Broadcom’s juggling of VMware pricing and licensing terms has resulted in a significant spike in what enterprises are paying for continuity, but there may be some wiggle room for those down to bargain, according to one of Broadcom’s rivals.

Nutanix executives during that vendor’s most recent earnings call took a more cautious approach to how it might take advantage of enterprise discontent with Broadcom’s moves, highlighting several hurdles that are extending these conquest sales opportunities.

The most dramatic was Nutanix CEO Rajiv Ramaswami stating Broadcom has shown pricing flexibility when dealing with its larger customers.

“We've seen Broadcom display a lot of flexibility with respect to their pricing, their packaging changes, especially when they are faced with the probability of losing some of their larger customers or responding to push back from the market and from the customer base,” Ramaswami said.

Ramaswami further explained that this pushback has also involved Broadcom being very active over the past several months in adjusting to the change their decisions are having in the market.

“They’ve tried a bunch of things,” Ramaswami said. “They’re stepping back on some of the things they’ve tried, so the competitive situation is quite dynamic on that front.”

Forrester Research recently released a report that found “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.”

Are enterprises preparing for an exodus

Naveen Chhabra, principal analyst at Forrester Research and author of the report, told SDxCentral 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.”

Ramaswami’s comments pointed to a rash of moves Broadcom has made since rolling out the pricing changes late last year, including blog posts attributed to CEO Hock Tan.

The most recent was released just this week where Broadcom attempted to clarify some of its latest license portability changes.

Potential Broadcom-influenced pricing tailwinds?

Nutanix’s executives during the latest earnings call also downplayed notions that there could be beneficial pricing “tailwinds” from Broadcom’s recent moves, pointing back to Broadcom’s pricing flexibility.

“While Broadcom's effective list prices for many of their customers may have increased significantly, the actual prices, meaning the discount levels in the market, especially when there's sort of a risk of losing business or otherwise challenge, as you can imagine will be lower than those list prices,” Nutanix CFO Rukmini Sivaraman said. “And as Rajiv said, remain quite dynamic is what we're seeing in the market.”

One industry source passed along a presentations from one of its vendors showing upcoming package changes that mimic what Broadcom has done with VMware.

Forrester’s Chhabra did note that enterprises looking for a VMware alternative might face pricing or term changes, which could result in higher prices or lower discounts.

“Why would competitors leave money on the table,” Chhabra said, noting that those VMware rivals are expecting an influx of interested parties. He added this could be similar to what happened to the real estate market during the pandemic when sellers were in the driver’s seat.

“VMware has the moat of increasing prices and its competitors will not reduce the price just because they want to attract VMware customers,” Chhabra noted.

Microsoft, which has become an increasingly important Broadcom ally, recently moved to offer new licensing benefits and discounts to help VMware users migrate and run their workloads on the hyperscaler’s Azure VMware Solutions service.

The migration program is offering users access to reserved instances at a set price over a set term of one, three or five years. These reserved instances are basically a way for a customer to pay upfront for the use of instances to run an application in Azure as opposed to a pay-as-you-go model, with the benefit of the reserved model charging less per instance.

Microsoft is incentivizing the reserve push by offering a 20% discount on Azure VMware Solution for customers purchasing a new one-year reserve instance term if that purchase is made before the end of the year. The hyperscaler noted the five-year option will only be available for purchase through the end of June.

Microsoft is also providing up to $120,000 in Azure credit for customers that purchase a new reserved instance plan. This credit can be used for the Azure VMware Solution or other Azure services.

Broadcom changes extending timelines

Outside of Broadcom’s apparent pricing flexibility, Nutanix’s Ramaswami also tied the longer-than-expected ability to take advantage of this market upheaval to many VMware customers being locked into multiyear deals dating back to before it was acquired by Broadcom, which will “buy them time” in their decision making.

This “time” issue has been mentioned by several industry observers as being a potential boon for enterprises looking at their VMware future.

Ramaswami also noted many current VMware customers will need a hardware refresh to run hyperconverged infrastructure (HCI), which could extend the overall decision-making window to take into account that refresh need or if there are other alternatives.

“I'd say compared to the overall thesis about this being a multiyear opportunity hasn't really changed for us,” Ramaswami added. “In the short-term, I think what we're seeing is these larger deals are going to take more time. And that's just a fact of life as we have to deal with the dynamics of all the things that are going on right now.”