Dell Technologies is exiting its commercial agreement with VMware now that it has been acquired by Broadcom.

The company said in a regulatory filing that it will terminate its commercial agreement with VMware due to a change in control. With the move Dell Technologies won't be a distributor of VMware products--unless there's a new agreement.

In the filing, Dell said the terminated agreement "provides a framework for various commercial activities between the two parties, including how the Company will act as a distributor of VMware products and services as well as how the parties collaborate on certain solutions and go-to-market activities."

Dell Technologies via its EMC acquisition became a key distributor of VMware via converged infrastructure including VxRail, VMware Cloud Foundation on VxRail and vSAN Ready Nodes. In a filed commercial agreement dated Nov. 1, 2021, Dell and VMware said the commercial relationship was designed to "maintain the mutual strategic advantage" between the companies. The news comes at a tricky time for VMware, which is changing its pricing since being acquired by Broadcom.

In a recent CXO meeting of BT150 members, VMware was a hot topic. Here are some of the takeaways from that meeting. 

  • CIOs were actively looking at alternatives with many looking to move off VMware. Nutanix appears to be the biggest beneficiary. 
  • CIOs weren't surprised by Broadcom's move and one exec noted that peers are seeing price hikes of 100%. Broadcom made similar moves when it acquired CA and Symantec, CXOs said.
  • Without a major change in strategy, it's hard to rip and replace VMware, but many companies are looking at jumping. One catch is that VMware still owns a lot of EMC's old big data portfolio and it's difficult to migrate.
  • Enterprises took the time to plan a move off VMWare while the Broadcom purchase was delayed by regulatory issues. It will take a few years to move off VMware completely.
  • Nutanix was gaining share and some CXOs were looking at open-source options for their Linux stacks.
  • CXOs are expecting VMware's innovation, support and service to all decline--especially for enterprises that fall out of the top 100 or 200 clients.

Business Research Themes