Company claims 1,000% price hike drove it from VMware to open source rival

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Company claims 1,000% price hike drove it from VMware to open source rival

UK based cloud operator Beeks Group has moved the majority of its 20,000-plus virtual machines off VMware and over to OpenNebula.

Published on 5th December 2024

Companies have been discussing migrating off of VMware since Broadcom’s takeover a year ago led to higher costs and other controversial changes. Now we have an inside look at one of the larger customers that recently made the move.

According to a report from The Register, Beeks Group, a cloud operator headquartered in the UK, has moved most of its 20,000-plus virtual machines (VMs) off VMware and to OpenNebula, an open source cloud and edge computing platform. Beeks Group sells virtual private servers and bare metal servers to financial service providers. It still has some VMware VMs, but “the majority” of its machines are currently on OpenNebula.

Beeks’ head of production management, Matthew Cretney, said that one of the reasons for Beeks’ migration was a VMware bill for “10 times the sum it previously paid for software licenses”.

According to Beeks, OpenNebula has enabled the company to dedicate more of its 3,000 bare metal server fleet to client loads instead of to VM management, as it had to with VMware. With OpenNebula purportedly requiring less management overhead, Beeks is reporting a 200 percent increase in VM efficiency since it now has more VMs on each server.

Beeks also pointed to customers viewing VMware as non-essential and a decline in VMware support services and innovation as drivers for it migrating from VMware.

Broadcom loses VMware customers

Broadcom will likely continue seeing some of VMware’s older customers decrease or abandon reliance on VMware offerings. But Broadcom has emphasized the financial success it has seen from its VMware acquisition, suggesting that it will continue with its strategy even at the risk of losing some business.

Beeks is just one company that has moved away from Broadcom’s VMware. But its story underscores the ongoing challenges Broadcom has in pacifying customers who have felt disrupted by the changes it has implemented.

Ignacio Llorente, CEO at OpenNebula Systems, said that “several relevant organizations” are moving from VMware to OpenNebula but that he couldn’t disclose specifics. He added:

In our experience, recent price increases have prompted these companies to explore alternative solutions. At its core, this is a matter of trust - many organizations feel they can no longer rely on VMware or other vendors that distribute proprietary components.

Like Beeks, other VMware customers have claimed costs for working with VMware skyrocketed due to Broadcom ending perpetual license sales (a move Broadcom has claimed was planned before Broadcom bought VMware) and combining VMware’s previously bountiful SKUs into a small number of bundles. Numerous customers have said that their VMware costs increased 300 percent under Broadcom.

Similarly to Beeks, AT&T previously claimed that Broadcom proposed new pricing that would have resulted in AT&T’s VMware costs increasing by 1,050 percent. AT&T sued Broadcom for not renewing perpetual license support, but the companies have since settled.

Broadcom sought to appease small- and medium-sized businesses with a new, more SMB-friendly subscription tier announced last month. The move came amid concerns that Broadcom was primarily interested in enterprise-size customers for VMware and was overlooking the needs of smaller firms. But Broadcom’s changes have already pushed many customers to research alternatives to VMware, including rivals like OpenNebula.

And with customers struggling to juggle new, higher costs associated with using and selling VMware, we can expect more companies to find ways to decrease dependence on VMware, just as Beeks has.