Nutanix CEO sees multi-year opportunity after Broadcom’s VMware acquisition

Historically, data center virtualization pioneer VMware was seen as a technology leader, but recent business changes have stirred consternation since its acquisition by Broadcom in late 2023. New product bundling and pricing, reseller program adjustments, divestments, and unforeseen changes are driving CIOs and IT providers to reassess their strategies and technologies.

“It’s going to change the relationship customers have with the company because Broadcom’s focus is on running as efficiently as possible,” said Rajiv Ramaswami, president and CEO of Nutanix, in an April 2024 episode of Bloomberg’s Tech Disruptors podcast.

“That means for customers: price increases, potentially less support…and that’s creating a disruption in the channel partner community,” he said. “For us, it’s a multi-year opportunity.”

Industry changes and fallout from disgruntled Broadcom VMware customers have been widely reported. In January 2024, The Wall Street Journal highlighted the attention Broadcom’s VMware overhaul drew from CIOs, followed by reports of pricing and reseller agreement changes. The Register later noted “whispers about a breakup with AWS,” despite Broadcom addressing the issue in a blog post. Many customers remain wary, prompting IT leaders to explore alternatives and adjust their strategies regarding VMware products.

On the Tech Disruptors podcast, Ramaswami outlined how Nutanix is meeting the rising demand for simplified IT infrastructure and positioning itself as the easiest alternative for VMware customers seeking to reduce risk or dependence.

Podcast host Woo Jin Ho, an analyst at Bloomberg, said: “From my math, it looks like [Broadcom] cut out roughly 10,000 channel partners out of their 28,000. [They are] now down to 18,000. Does that potentially expand the channel partner program for you guys?”

Ramaswami confirmed.

“We’ve certainly seen a higher level of engagement with many channel partners,” Ramaswami said, highlighting a recent announcement that WiPro created a Nutanix Business Unit to accelerate digital transformation and hybrid multicloud innovation.

Many joint Nutanix and VMware partners are looking to renew their Nutanix partnership, especially those losing out of the top 2000 customers.

“Many customers who knew the Broadcom playbook signed three to five-year enterprise agreements with VMware before the deal was closed,” Ramaswami said, adding this bought them time.

Many see Nutanix as “the easiest alternative,” he said. “Not everybody is going to do wholesale migrations. Many might adopt a dual vendor strategy and might use Nutanix in a portion of the business.”

Woo recognized the rising significance of hybrid multicloud following the COVID pandemic, a time that accelerated digital transformation to accommodate remote work and the surge in online commerce.

“People are finding that steady-state workloads can be run much more effectively and cost-effectively in their own data centers,” said Ramaswami, highlighting how X (formerly Twitter) optimized its cloud usage, shifting more on-premises and cutting monthly cloud costs by 60%, data storage by 60%, and data processing costs by 75%.

This is prompting the CIO shift to hybrid and multicloud.

In Nutanix’s recent Enterprise Cloud Index (ECI) – which surveyed 1,500 IT, DevOps, and platform engineering leaders globally – over 80% of organizations viewed hybrid IT as essential for managing applications and data. Nearly half indicated that implementing hybrid IT is a top priority for their CIO.

The interview hinted CIOs are cautious with their IT budgets and that while there is spending it’s with a total cost-of-ownership (TCO) mindset.

“We have a TAM (total addressable market) of about $76 billion and that includes software-defined compute, storage, and networking,” Ramaswami said. Disruption from the Broadcom-VMware acquisition “gives us an opportunity to grow [market] share faster than we probably normally have into that TAM. I would see this as an acceleration.”

Ramaswami discussed growth among both large Global 2000 and smaller companies globally, with many looking to expand their use of Nutanix. A major APAC company that ran a dual Nutanix and VMware strategy recently chose Nutanix over VMware for an expansion, while smaller customers show potential for full migration to Nutanix.

And he noted, after the Broadcom deal closed, a smaller public healthcare system accelerated its shift to Nutanix, finishing in just 90 days.

“We have done a lot of work on automating migrations for simpler environments, but also for very complex environments,” said Ramaswami.

Learn how Nutanix can accelerate your hybrid cloud journey and transform your business.

Disclaimer: Nutanix, Inc. is not affiliated with VMware by Broadcom or Broadcom.

Ken Kaplan is Editor in Chief for The Forecast by Nutanix. Find him on X @kenekaplan.