Hacker Remix

Euro-cloud provider Anexia moves 12,000 VMs off VMware to homebrew KVM platform

273 points by xbmcuser 6 days ago | 104 comments

amluto 6 days ago

I found this rather odd:

> “We used to pay for VMware software one month in arrears,” he said. “With Broadcom we had to pay a year in advance with a two-year contract.”

If your goal is to extract every possible cent from your existing customers, why would you also switch them from net 30 to requiring partial prepayment? VMware wants money in general but should not have a cash flow problem, and forcing a monster early payment seems like it will force customers to notice an immediate problem and make a choice instead of allowing themselves to be slowly and steadily ripped off.

If I were a pointy-haired CEO committed to the multiply-pricing-by-five strategy, I would do my best to sweeten the deal: offer generous payment terms, give nice-sounding discounts for up front commitments, give very large discounts for nodes that haven’t yet been leased to a customer, etc.

nolok 6 days ago

Because they have twelve thousands vms and are themselves a provider that can't afford to have downtime for its customers.

So the thinking here was probably "there is no way they can refuse to sign right now and destroy their business in the process, so we might as well take the cake and also force them to stay after so they don't leave in 11 months and 29 days".

Turns out that thinking is wrong for that specific customers, but for how many did it work ?

pixelcloud 6 days ago

The large renewal "uplift" is partly a strategy to get in front of the C levels and board of directors.

I heard of a one billion dollar renewal quote from Broadcom. The company didn't pay anything close to that. But it bypassed middle mgmt... Not exactly sure what the overall strategy is here, but this is not an isolated incident.

Texasian 6 days ago

The strategy is Broadcom doesn’t give a flying F about any customer smaller than Fortune 50. They really don’t. Hock has said as much.

BobbyTables2 6 days ago

My guess is that lower/middle management would have greater hatred of Broadcom…

Upper management will be the clueless putz.

mbreese 6 days ago

Here’s an alternative theory - and I have no idea if it is right. But, this might have happened this way because Anexia only have 12,000 VMs and Broadcom wanted to get rid of the account. I don’t know if Anexia was considered a large or mid-level customer for VMware. As other have mentioned here… there are other customers who have many more VMs on site.

bhouston 6 days ago

I think the original theory is right. I’ve seen it play out close up. Basically a sales guy thinks they have a client who is caught and they can basically can extort them for a ransome and they try to do it. Sometimes clients actually are not as caught as the sales guys think and this happens. The sales guy looks now like an idiot and this is a guide that other caught customers can follow.

tgv 6 days ago

Indeed, a sales rep might have dreamed of an extra big bonus.

rurban 6 days ago

My cousin is a VMware sales girl. She didn't like the Broadcom move at all. Customers are exiting right and left. And no new contracts at all. Game over

rkagerer 6 days ago

That's not sales it's extortion

xbmcuser 6 days ago

VMware was taken over by a company whose business model is extortion. Ie take over a company with customer that have few or little alternatives then keep jacking up prices as high as they can.

tgv 6 days ago

The company I work for experienced this. The SaaS solution we depended on suddenly got very pricey. New pricing model and all. The sales reps were completely inflexible. It got so uncomfortable that I got to develop a replacement. When we were (gradually) moving over, they lost interest and let us off with a mild increase, and from this year on, we won’t be needing them at all.

cryptonector 6 days ago

Buy, or build?

Build -> opportunity cost, ongoing cost, legacy

Buy -> upfront cost, integrate, ongoing cost, and maybe eventually extortion leading you to Build a replacement.

This leads to many different implementations of roughly the same concepts all over, which sucks. Or open source, if it already exists. Or both. Not that open source doesn't have integration costs.

But think of this from an executive's perspective. Building really sucks. But buying sucks more in the future. You might just buy.

I've seen all of these. My preference is to grudgingly build if suitable open source doesn't already exist.

malux85 6 days ago

No it’s “vendor lock-in”

Wait no you’re right, they are practically synonyms.

bhouston 6 days ago

For the sales guys involved it looked like a massive payday for him, one he could brag about for years.

luma 6 days ago

The guy's name is "Hock Tan", it goes all the way to the top. Greedy billionaire trying to squeeze the entire on-prem datacenter industry. Every single one of my VMware customers is either in the process of migrating off or developing the plan to do so. At least one of them would be in Broadcom's list of 600 key accounts that Broadcom thought they could turn the screws on. They somehow seem to have forgotten that MS had just bought a chunk of that org and instead of paying VMware, they are now exiting a few dozen datacenters to move everything to the cloud. This org was highly cloud-resistant (for a handful of good reasons), but VMware forced their hand at exactly the wrong time.

I believe this course of action for VMware is going to be taught in business schools in the future.

belter 6 days ago

The story is even worst than this. You can find an interview from him on YouTube post acquisition of VMWare. A business reporter naively ask him what is his strategy for the acquisition. The answer just shows there was no strategy, just, and I am paraphrasing: "I spent all this money has to be for something"

cryptonector 6 days ago

Do any business schools teach about business school fads and how often they don't work out?

bigfatkitten 1 day ago

I hope so.

My first lecture in project management subject about how the majority of IT projects (using the very methodologies taught in that class) fail.

mihaaly 6 days ago

I still don't know.

Starving the milk cows (push customers into losses) is never a smart strategy for those living on milk cows. Sounds more like inceadibly stupid. Or short sighted parasitic (squeeze all then run with the heist).

ratg13 6 days ago

In my experience, VMWare attempts to force this model on everyone using tactics like not giving quotes until the very last minute, forcing buyers into a "take it or leave it" decision.. thinking (rightly so) that it will work in their favor most of the time.

It takes a lot of balls for a company to "leave it" right as their contract is expiring, and speaks to talent and experience on the customer side to be able to stand up to bullying, and be able to pull off such a large migration.

dylan604 6 days ago

But it's also a great negotiating tactic for the buyer not the seller. This seller has been chasing this buyer for however much time, and then at the last second walks away from the deal. I've had the price of a car drop drastically by doing this. I can't imagine a software sales person and its managers not budging and just letting the deal walk away either.

hdhdbebd 6 days ago

But it's highly unlikely the buyer will walk away if their core business already depends on the product you licensed to them

protimewaster 6 days ago

Now that there's a high profile example of it happening, though, it might become both more common and more of a negotiation tool for customers. This company has shown that it can be done, and now both Broadcomm and their customers know it, and each knows that the other knows it.

Sure, it's still a lot of effort, but, at this point, even if Broadcomm can get somebody to sign up for another year, that gives the customer a year to plan on how to jump ship next time around. And it looks like the number of people with expertise on migrating from VMWare is skyrocketing, so companies should be able to hire a team to do it...

KingOfCoders 6 days ago

I had my license cost from another large company YoY increase 10x (hefty amount). Reason was new sales manager who wanted to shake max money. They make revenue and then move on.

ToucanLoucan 6 days ago

The lock in is strong with their product and they know it. Migrating hypervisors is a long and arduous process for any medium-to-small business, and I speak from experience: it took our small team about 2 months to move off of VMware about a decade ago, also because the price of support was simply unhinged from our perspective.

They would be fools to not expect high attrition of smaller clients, but big businesses and government customers aren't going to change, or at least not nearly to the tune that smaller ones would, and a smaller pool of larger customers paying a higher price probably works pretty well to keep revenues up while letting them slash support staff without too much of a reduction in quality for those that are left.

It was clear to me from the beginning that this price hike wasn't about cash flow, not particularly. Broadcom doesn't want vmware wasting money supporting small fish.

freedomben 6 days ago

I definitely don't want to miniminize the significance of this. This is huge!

But, they did have some major benefits that most companies looking to do the same won't:

> Anexia therefore resolved to migrate, a choice made easier by its ownership of another hosting business called Netcup that ran on a KVM-based platform.

> The hosting company is also a big user of NetApp storage, so customer data was already stored in a resource independent of its VMware rig – any new VMs would just need to be pointed at existing volumes.

Again, still a great accomplishment and an exciting milestone for them, but for people still stuck on VMWare that are looking to migrate, it's good to know about the above things.

tw04 6 days ago

Other than the additional capital outlay, this shouldn't prove a hurdle to anyone looking to do similar. Migrating from VSAN to external storage like NetApp is a non-disruptive process. And frankly VSAN has always been pretty horrible, so you'll likely end up with better performance and storage efficiency when all is said and done.

rcleveng 6 days ago

The phrase "homebrew KVM platform" made me chuckle. All of the hyperscalers have a homebrew, aka proprietary platform using a hypervisor. AWS has Nitro which seems to have been based on KVM but likely quite different by now.

If you are selling VMs to customers, I can't understand a good reason to use VMWare. The only reason would be if you are selling VMWare as a service.

monocasa 6 days ago

> AWS has Nitro which seems to have been based on KVM but likely quite different by now.

It still is relatively stock KVM on the CPU side of things. They've been upstreaming changes they need like lower overhead for emulating Xen's hypercall interface.

Most of their special sauce is in the devices though, as those natively provide VM boundaries leaving the hypervisor to not have to manage all that much at runtime.

dilyevsky 6 days ago

The challenging bits are all outside of the KVM like the VPC networking that has to be implemented using some SDN (e.g OpenVSwitch), block devices, etc

VMware had a solution for all of these natively and with support. Not using their hypervisors you have to manage a huge pile of OSS+proprietary integrations and actually have staff who truly understand how everything works down to the lowest level. Doable but probably above the pay grade for most

sofixa 6 days ago

> VMware had a solution for all of these natively and with support

VMware support had always been a crapshoot. Now under Broadcom it's even worse.

So having support that may or may not be useless isn't a big advantage, really.

Not everyone needs an SDN, depending on their networking requirements or topology. Storage is also not a very complicated problem if you already have a SAN. Solutions like Proxmox come with everything included too, so you don't have to build everything from scratch.

TheNewsIsHere 6 days ago

If you’re providing application services to customers who need to use an application that the vendor only supports in VMware, then you don’t have a choice.

Well, I suppose you do. But an EMR/EHR for instance is going to _need_ vendor support, which means requiring VMware even if you’re not selling VMware itself as a service.

rcleveng 6 days ago

Absolutely - in enterprise software, it's the certified configurations that are not something you can mess around with, if you like support.

I'd still consider this VMware as a service, although not full VMware, but just enough for the checkboxes. Maybe you don't get API access, console access, etc, but the main thing you are selling is vmware (to check the certification boxes), and not a generic VM.

segasaturn 6 days ago

Anybody who formalizes their "homebrew KVM platform" into a marketable hypervisor product is going to make a lot of money I suspect. Every IT department I know is scrambling to replace their VMWare stack ASAP, including very large ones.

dehrmann 6 days ago

Most things that would have used VMware 15 years ago are using Kubernetes now. The things that aren't are probably looking at Proxmox or just KVM.

taskforcegemini 3 days ago

>VMware 15 years ago are using Kubernetes now.

this doesn't sound right, both serve different purposes

formerly_proven 6 days ago

> Every IT department I know is scrambling to replace their VMWare stack ASAP, including very large ones.

At least some of the big ones seem to just pay up. Probably because they / their MSP / their relationship with their MSP is so dysfunctional that they know migrating is a pipe dream.

stackskipton 6 days ago

As former DevOps who dealt with VMware, it's not relationship with MSP. It's just so many things plugin to VMware that migrating off of VMware is just difficult. Monitoring, Backups, Deployment and so forth are deeply integrated into VMware so companies just look at work involved getting off and go, never mind.

kashyapc 6 days ago

As rwmj says in this thread, there are already several mature KVM-based solutions that you can run yourself, if you have the staff who can manage it.

Disclosure: I also work in Red Hat's virtualization team, but not on converting gusts from VMware to KVM.

rwmj 6 days ago

There are tons of supported solutions in this space, such as Openstack, Kubevirt, and oVirt (and many more).