Virtualization News
O’Ryan Johnson, Steven Burke
VMware layoffs are creating ‘significant concern and chaos’ among customers and partners in the sale trenches, said C.R. Howdyshell, CEO of Advizex, a Fulcrum IT Partners company.
Thousands of VMware employees absorbed last week by Broadcom opened their emails today without knowing if they would have a job once they finished reading.
“It’s a combination of disgust and disappointment,” said one let-go VMware employee Monday of the mood inside the company as word of the layoffs rolled out.
“For months we have not known what would happen, and we have been treated as disposable,” the manager told CRN. “They sent out offer letters before the deal closed, but thousands didn’t get them. VMware management didn’t know what the status of various business units would be or the status of the thousands of employees who did not get the letters. Broadcom probably was working on a plan but didn’t share much.”
Broadcom has not returned CRN’s request for comment about the job cuts. The company, which closed its acquisition of VMware Wednesday, had previously stated it could find $250 million in synergies once it completed the deal.
[Related: Broadcom Closes Deal, Cuts VMware Four Ways As Raghuram Steps Aside]
C.R. Howdyshell, CEO of Advizex, a Fulcrum IT Partners company that did $30 million in VMware revenue last year, said VMware layoffs are creating “significant concern and chaos” among customers and partners in the sale trenches.
“I see no benefit to partners from this acquisition,” said Howdyshell. “As a partner, we don’t know who to call. Nobody has reached out to us. There is a lot of uncertainty at the highest levels of customers who don’t know if they want to proceed with multimillion dollar ELAs (Enterprise Licensing Agreements) and TLAs (Technology License Agreements).”
Advizex has three ELAs and a TLA across four different clients that have been stalled by the acquisition, said Howdyshell. “We have been told that every proposal is null and void, and we have to get new pricing,” he said. “We have one customer that is going without support and is refusing to pay.”
One VMware solution provider executive, who spoke on condition of anonymity, said one of his close VMware sales contacts got a layoff notice this morning, while another sales rep was given an offer letter to join the new company but declined.
Other solution providers also told CRN they are dealing with a lot of uncertainty as a result of the aquisition.
The CEO for a top VMware partner, who did not want to be identified, said customers are concerned about whether they are going to be subject to price increases now that the deal has been completed.
“We have a lot of customers concerned about the costs increasing on VMware and the quality of service and support going down,” he said. “That is the FUD (fear, uncertainty and doubt) that we are running into. I haven’t seen Broadcom do a good job with any of its software acquisitions. They bought Symantec and Computer Associates, and the market reputation of those companies suffered.”
The CEO said his company is having a lot of conversations with customers about “risk mitigation” in the event that the VMware stack becomes a lot more expensive.
“If you have an ELA getting priced right now and you need to buy in the next month, you have no leverage,” he said. “My guess is some customers will sign a one-year deal and then try to figure out what to do.”
Nutanix is sure to be one of the beneficiaries of the chaos at VMware, said the solution provider CEO. “If you are currently on Nutanix, you can effectively move at no additional cost to Acropolis,” he said. “They have got a compelling value proposition right now for VMware customers.”
VMware Cuts Come As No Surprise
From the time the deal was announced in May 2022, Broadcom has told Wall Street analysts that there would be deep cuts to VMware, with as much as $250 million in synergies being discussed. In that May 2022 pitch, Broadcom CEO Hock Tan outlined a path to increase VMware’s profitability by $3.8 billion by “eliminating duplicative general and administration functions across human resources, finance, legal, facilities and information technology,” documents filed with the SEC show.
Those let go took to LinkedIn to share their experience and stump for colleagues who were also cut.
Kris Anderson, director of VMware marketing strategy, said the VMware marketing team is a “Titan” that propelled VMware to its current value.
“As Broadcom begins its new chapter with VMware as a part, my role is no longer needed,” he wrote. “There’s so much to look back upon. The people I’ve been lucky to work with, the projects I’ve been lucky to work on, and the successes I’ve been lucky to build are immeasurable.”
Similar messages poured in throughout the day, with every hour bringing posts from VMware worker that were cut, such as a software engineer for the last three and a half years and an information security analyst.
“While I will try to enjoy the holidays with my family and friends, I will also be active in the job market to see if I can find something at the beginning of the year,” wrote Vaughn Valenci, a strategic program manager for Tanzu compliance.
Todd Yori, a U.S. Navy veteran, called VMware his dream job. The soon-to-be-former strategic client executive working in VMware’s SLED unit wrote a message directly to channel partners.
“If you are a VMware reseller, serve State of Florida government, and are hiring … I would love to speak with you,” he wrote. “I’m local in Tallahassee.”
