Scale Computing CEO: Broadcom-VMware Backlash Has Powered 400 Percent Enterprise Growth

“At this point 50 percent of our pipeline is enterprise and 50 percent is midmarket,” said Scale Computing CEO Jeff Ready. “That’s a wild shift from where it was 18 months ago. At that point it was probably 10 percent enterprise and 90 percent midmarket. It’s a huge, huge shift.”

Jeff Ready, the hard-driving co-founder and CEO of midmarket virtualization stalwart Scale Computing, says Broadcom-VMware changes have propelled his company into the enterprise market, leading to a whopping 400 percent increase in enterprise sales in 2024.

“At this point 50 percent of our pipeline is enterprise and 50 percent is midmarket,” said Ready in an interview at CRN parent The Channel Company’s XChange 2025 conference. “That’s a wild shift from where it was 18 months ago. At that point it was probably 10 percent enterprise and 90 percent midmarket. It’s a huge, huge shift.”

Ready said he expects the enterprise momentum to continue in 2025 with an anticipated 100 percent growth in that segment of the business. “We expect to add 1,000-plus partners and probably 1,000-plus new customers [in 2025],” he said. “We are also seeing quite a bit of global expansion.”

[WATCH: Scale Computing CEO Jeff Ready On Edge Computing And AI]

Ready said the changes after Broadcom acquired VMware in November 2023, including a dramatic increase in prices based on a new Broadcom-VMWare per-core subscription model, partner terminations and Broadcom-VMware’s decision to take the top 2,000 accounts direct, have been a “catalyst” for the big gains Scale Computing is making in the enterprise market.

In fact, Ready said the VMware changes have enterprise CIOs and partners rethinking their commitment to the VMware architecture. “There is no trust,” he said. “How can you run a business if your main vendor partner is thrashing things around like this? At the end of the day no matter where this settles down—if it ever does settle down—there is a broken trust between the vendor and the customer and between the vendor and the partners.”

Broadcom-VMware declined to comment on Ready’s comments.

Scale Computing has put on a full-court press to recruit VMware partners and attract VMware customers. The company has implemented a “VMware Rip & Replace Offer” providing a 25 percent software and services discount for VMware customers. In addition, it is offering a full system exchange trade-up plus no-cost coverage for the remaining VMware term with its “Seamless Switch: Trade Up To Scale Computing” promotion.

As part of its enterprise march, Scale has dramatically increased its R&D investment to add enterprise features to its product set. In midyear, Scale is adding a new Fleet Manager capability that supports application delivery. “It underscores just how different the future I am describing is from what you see happening at Broadcom,” said Ready.

One sign of Scale Computing’s ascent in the wake of the Broadcom-VMware changes is the growth of Scale Computing’s Platform partner conference scheduled for May 13 to 15 at Resorts World in Las Vegas.

This year, Ready said, Scale Computing will host 1,000 attendees, up from only 300 attendees two years ago. “We expect it to be a sell-out,” he said. “We have an expanding ecosystem including backup vendors and security vendors. The same pressure that customers feel about Broadcom-VMware is what partners feel about Broadcom-VMware. It is also what other vendors feel. Other vendors who for a long time had their product working on VMware find they now need to shift gears, so we have become a natural place for them to partner.”

Below is an excerpt from the CRN interview with Ready.

Scale has traditionally been viewed as a midmarket company. How have the Broadcom-VMware issues impacted your position in the enterprise market?

Our enterprise business is up 400 percent. We were a midmarket-focused business and we picked up some enterprise customers along the way [before the Broadcom-VMware changes]. But at this point 50 percent of our pipeline is enterprise and 50 percent is midmarket. That's a wild shift from where it was 18 months ago. At that point it was probably 10 percent enterprise and 90 percent midmarket. It’s a huge, huge shift.

The VMware-Broadcom thing is a catalyst. Imagine you’re a CIO and you’re thinking about the future. You’ve got AI written down as a priority. You’ve got edge computing written down as a priority. But then the Broadcom thing lands like a bomb in your lap. Now they are saying, ‘OK, I’ve got to do something about this.’ So they are sort of pulling in these other projects [AI and edge computing] and rethinking that [VMware] architecture.

It still seems like every other week Broadcom is changing something. It is the pricing. It is the partner program. Partners are kicked out. They are invited back in. The pricing is five times more. It is three times more.

There is no trust. How can you run a business if your main vendor partner is thrashing things around like this? At the end of the day no matter where this settles down—if it ever does settle down—there is a broken trust between the vendor and the customer and between the vendor and the partners.

In the past we have seen other vendors be a channel company and then go direct and then after they are direct for a while they decide to switch back to a channel company. That is painful for partners. But this constant you are out of the program—you are in the program or you can get into the program but the minimums now are more than your entire annual business—that doesn’t work.

So you don’t see it settling down in terms of the changes impacting partners from Broadcom-VMware?

No. One of the reasons we are getting so much enterprise pipeline is if you are a partner and you are fortunate enough to get invited to bid on a project for a Fortune 500 company, if you take that to Broadcom they are taking that direct. They have said that. These aren’t my words. Their words are that their top 2,000 customers are now direct. So what does a partner do with that? You bring them to us. We are 100 percent partner all the time so you can change that conversation around.

We expect this year to be just as big or bigger than what we saw last year. The starting number is bigger so even the same growth rate is a much bigger dollar amount of growth for the year.

We expect to add 1,000-plus partners and probably 1,000-plus new customers. We are also seeing quite a bit of global expansion. All these trends we are talking about affect everybody.

So what percentage of your business do you think will be enterprise in 2025 versus 2024?

The enterprise business will grow over 100 percent this year. It grew 400 percent in 2024. It may grow 200 percent this year. Enterprise is half of our sales pipeline.

We are also still working on thousands of individual midmarket transactions. We do them all.

I love all the customers. I am just as happy to talk to a dental office that needs one server or Coca-Cola. I love talking to them both. At our Platform event last year I got asked the question, ‘How do you define success at Scale?’

The answer I gave was to me it is how many people can we help with the technology we develop, That means when I help that CIO at the dental office and I help the CIO at Coca- Cola, those are both wins to me.

It is all about solving people’s problems and making things better. That is why I get so excited about talking to customers and partners.

Today I told partners in a boardroom if you have a customer who you think a meeting, phone call or email from me will help to close a deal, just tell me. I’ll send an email before I even respond to you that I am going to send the email.

What kind of investments is Scale making to meet that enterprise virtualization demand?

First, on the go-to-market side we created an entire enterprise team. As partners bring in these kinds of opportunities, they will still work with the same channel representatives they have always had but those individual deals will get escalated to an enterprise team within Scale. So partners with enterprise opportunities are dealing with co-sellers on our side who are familiar with the ins and outs of selling to the enterprise, which is very different than selling to the midmarket. It is a longer and more complex sales cycle. We are shoulder to shoulder with partners there.

On the R&D side, we are doing a ton of hiring. It is the biggest area of investment we have for 2025. It was also the biggest area of investment for 2024.

One of the unexpected side effects of us moving into this enterprise market and building out features that they need is that there is often much more customization required in these accounts. But we have found that as we develop these features, which we tag on our ‘to-do’ list tag as enterprise-specific features, almost all of them end up being wanted by the midmarket as well.

A lot of the R&D spend is around enterprise and scalability, interoperating with other systems. It is much more common in an enterprise that you are just a piece of a bigger puzzle than in the midmarket where you might be the entire infrastructure.

Do you see a future where you will have to split the product line and have something that is more enterprise-specific?

So far I don’t, but I would have given you a different answer last year. I would have thought there would be much more splitting.

We are adding engineering teams to do this work. That doesn’t mean when the midmarket sends in their feature requests we are not paying attention to those. There is a team still working on those midmarket requests too.

Certainly there are midmarket features that are less applicable to the enterprise. But most of the enterprise features apply everywhere. I am expecting that is going to continue for some time.

Part of this is because of the rise of edge computing where you have distributed systems. And when you start distributing systems, any individual deployment can kind of look more like a midmarket deployment than a traditional big enterprise.

Instead of 1,000 servers in one location you have one server in a thousand locations. You are still managing 1,000 servers. It is still an enterprise-scale problem. But the solution set is different and the solution set to manage 1,000 one-server sites is a lot like managing a single one-server site.

That said, we are also getting those 1,000 servers in one site centralized type of opportunities.

Are there specific enterprise features that you are bringing to market that will change the game for VMware enterprise customers?

Through our Fleet Manager product you manage your infrastructure like a private cloud. So the same way you would log into AWS in one place and manage your entire AWS deployment, you log into Scale in one place and you manage your entire Scale deployment. We are expanding that this year to include application management within those systems.

The idea is to mimic how the cloud works. In the cloud you don’t think about infrastructure. It is AWS’s problem or Google Cloud’s problem. That is how we want people to think of their private infrastructure. Don’t think about the individual components. You just know this is an app you need, you tell me where you need it and off it goes with one click. It doesn’t matter whether it is a virtual machine or a container. We don’t care. It is one platform to manage them all.

So you can use Fleet Manager and push applications out there for things like updates. You can even have a repository with a master image of the application and request that anytime you change it it automatically changes all the sites that use that application.

It is so critical because we are now 15 to 20 years into the public cloud. There is an entire generation of IT administrators who have never done anything except public cloud. So the idea that you would have to manage and babysit an individual server in an individual location is foreign to a lot of younger admins. Now all these trends are forcing more applications on-site. So you can use software to automate that. So the same automation we bring to infrastructure we want to bring to the application layer as well.

When will you deliver that Fleet Manager application delivery functionality?

We’ll have it middle of the year.

When you start talking about us managing one site as one server, managing multiple sites as one server, managing tens of thousands of sites as one server and now I can deploy applications to that one server, it underscores just how different the future I am describing is from what you see happening at Broadcom, where it is the same old product, price is going up, support is going down, cutting R&D.

When customers deploy an edge computing platform like this in this way and it becomes so easy to deploy applications, they deploy more applications. A grocery store may have thought they needed five applications to run on-site. It is so easy to deploy applications now they can easily try other applications to improve their business.

I saw a cool AI application from a startup for a restaurant that looked at beer with the ability to tell how much beer is left with the aim of providing the optimal time for the server to ask a customer if they want another beer. They claimed they could raise alcohol sales by 25 percent for a restaurant, which is enormous.

Now imagine you are a national chain that wanted to try it but it would require rolling a van out to 1,000 locations to install it. In that case, the barrier to entry to get that application out there is so high you would not do it. However, if you deployed edge computing and the barrier to entry is, ‘Let’s try it at these 10 stores with a click,’ of course you’ll do it.

So the customer who thought they needed five apps all of a sudden they have 25, 50 or 100 apps. Edge is going to follow the same path the cloud did. So the opportunity for Scale is we are the AWS for the edge.