Nutanix CEO Sees Multi-Year Opportunity After Broadcom’s VMware Acquisition

In an extensive interview with Bloomberg’s Tech Disruptors podcast, Nutanix President and CEO Rajiv Ramaswami talked about what’s driving widespread use of hybrid multicloud and how changes following Broadcom’s acquisition of VMware are driving IT customers to choose alternatives such as Nutanix.

By Ken Kaplan

By Ken Kaplan May 29, 2024

Historically, data center virtualization pioneer VMware was seen as a technology leader, but recent business changes have stirred consternation since it was acquired by Broadcom in late 2023. New product bundling and pricing, reseller program adjustments, divestments and unforeseen changes ahead 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 Nuntanix, 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 news continues to cover the many changes and fallout from disgruntled Broadcom VMware customers. In January 2024, The Wall Street Journal reported that Broadcom’s VMware Overhaul Draws Attention of CIOs. News about product pricing, reseller agreements and other changes followed. In May there were “Whispers about a breakup with AWS” as “it looks likely VMw Cloud on Amazon is changing,” reported The Register. Even though Broadcom addressed this issue in a blog post titled VMware Cloud on AWS - here today, here tomorrow, The Register wrote, “Customers brace for bumpy ride.” These changes have led to a growing chorus from IT leaders eager to step away from, limit or augment their use of VMware products.  

In the Tech Disruptors podcast, Ramaswami discussed how Nutanix is seizing this opportunity while meeting the market’s growing need for simplified IT infrastructure that extends from private data centers to public cloud services and the edge.

“Nutanix is the simplest and easiest alternative for VMware customers, looking to reduce their risk or dependence [on VMware products],” he said.

Tech Disruptors host Woo Jin Ho, an analyst at Bloomberg, dug into the topic to understand its business and market implications.

“From my math, it looks like they [Broadcom] cut out roughly 10,000 channel partners out of their 28,000 now to 18,000,” Woo said. “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 looking to do more with us,” Ramaswami said, pointing to a recent announcement that WiPro created a Nutanix Business Unit to accelerate digital transformation and hybrid multicloud innovation. 

“There are more partners looking to engage with us,” he said. “Many of our current partners are also VMware partners, and some of them are looking to re-up with us, especially the ones that are losing out of the top 2000 customers.” 

He said the Nutanix channel partner program eases migrations for their customers.

“Many customers who knew the Broadcom playbook signed three to five year enterprise agreements with VMware before the deal was closed,” Ramaswami said. “They bought themselves some time” to explore options.

Many see Nutanix as “the easiest alternative,” he said.

“Not everybody is going to do wholesale migrations. Many people might adopt a dual vendor strategy and they might bring to Nutanix a portion of their business. Over time we have a record of expanding with all these customers.”

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Focus Shifts to Migration in Wake of Broadcom’s VMware Acquisition

Woo acknowledged the growing importance of hybrid multicloud in the years following the COVID pandemic. That period accelerated digital transformation for many companies to support remote working and an increase 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, pointing to an example of how X (formerly Twitter) optimized its use of cloud service providers and began doing more on-premises, which reduced monthly cloud costs by 60%, cloud data storage size by 60%, and cloud data processing costs by 75%.

“All of this, I think, has created this new realization that the world is going to be hybrid and multicloud. That's where most CIOs are operating.

In the recent Enterprise Cloud Index (ECI), for which Nutanix surveyed 1,500 IT, DevOps, and platform engineering decision makers worldwide, over 80% of organizations believe hybrid IT environments are most beneficial to their ability to manage applications and data. Nearly half of respondents noted that implementing hybrid IT is a top priority for their CIO.

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Report Shows Top Demands Driving Hybrid Multicloud Adoption

“Customers right now seem to be cautious with their IT budgets,” said Woo.

Ramaswami responded that he sees spending, but with a total-cost-of-ownership (TCO) mindset. There’s more scrutiny around spending.

“We have a TAM (total addressable market) of about $76 billion and that includes software-defined compute, storage, and networking,” he 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 talked about growth among customers, including large Global 2000 and smaller companies around the world, who want to do more with Nutanix. One large company in the APAC region has a dual vendor Nutanix and VMware strategy, but they recently did “an expansion deal with us alone,” Ramaswami said. For smaller customers, “I think there's potentially more room for a wholesale migration.” 

He said a smaller public healthcare system accelerated their move to Nutanix and away from VMware after the deal closed with Broadcom.  

“They were completely out, fully migrated within 90 days,” he said. “We have done a lot of work on automating migrations for simpler environments, but also for very complex environments.”

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

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