Broadcom’s acquisition of VMware has opened new competitive opportunities in the distributed hybrid infrastructure (DHI) cloud management space, which rival market leaders such as Microsoft, Amazon Web Services (AWS), Nutanix, and Oracle could pounce on.

Those five vendors were located in the “leaders” quadrant of Gartner’s latest ranking of distributed hybrid infrastructure providers. Those are companies that offer cloud-native platforms that allow enterprises to manage their data across different cloud architectures.

“The distributed hybrid infrastructure market addresses this need by offering standardized full-stack infrastructure deployments in public cloud, on-premises, and edge locations,” the ranking smartly explains.

Microsoft, AWS lead the leaders

Microsoft held the highest position in the ranking based on its Azure Stack HCI, Azure Arc, and Azure Kubernetes Service (AKS) stack. Gartner touted the offering’s brand recognition, single platform, and unified management capabilities based on the platform’s Azure Arc controls.

Gartner did add that some users expressed some management challenges due to “multiple administration tools,” lack of private cloud support that limits deployment to edge locations, and ongoing security updates.

Fellow hyperscale giant AWS nestled up close to Microsoft in the ranking based on AWS’ various Local Zones, Regions, Outposts, and Wavelengths services that extend connectivity closer to end users. Those services were noted as appealing to AWS’ large, entrenched customer base; easy to manage due to AWS’ as-a-service model; and garnering robust support from the cloud giant.

The offerings are viewed as less appealing to non-AWS customers, noted for lacking disconnected operations unless customers also pick AWS’ Snow products, and complex to onboard due to planning challenges.

Oracle and Nutanix show different paths

Oracle’s Cloud Infrastructure Dedicated Region, Compute Cloud Customer, and multicloud services were also well ranked by Gartner. The vendor’s offerings were lauded for pricing consistency across on-premises and cloud deployments, diverse architecture support, and interoperability with various hyperscaler cloud environments.

Downsides were cited as a lack of awareness for the offerings outside of Oracle’s already established channels, a less mature generative artificial intelligence (genAI) strategy, and enterprise concerns over Oracle’s reputation from past interactions.

Nutanix scored a significant rank amongst its much larger peers based on the success of its HCI platform, migration simplicity, and license portability. However, its smaller size was noted as a caution, as were it not being a “public cloud-native offering” that could hinder long-term options for enterprises, and lack of license optionality.

The Broadcom overhang

Broadcom was the fifth entrant in Gartner’s “leaders” box, and the one causing the most market disruption. The vendor’s halo VMware Cloud Foundation (VCF) platform was cited for its market scale, Broadcom’s reinforced focus on the VCF platform, and broad ecosystem integration partnerships.

But, Broadcom’s well-publicized changes to VMware’s long-standing perpetual license model, Broadcom’s reputation across other industry verticals, and enterprise’s expressing concerns over Broadcom’s service and support were all deemed “cautions.”

Gartner noted that these concerns will result in half of enterprises over the next couple of years initiating “proofs of concept for alternative distributed hybrid infrastructure products to replace their VMware-based deployments and embrace hybrid cloud infrastructure delivery, up from 10% in 2024.”

That upheaval could see tens-of-thousands of VMware customers leave Broadcom.

Equity research firm William Blair in a recent report looking at VMware rival Nutanix mentioned market research firms were predicting up to 30% of VMware’s installed base of more than 400,000 customers “will eventually switch away from VMware.”

Analysts have repeatedly talked about how Broadcom’s pricing and licensing adjustments to VMware’s services have resulted in significant cost increases for long-standing customers, which has many of those enterprises looking for alternatives.

Naveen Chhabra, principal analyst at Forrester Research, recently helmed a report that attempts to provide a template those exposed enterprises can follow as they navigate their new VMware reality. That report notes that Broadcom’s changes impact “all the classic five ‘P’s’ of product marketing – product, pricing (and packaging), place, promotion and people (partners).”

“One VMware client shared that they’re experiencing a 500% price increase based on their current use of VMware products and how it maps to the new licensing and packaging,” the report notes on the impact of those changes.

Chhabra added that these pricing changes were not unexpected and that he and his team had predicted 20% of the world’s largest enterprises “will start to exit – read these words very carefully – will start to exit the VMware stack.”

“They will not do a full replacement overnight, but in parts, they will start to move away,” Chhabra said. “I clearly see that happening right now and I don’t need to go another five months to claim that that prediction was true. It is happening.”

However, timing remains a significant challenge.

The William Blair report noted that conversation with Nutanix showed rival opportunities could still be years away. This was due to VMware customers re-upping on multi-year deals prior to the Broadcom deal closing; needing to align on an enterprise’s hardware refresh cycle; how aggressive Broadcom might be in retaining the customer (see AT&T); and the desire by VMware customers to learn a new set of tools should they switch.

Broadcom, for its part, remains steadfast.

CEO Hock Tan noted during the vendor’s second-quarter earnings call earlier this year that it had signed up nearly 3,000 of its 10,000 largest customers to VMware’s new subscription licensing model. He added that “each of these customers typically sign up to a multi-year contract,” which when spread across an annualized booking value increased from $1.2 billion during the first quarter of this year to $1.9 billion in its latest Q2.

“We’re making good progress,” Tan said of its move to sign legacy VMware customers to the new licensing model. “The journey is not over, by any means, but it’s very much to expectation moving to subscription.”