Broadcom Ends Business with VMware’s Lowest-Tier Channel Partners

Broadcom has made a significant shift in its VMware partner program by cutting its lowest tier. This change, intended to better serve larger VMware deployments, also raises the risk of customers and partners migrating away from VMware.

In a blog post on Sunday, Brian Moats, a Broadcom executive, revealed that the Advantage Partner Program, which emerged after Broadcom dissolved the original VMware partner program in January 2024, will now consist of only three tiers: Pinnacle, Premier, and Select. The Registered tier has been eliminated.

According to Broadcom's strategic direction, this move follows a "comprehensive partner review" and affects VMware's operations in the Americas, Asia-Pacific, and Japan, Moats explained. Broadcom’s global partner program leader, Laura Falko, shared with The Register that partners will receive 60 days' notice regarding this change.

Moats pointed out that the majority of business and customer impact comes from top-tier partners, and Falko added that many of the ousted partners were "inactive" and lacked necessary capabilities for supporting customers on VMware's private cloud journey.

One partner affected is Canadian managed services provider Members IT Group, which learned it would no longer be a VMware reseller. CTO Dean Colpitts expressed frustration, blaming Broadcom's hefty price increases for declining business since its acquisition of VMware.

"The only reason we were "inactive" is due to their greed. A 50 percent increase with no warning after budgets were set was unacceptable," Colpitts said.

Members IT Group is now transitioning its clients to Hewlett-Packard Enterprise's VM Essentials virtualization solution.

This downsizing aims to allow Broadcom to "focus on deepening" relationships with partners showing strong historical performance and expertise, said Moats. Sumit Bhatia, co-author of Navigating VMware Turmoil in the Broadcom Era, warned of a "sense of betrayal" among lower-tier partners and potential increased costs for end consumers due to reduced competition.

Moats also hinted further adjustments could occur for remaining channel partners, emphasizing consistent engagement and additional requirements like maintaining Expert Advantage Professional Services Partner status or a scaled Small and Medium Business practice. Broadcom will also expect Pinnacle and Premier partners to have dedicated sales resources and execute joint business plans.

These changes have forced some solution providers to work through larger resellers instead of directly with VMware, leading to increased quote wait times post-acquisition. Some believe these steps are part of creating a "feeling of exclusivity" around VMware products.

However, Broadcom's strategy of reducing partners could push the industry towards alternatives like Microsoft, Nutanix, and AWS, according to Gartner analyst Michael Warrilow, suggesting a negative impact on the industry.

Despite these risks, Broadcom sees potential for acquiring new clients whose previous resellers were forced out, although it acknowledges the need for some customers to form new partnerships.

Scharon Harding is a Senior Technology Reporter at Ars Technica, specializing in news, reviews, and analysis on consumer gadgets and services.