HITT- Cloud VMWare, Mar 26, 2024

Transcript

Introduction and Overview

Here today is our VP of Advanced Solutions Kobe Phillips and a panel of experts to discuss some changes with VMware and the opportunities that provides Telarus Advisors, Kobe, and all welcome to the Tuesday call.

Thanks, Doug. Thanks, Adam and Richard for the great lead in segment, for this very hot topic.

Changes in VMware’s Model

Speaking to disruption, VMware is blowing things up, and it’s creating a lot of opportunity and a lot of conversations for our TAs to be able to have with their clients. We have three great guests today that can bring some amazing insight to the opportunity, to the landscape, and really get you guys armed and ready to go have those conversations. So I’m gonna welcome all three, and we’ll start with AJ and then go to Mac and Robbie. If you guys could just do a quick you know, overview intro, and then, we’ll start off with some conversation.

Sure. Hi. My name is AJ Koffek. I am a product manager at Expedience.

My job is mostly around our actual product development, how we work with not only our end users and clients, but also our partners on how to deliver the best solutions and I’ve worked very, very deeply on our transition to the VMware, to the new VMware model, and I’m happy to be here.

Appreciate it, AJ. Matt.

Yeah. Mack Mc Clinton, VP of a National Partner Development for eleven eleven systems. My role really is just to support the the folks at Telarus, and translate all these changes to a, a strategy for TAs.

Appreciate it.

And, Robbie, Hey, guys.

Good morning. My name is Robbie Golry. As the title says, I’m the head of partner success at Rapid Scale. Ultimately, my goal is very simple is to make you guys successful. So looking forward to participating in this panel.

Impact on Partners and Service Providers

Alright. So let’s go. Alright. Guys, our goal as a panelist there’s a panel right now is to hold the audience.

We have a lot of people on here, so let’s be interesting and insightful. Mac, wanna use starting off. No pressure. And give us the landscape of what’s going on with this, Broadcom acquisition of VMware and all that’s going on in that partner program and and the ripple effects.

Sure. Yeah.

I mean, it really comes there’s a lot of noise as you guys, I’m sure, have all heard, and trying to get a a clear picture is always or is a little difficult But in the most simplest form, Broadcom has simply ended the sale of perpetual licensing moving entirely to a subscription based model. Why does that matter? Again, customers historically have purchased their licensing and paid annual maintenance and support on those licenses as long as they’ve been buying VMware. Now they’re essentially starting from scratch with the new model. So under the, objective of portfolio simplification.

They have also moved away from an a la carte buying motion and and gone towards the bundle. And this is where things get a little bit hairy and and where you’re starting to hear a lot more about large price increases because at the end of the day, in upwards of seventy five percent of Yammer’s base has only purchased one product. Right? They’ve been primarily buyers of V Sphere.

And so when they move into these new bundles that include a lot of new things that they probably aren’t using now and maybe could benefit from, It just makes that spread, that, price increase that much more significant, especially with the focus on three year commitments right now. So as these renewal dates come up on the licensing that they had purchased in the past, they’re gonna have to embrace this new bundle, and that’s where a lot of the, activities come from.

AJ, based off of that. And sorry. I let me take a step back.

The the partners, originally we’re around five thousand. Is that correct, guys? Some of them are about five thousand VMware partners globally, and it got cut down to about five hundred.

So What do you on the service provider side?

Yeah. On the service provider side, there was about forty five hundred of us, and that’s been cut down to about four hundred globally.

And a lot of that comes back to, there were a lot of partners that were really, really small that we’re just buying the licensing from VMware for resale, out to their clients for managed services purpose.

And what Broadcom wanted to do was to really shrink that program down so that the larger partners, Expedia, eleven, eleven, rapid scale, and others were able to be the kind of premier and pinnacle of those programs so that we can actually go into the market more, distinctly and be able to work directly with VM or sales. So, on the Pinnacle side, so Expedia, we’re a Pinnacle partner. We’re able to go direct with VM or sales, into the field.

And work with them on, on deals that they’re bringing to the table. This also plays into the partner space because the partners are now having to also go figure this out. This is where you as a trusted advisor can go into a client and say, hey, this is something that’s changing for you. How do you see this going? Are your budgets there to match this?

Is this something that you feel nift There’s a lot of emotion right now. Whether it turns into anything real from a, you know, we wanna switch platforms. We wanna change vendors. Etcetera.

It is a lot.

And there’s a lot of just big, hard emotions right now that people are feeling. Just feel really angry that everything has changed very, very quickly. They don’t have a ton of time to make decisions as to how that affects them. Right? So if you have an agreement that’s coming up in May, you have less than two months to figure out what you’re going to go do. And VMware wants you, as Mac mentioned, on a three year commit, which means you are then going to jump into the next wave. And do you jump into three years because you only have two months and you can’t make a decision or make any changes in that three month period do you actually do that?

Alternative Solutions and Considerations

That’s where a lot of the change and why everything is very, very It’s really hard for a lot of people to actually wrap their heads around it fully because they’re just so upset about what’s going on.

There’s still a lot of folks that interesting to see that, don’t appear to believe that it’s happening still.

Yeah. There is actually just one quick question. I wanted to I wanted to grab here because there’s one if we have existing clients, when it’s time to renew, are you saying distribution will deny renewal? No.

What they will do is the licensing will change from what they have today. So as Mac mentioned perpetual licensing, if they bought vsphere licensing twelve years ago, and they’ve just been paying their support, it will be converted into VMor cloud foundation or VMor vsphere foundation licensing.

And then it turns into a subscription model where they are paying monthly.

Or they’re paying all upfront if they want to. And a lot of that comes back to just the change in the model. And not only that, you have clients who as Max said, they bought V Sphere, and then they’re getting a three to five to ten percent or ten x increase in their cost because they’re now more or less being forced into buying products that they didn’t have before. Right? So they’re buying a bunch of additional things that they didn’t want They just want a v sphere, but because they have all these additional pieces in there, the entire cost of the platform goes up. So it’s not that VMware is necessarily jacking the prices up. They’re just more or less making you buy more stuff.

So there is also a value proposition from you as a trusted advisor to leverage providers like Expered in eleven eleven rapid scale or even the other, you know, partners that you may see out there in terms of being able to provide professional services and managed services to get more value out of that initial license.

Yeah. And I would say that, just to answer a couple of the other questions I’ve seen come through as well. The The ability you guys have, you have multiple premier partners and multiple Pinnacle partners in your, in the portfolio here for you to choose from and really the idea of where this guys is to make sure you have the landscape. Everybody, it has a slightly different approach to this, right, from a supplier standpoint on how they’re attacking the conversations with customers and there’s a different value add across the board.

Robbie, how would you say that Rapid Scale is teeing this up? And just to clarify, Expedia eleven eleven fall into that pinnacle, side of the partnership with VMware. Rapid skills representing the premier side of it. And I would love to understand where rapid skill is seeing the landscape and and the opportunity, from your point of view.

Yeah. Thanks, Kobe. First of all, If you go to our website, Rapid Scale, not a not a a promotion, but there’s a whole blog article we have on this whole VM Ware dot com thing. So definitely take a look at that. But yeah. So, Kobe, thank you for that. Ultimately, you know, we’re a premier partner.

So what that means for us is ultimately we’re anticipating any significant cost increases on our core services. So what do I mean, by our core services? Really, what I’m referring to is infrastructure as a service, our DAS, our Citrix based, VDII platform, disaster recovery and backup. Those are our core services.

We do not, anticipate any, increases. Therefore, our customers and our partners won’t feel any of those increases. So then the, the example or the question’s gonna be, and I got this question to channel partners a hundred times is Why? How come you guys are insulated, from this.

Ultimately, and I’m I’m sitting here standing here, taking a credit for this. But this really goes back to our engineering team and our architectural team. Ultimately, our platform is is is pretty dense. It’s pretty global.

We’ve got pretty big scales given that we’re a a business unit of Cox, you know, a twenty two billion dollar company. So it gives us a lot of immunity to end scale and economies scale, and gives us some insulation there as well. Now we also believe that there’s gonna be some customers that finally decide, you know what? I’m sick of it.

I’m tired of this whole VMware thing. I’m looking for options or alternatives, and I’m gonna move to the public cloud. And so that’s where we also, I think, Sean, is, we have the capability of basically helping customers migrate workloads from VMware to AWS or Azure or Google Cloud, whatever they choose they may be. So, you know, that means workload migration.

It means day to day management as support. So we feel like we’re pretty equipped and pretty, capable of helping partners and, obviously, your customers basically through this transition.

And I would also jump in there in terms of from an expedient side, we also saw very little in terms of the actual cost increase.

BMor did increase our prices too. I mean, they’ll just be real transparent there. They did bring that down. But because of our density, our average client in our multi tenant environment, saw a around a five percent increase in their total cost.

So a very, very small bump And this is where we, as service providers, a lot more or less can help be more efficient for you. At least on our side, we see a lot of increases to clients wanting to take on disaster recovery because the licensing that they’re paying on premises They have to now license both sides in the new subscription model, which can be very, very expensive as a massive jump when you do it that way. Bringing on to a service provider, we can provide, down to burstable licensing for clients there for, you know, workloads that are really only used in the event of a true disaster.

We’re able to help from a cost savings standpoint there. And I think that’s where the density, that, Robbie mentioned earlier of that’s where the service providers really come in. We are able to literally help you build that at scale.

One thing I do wanna push back on is the the jump that a lot of clients are thinking about making, whether that goes to a hyperscale cloud or to an alternative hypervisor.

A lot of the questions. AJ, sorry to sorry to interrupt you. When you say alternative to hypervisor, just to clue everybody in Sure.

You’re talking about Nutanix, Yeah.

The two the two big ones are Nutanix and mic and Microsoft’s hyper v slash Azure stack.

And a lot of that comes back to really just saying, not screw you anymore. I don’t wanna pay him anymore. That’s it.

That’s really a lot of the feeling that That’s the emotional side of it.

Right? Yeah. That’s the emotional side.

What goes into that though is effectively a rethink. And this is where Robbie mentioned that their engineering teams can help on a hyperscaler side, we can also help on the Nutanix side. We’ve been an Nutanix partner for, I think, about five, six years now. Most of our multi tenant cloud actually runs on top of Nutanix storage.

Being able to switch hypervisors is easy. Moving into a hyperscale cloud is super easy. You just use their migration tools. Done.

Now how are you backing that up? How are you doing disaster recovery? How are you securing it? How are you monitoring it? How are you operationalizing it?

And let me I’m gonna again, sorry. It’s right in the middle of the thought, but I really want our our advisors to hear that and start to to formulate the conversation of the talk track to go back to their client. So if I’m hearing what you’re saying, again, I’ll I’ll let you finish your statement and just say, I but what I’m is what you’re saying is super important. And the opportunity in Mac, you and I talked about this offline as well, and Robbie It’s really around that backup conversation because you’re talking about when you’re having to do a backup, guys, now you’re doubling the cost down, and you’re doing a lot of other You’re adding a lot of, unnecessary cost from what it the model used to be to what it is now. So that’s an immediate conversation to have. As they’re going through it. So not only is it, hey, how is this being where, you know, thing affecting you, but in particular, what are you gonna do now different in in DR?

Have an exit strategy to that conversation, of course, say, hey, we’ve got some great resources. We can bring in a lot of discussions. We have a lot of different options on how we can help absorb some of this discomfort if there is any for you and go from there. So, AJ, I’m sorry. Again, I just wanna make sure and highlight that point for the, for the advisors on the call.

Yeah. And really what it comes back to is this is not just a simple technology to technology discussion. This involves people and processes too. If you’re going to switch hypervisors, do your application support that?

There’s a ton of applications out there that are certified. I’m just using quotes. It just means that it’s been tested and that vendor says it’s okay to run on top of VMware. Are they certifying those applications to run on top of other hypervisors or public cloud?

These are the sorts of considerations that are more than just I wanna go from this platform to this platform. And I think that’s really where if that’s going to if that’s something that’s coming up with your clients, helping them walk through that, thinking about more than just the base technology stack and how to how does it fit into the overall portfolio of their environment, their overall infrastructure, and their team? Because I think there’s a lot of organizations think they can make that jump, and they probably could. But make sure that they consider that all the way through so that they don’t get into it six months later and go, actually, we’d have no idea what we’re doing.

That’s the same discussion we had with cloud ten years ago when it was like, oh, we moved everything to cloud.

Now everything’s more expensive, and I have no idea what I’m doing. Right? So again, it’s the same general conversation.

Consider it that way, as well.

Global Impact of Changes

And, Mac, what are you guys seeing from a global land here. This isn’t, just a domestic problem. This is or what I wanna call a problem, a domestic change. Right? It’s not fair to call it a problem.

Necessarily, but it’s causing some problems for a lot of people.

It’s causing some problems.

Exactly. So you this is a global issue, for VM Right? This wasn’t just a domestic change. We had a couple of questions come through the chat.

Yes. One hundred percent of VMware customers are affected by this. That’s the the simplest way to look at it. Right? So in the UK, they’re they’re facing the same things. It’s just on the other side. They’re they’re a couple different service providers.

But same same exec, cloud foundations bundle that AJ was talking about before. So it is it is simpler to have that conversation, but absolutely affecting them the same way.

And, you know, Robbie, to kick something back to you, we we talked a lot about the core products of VMware, but one of the other major changes that’s happened through and it it’s been coming a little bit. I don’t think it was a big secret, but, their DAS product, their VDI product, VMware Horizons, that you guys built your DAS product off of, or one of the, principles of it, is also being sold off. How do you see that affecting that that particular landscape?

Yeah. So just a little background there. Thanks, Kobe, for that.

So if you if you look at first of all, go back to the why of what Broadcom’s doing. Historically, they’ve always done this. They buy a company. They focus it on the top a thousand, two thousand customers of VM, VMware, and they basically also focus on the top partners, and they kind of remove everything else.

Historically, they’ve done that, and it’s the same same sort of playbook that they’re implementing for this act was as well. So one of the one of the business units, of VMware is something called EUC or end user computing. Within EUC, There’s really three fundamental products. You guys may be familiar with them.

One is VMware Horizon.

The second is based basically something called VMware app volumes and then VMware workspace one.

That business unit, the EUC business unit is actually being acquired by a private equity firm called KKR. There’s a lot of news articles on on on that topic. So again, going back to you guys and the advisory community as well as your customers, your customers are gonna be looking at alternatives with what this acquisition is basically doing is it’s causing in a lot of cases for the Horizon DAS solution to basically, almost double in price in a lot of cases. So we we were way prepared for this.

And so we’ve been guiding our customers and our partners through, alternative solutions. There’s a bunch of other DAS capabilities out there. There’s Azure Virtual Desktop. There’s obviously, you know, Citrix.

There’s a bunch of others. So we we’ve got expertise. We’ve been doing this for a long time, but ultimately this does impact your your customers and, and, obviously, your business as well.

Appreciate that. So I’m gonna summarize real quick, then we’re gonna get into some Q and A on the VMware topic and then kick it back over to Adam and Richard to finish up the Q and A from the earlier segment as well. So the way that I see this landscape, for our advisors, a couple things, a, recap the situation that’s happened from forty five hundred, partners down to five, four hundred or so.

Impact on Telarus Advisors

We have the split of about a hundred Pinnacle partners and the rest are gonna be in that premier group. Out of those hundred, around twelve are domestic guys. So only twelve are US based. You have access to six of those.

There will be a document following this call that gives these highlights and the list of both Premier and Pinnacle Partners And each individual supplier will have their own talk tracks and how they’re attacking this. There are different avenues that you can take these conversations, but we will list some good good questions, kind of talk tracks to have for your clients. And then anyone that wants to have a bigger discussion will do a bit more of a training on it and kind of that exit strategy. If you work with a lot of MSPs right now, that conversation is about a two to three week shelf life, before it expires because these guys are their whole business model is changing.

Impact on MSPs and Resale Motion

Gotta do something, they gotta do it fast. So if you work with a lot of MSPs and you’re wanting to have that conversation with them, we probably auto would jump on that very, very quickly. Mac, AJ, from that Pinnacle side, both have different avenues that you can explore and how you can support those MSPs as well, through that resale motion. That’s one of the benefits being a Pinnacle partner is the white label resale motion that they that they have.

Key Talk Tracks and Conversations

And we we do have an avenue on how you can, explore and get clumped on that as well.

And so we’ll have some follow-up information there. Key talk tracks.

Talk about the disruption. It’s a fishing lure to get you into a lot of conversation. If you’re not having these type of conversations with your clients, this gets you in to be able to have a different level. Maybe changes your perception within your own accounts. We talked about that before in a lot of different trainings, allows you to have a different conversation than the traditional network or UCaaS and and things like that. And know that our engineers, we had a pre call yesterday, are very much prepped and ready to at jump in and help you as well with that that conversation and help write it to the right, route it to the right supplier.

Q and A Session on VMware Topic

So with that, let’s get to some q and a, Doug. If you have some some questions loaded, and we will kick it over to our panelists and see if we, see what we can get accomplished here for our partners.

Terrific presentation. All of you. Thank you very much. Kobe, you’ve hit some of the big ones already.

Just a couple of things we’d like to clarify and feel free to bring in, any others beyond that. But, right there at the end, you talked about the resources Tilaris is making available to our partners who have questions. Obviously, this is going to, to affect each of our suppliers in a different way. And the types of services and licensing that are out there for our partners.

But, how should they direct questions to Del Harris about specific instances where they need help in making a decision?

I would say let’s route it the same way we always do. Start with your your key contact, whether that be your PDM or your PEA, they’ll grab the right resource to get them involved, and then we’ll route it through. If you’re already working directly with engineers, you already have a a established relationship, by all means, you can go directly to them.

But that would be the the fastest route to make sure that we get everything addressed for you guys. So no no different motion.

Than the traditional way to get the resources involved.

Speculation on Future Changes

Toby and panelists, are you seeing this as the first shot in a series of these types of changes that will happen in this aspect of the business or is this, sort of a one off situation?

This is gonna be my opinion, and I’d love to get, everybody else’s. Whenever you see a market leader like this, and I would say v VMware is the dominant player in this particular space. They were, first in, have grown to be almost I would almost borderline monopolize this case been tell recently with, some of the new stuff that’s coming out. It’s gonna trigger ripple effects like anytime anything like this happens. So you’ll see some other things and and follow suit to try to guess what those might be would probably be irresponsible, but I wouldn’t be shocked if there’s a lot of other changes from the competitive landscape coming down the pipe. Maybe I’ll kick it over to Mac to address and then, we’ll go from there.

Yeah. I mean, Broadcom wasn’t wasn’t the first and they won’t be the last. I think that just the impact and the speed in which they did it, and honestly, a lot of the market just didn’t believe that they were gonna do it the way that they did it. So, it it’s catching up in in the timelines closing, but we’ve already seen broadcom, actually capitulate a little bit to some of the original plans, timelines and and discount structures to to convert that three year term. Right? So we don’t really view this particular scenario as like a mass migrating event. I think it’s more of like a mass awakening of what’s real, what’s on prem, what should be on prem, what should be in the cloud, looking at the, maybe not a cloud first model, but a cloud smart strategy.

To look at what should be where and why, which is again something that we’re trying to help with, on prem.

Yeah. AJ, Robbie, anything additional to add there?

Yeah. I just I just wanted to add. I I I agree with the whole monopolistic approach. I mentioned the playbook of Broadcom.

This is exact the approach. Let’s look at an industry. Let’s look at a company that has pretty much a monopoly on the situation, and let’s take advantage of it. Yeah.

It’s just my opinion and my opinion alone, but, yeah, this is a good playbook for people who have the scale to be able to pull it off.

I think it’ll happen over and over again.

Approaching Government and Public Sector Clients

Kobe, a great question from one of our advisors having to do. Most of our partners are dealing with a lot of business clients, but we do have a number of that deal with government or a public sector clients as well. Any difference in the way that they should approach these opportunities And among our panel or elsewhere within Telarus, do we have the resources that can assist them with those customers?

Pass. Next question. No, I’m joking.

AJ, you guys I just wanted to do that one time on here. No, I think it’s a great question.

It’s gonna come down to, supplier specific, you know, ROEs around government and, government entities and things like that.

AJD, is expedient to have any any particular viewpoint on how you guys are approaching those type of accounts?

When you’re talking to especially GSA, you’re talking to federal level.

Federal level gets into FedRamp, which is really expensive if you wanna go chase that all down.

I think for us, we’ve generally stayed away from federal level. We definitely have state.

We’ve had def state and local government. University, public institutions. We’ve had a number of those clients, in our environments.

But it I see state and local government guess. I mean, they are in the same sort of boat.

It again is a hundred percent of VMware’s customers, but they get different discounts because their government, and education. So they definitely see some discount changes there as expedient. We don’t necessarily treat them differently. We obviously understand the, implications and regulations that go around government infrastructure, government IT, but that’s just something that comes up on a case by case basis. So, yes, we can, but it’ll be a case by case thing.

Mac, Robbie, anything add to to that particular conversation?

From a Rapid Scale perspective, again, we we’ve got tons of state and local customers, same kind of impacts.

Don’t play much in the fed ramp in the federal space. But, yeah, I think I I concur and agree with a lot of what, what AJ say.

Yeah. We’re actually we’re working on a a use case right now. Where to your point, Kobe, earlier, you mentioned that this was a lure. VMware is not the deciding factor, but it was the catalyst to get us the conversation with the end user.

But it was a simple, hey, we’re paying forty grand last year for renewal.

This year, it’s a hundred thousand. So let’s rethink how we’re doing things, and we’ve got an infrastructure opportunity out of it. Right? So it’s not slowing down that state and local conversation just like anybody else.

Alternatives to VMware Horizon and Premier vs. Pinnacle Partners

Alright. I’m gonna rapid fire because I know there’s a lot of Q and A for, Richard and Adam. So I’m gonna go through Doug. If I miss any, circle back, What’s the best alternative to VMware Horizon? It’s gonna be Citrix or Azure VDI.

Those were the two leading leading other VDI platforms, Rapid Scale, amongst others in our portfolio offer offer, both and can mix a mask depending on the situation.

The major difference between Premiere and Pinnacle, and my understanding, anybody correct me if I’m wrong, is essentially Pinnacle has the ability to resell white label and they get direct support from VMware.

The premier partners, the discounts aren’t very, very different on the pricing. They will be going through a distributor, like, I believe insight Ingram or micro, the two that have been chosen mostly for the support in the back end on the technical support for VMware on that. Those are your two major, major differences as I see it as I’ve seen them laid out.

Hardware and Licensing Changes

The other other questions I’m sorting through here. How will the hardware and licensing changes affect carriers deploying Bello, SD WAN? Anybody wanna jump on that one? Is there any changes to that at this point?

I can jump in there, Kobe. No. No changes at all on the Bella side. So, again, thinking about the why, they don’t have a monopoly on, on SD WAN. Plenty of SD WAN solutions. So they’re not making any impacts in any pricing changes developed cloud.

And last but not least, the all or all suppliers go into a subscription based model or some saying that they they’re being forced to subscription based. So VMware is forcing it regardless. And some of the the timing on this. So let’s talk about the timing and alignment.

Once you have the conversations with your clients, the idea around hardware and software licensing, being renewed at the same time, is almost a unicorn in a lot of the IT spaces. It just doesn’t happen. You’re gonna see a little mix and match of timelines, and we’re gonna have to jump to this and jump to that. So that’s gonna be a lot of the opportunity as well, helping them problem solve on what to do with the software licensing, whether hardware refresh is still on, still down the road for them and seeing how you can start to line that up and match that up.

I know that all three suppliers on on the panel have some ability to help with that conversation and guide it for a client.

And that’s the other major component. Making sure you understand the entire landscape around their hardware and their licensing will really, again, open up the door to a lot of different conversations. If you’re if you’re not comfortable with that, that’s where you can grab our engineering team they can help with that conversation a lot as well. And we can start to kick open some opportunities, and we’ll get the right suppliers involved with that conceptual architecture methodology that we have in in streamline the conversations for both your clients and yourselves to go from point a to point b faster than they’re gonna go themselves. I’m gonna conclude with that so we make sure that we leave some time for the other Q and A. Any, closing statements from any of the three, if not, then I’m gonna say thank you guys very much. This was super insightful.

Closing Statements and Concluding Remarks

And very much appreciated of your time in joining us.

Thank you. Sorry.

Paneled terrific job today. Thank you all very much obviously a continuing topic will have more questions. If you have additional questions or comments, send those to marketing at telarus dot com, we will make sure and get you a response.