‘Price is a factor, but it’s more like taking the whole package of pricing, the known recession, and the changes to support all of that, and shifting them across the table to the client you’ll spend decades working with. Develop trust in CRN,’ says Nutanix’s Dave Gwyn.

The repercussions that began shaking up the virtualization market in May 2022 when Hock Tan announced it would acquire VMware and fold it into chipmaker Broadcom haven’t stopped shaping customer conversations since then, Nutanix Channel Chief Dave Gwyn recently told CRN.

“I think the Broadcom VMware situation is still top of mind for a lot of Nutanix partners,” Gwyn said.

Gwyn said VMware’s service provider community has been hit hard by the changes Broadcom implemented when it completes its $69 billion acquisition of the virtualization company in 2023. The new owners cut off some partners’ ability to sell licenses directly to customers. Additionally, Broadcom bundled products that customers might not need with products they trusted to increase sales of the entire product line.

“Price is a factor, but it’s really like taking the whole package of pricing, known recessions, changes in support, and sliding it across the table to your customer, whose trust you may have spent decades developing,” Gwyn said.

CRN has reached out to Broadcom for comment.

Market research firm Forrester predicts that VMware’s top 2,000 customers will shrink their VMware deployments by an average of 40 percent by 2025 as a result of changes Broadcom is making to the way it brings virtualization to market.

“Increasing migration to public cloud, on-premises alternatives, and new architectures will increase this reduction. Despite firms’ interest in private cloud due to digital sovereignty and cost concerns, VMware continues to face challenges,” researchers wrote in a report last month.

Researchers noted that VMware’s revenue in its first quarter under Broadcom decreased by $600 million due to asset reallocations, divestitures and customer losses due to overpriced renewals and unfavorable new terms.

“Broadcom’s price increases and cost-cutting measures are expected to boost its net profit, with few credible competitors able to help customers replace VMware virtualization,” Forrester said. “Technology leaders should follow our advice when evaluating VMware alternatives, taking into account their investments in VMware and how they manage those alternatives.”

Nutanix’s market value has increased by 500 percent since Broadcom announced its intention to acquire VMware in May 2022. Nutanix shares traded at $71.09 today, with a market cap of $19.14 billion. Nutanix shares closed at $16.88 on May 27, 2022, with a market cap of $3.78 billion.

Gwyn hopes disgruntled VMware customers can now find an alternative and find a solution for their future assets in Nutanix.

“Where Nutanix is ​​now and where we find these customers who are upset with the situation with Broadcom, you need to tell them, ‘Hey, it’s time to get rid of VMware,’ but it’s also time to do it. ‘Perhaps that’s the moment that needs to be the catalyst for full modernization “This is it, that’s where I’m going, okay, I need all of the above,” he said.

Here’s CRN’s conversation with Gwyn, edited for length and clarity:

Where do you see the traction for Nutanix in terms of Nutanix partners? Is this product around the package?

Product packaging is just an abstraction of the markup. What they actually do is say: hey, you have to pay 3 times as much, but hey, you got this package.

So yes, it’s still an issue, but it’s actually just a different word for the pricing issue. The only thing really is that they hit them with a different licensing method to make it less possible for them to buy the component they need.

Now, as for us, we have to try to adapt to these customers, and just because a customer is looking at a difficult proposition… that doesn’t mean they can easily say, “Okay, fine, we’ll just change it.” .’

What does that sales cycle look like when Nutanix encounters a VMware customer who is ready to switch?

Each is at a different stage of deployment, so the hardware they run on may not be suitable for Nutanix.

We may need to wait for their depreciation schedule, or we may need to show enough value that they are willing to part with the depreciation schedule in advance.

Or maybe they’re starting their transition partially, rather than completely, and they’re just saying, ‘Hey, as this depreciates, we’re going to start modernizing.’

Actually what we see is this is not just one thing, we used to have a virtualization platform called VMware. Now we will switch virtualization platforms. This is not where the world is now. And in fact, most of our customers’ virtualization is almost like legacy at this point. Everyone is doing containerization. It’s all about Kubernetes.

How does Nutanix approach this?

We made an acquisition earlier this year, we’ve now launched, it’s called NKP, the Nutanix Kubernetes platform.

This is not small news for us. If your IT staff is fresh out of college or has a junior computer science degree, not all of them are thinking in terms of virtual machines. This is old school, right?

New school; containers, microservices, and cloud-native deployments.

Where Nutanix is ​​now, when we find these customers who are upset with the situation at Broadcom, you have to tell them, ‘Hey, you know, it’s time to get rid of VMware,’ but it’s also a time. ‘Maybe this is the moment that needs to be the catalyst for full modernization’ I’m going to say, okay, I need all of the above. I’m not just changing my virtualization platform because who cares.

But NKP is true enterprise Kubernetes for us. Large-scale container is the ability to manage and deploy Kubernetes-based deployments.

There is a companion called NDK, Nutanix Data for Kubernetes. And this is something unique.

When deploying Kubernetes applications, there is often no great way to store their data.

So you run into these challenges around the agility of the application because it’s not just the containers that move, you also have to think about the data and what needs to change depending on where you move.

NDK aims to simplify this. Right now, you can use native data for whatever moves with the application, and the data doesn’t have to move with the application, but the data methodology can move with the application and you can just say, “Hey, this application goes.” NDK is available here as a complement to NKP, so it works exactly the same no matter where you run it.

How big is the container opportunity for partners here and are you pitching it as container versus hypervisor? Are you talking to your partners on these terms yet?

No, I mean, I’m speaking from my own organization. I don’t think we separate the two issues so specifically. In other words, to me it’s more of a modernization conversation, right? These two things coexist.

In a larger than mid-sized business you will have both. You will only have applications running on top of the virtual machines and VM environment. In a containerized environment you will only have applications running on Kubernetes, but I think it will mostly be a single organization managing all of the above.

So, going back to the original part of this conversation, when you walk into a company they look at you like, ‘Oh my gosh, we’re really impressed with this Broadcom thing. And wow, we’re working on a three-tiered architecture.’

And then, you know, Nutanix comes along and says, ‘You know, you should really consider AOS and our Acropolis hypervisor is a great alternative to ESXi and isn’t that great?’

And they said, ‘Okay, does this work in our three-tier architecture?’ they say.

‘Yes, no, it doesn’t work in three stages. We are hyper-converged. And this is our this is our story. Hyperconverged infrastructure. But you have to modernize, you have to modernize.’

And then it becomes: ‘But if I’m modernizing then I’ll go in the container direction. I’d be using Kubernetes.’

And my Nutanix sales reps have to say, ‘Yes, you should be.’

So that completes the whole story.

They do not need to exist separately.

So it looks like there is an opportunity in the Nutanix partner ecosystem for partners looking to expand their container capabilities?

That’s true, and it puts them in the best position to step in as a thought leader and help a customer struggling with what to do next. Or they might understand: Is it time for me to make a bigger decision? And if you’re well-educated about things new and old, then you can offer some really insightful thought about what is the right thing for them to do right now.

You are also making some changes to the partner program. Can you tell me about this?

The biggest change to our partner program this year is that we’re adding a new tier. We have a new level called Premier. We used to have three tiers and a lot of people clustered together at the top of our affiliate program.

I wanted to have a truly elite level, as opposed to a crowded upper level. That’s why we created this new premium tier for partners who are truly just like everyone else.

You’ll get higher discounts and better incentives for the new logo, autonomous behavior, and all the different things we’re trying to encourage like that.

I deliberately didn’t make too many changes, because one of the things that really drives us internally is that I focus on these four things. As you know, I talk about how we want to have four main things when being a good partner to our partners: profitability, product, long-term commitment and trust. All four of these are critical. And I say, if any of these don’t happen, then the relationship will break down.