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Broadcom is reportedly taking on VMware's top 2,000 customers directly
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This is more bad news for VMware's partners
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Broadcom is likely sell off more elements of VMware next, an analyst tells us
Broadcom has taken around 2,000 of VMware’s major customers directly under its wing according to a new report.
Some of VMware’s top customers include Apple, CVSHealth, Costco, FedEx, PepsiCo and many others. Now, VMware’s extensive network of resellers will not be allowed to cut deals with major customers.
Broadcom has already shaken up VMware’s network of resellers after the completion of the $61 billion acquisition late last year. Broadcom has started to cut VMware partners who were earning less than $500,000 in annual revenues for the company.
VMware’s sales team previously conducted the majority of the firm’s deals through its channel partners, Gartner analyst Michael Warrilow told Silverlinings in an email, he said that around 80% of VMware’s revenue was earned by reseller deals according to previous earnings calls.
This will now change as Broadcom has taken on the major VMware contracts directly. The Gartner analyst noted that Broadcom will need to retain a workforce capable of selling all its VMware software., although there be less need for personnel in the VMware partner team, the analyst stated.
“As to partners, if this is true, then taking the top customers direct would have an immediate reduction on reseller revenue opportunity for many of the largest VMware partners,” Warrilow said.
What happens next?
Zeus Kerravala, principal analyst at ZK Research thinks that there is still more to come in the process of Broadcom taking over VMware. “I do think there is another shoe to drop and that's selling off businesses that aren't core,” Kerravala noted.
“Broadcom has already announced it's going to sell of the end user computing and there are likely more to come,” Kerravala said. “The entire networking portfolio is likely up for sale. It's a highly competitive space that requires significant R&D investments to stay current and that would be counter to the way Broadcom operates.”
We’ll update you, dear reader, if any of that happens in the ongoing saga of Broadcom and VMware. Oh, and by the way, we did reach out to Broadcom to get any updates on this they cared to offer, but no reply yet.