sarah Miles, founder and CEO of Milestone Tech, Castle Rock, Colorado, said she 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.

Miles said literally all her customers are frustrated with VMware and are interested in an alternative. “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 customers 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.”

O’Dell, for his part, said he also sees a massive opportunity to provide customers with an alternative to VMware. “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.”

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.

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.

Molina, for his part, 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.”

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.”