‘Price is a factor, but it’s really more like taking the whole package, which is the pricing, the known stagnation, the changes to support all of that, and sliding that across the table to your customer with whom you might have taken decades to develop trust,’ Nutanix’s Dave Gwyn tells CRN.

The reverberations that started shaking the virtualization market in May 2022 when Hock Tan announced he would buy VMware and fold it into the chipmaker Broadcom have not stopped shaping customer conversations in the years since, Nutanix Channel Chief Dave Gwyn recently told CRN.

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

Gwyn said VMware’s service provider community was hit hard by the changes Broadcom put in place when it completed its $69 billion acquisition of the virtualization company in 2023. The new owners cut off some partners’ ability to sell licenses to customers directly. Additionally, Broadcom has bundled products that customers may not need with products they rely upon to boost sales of the entire stack.

“Price is a factor, but it’s really more like taking the whole package, which is the pricing, the known stagnation, the changes to support, and sliding that across the table to your customer with whom you might have taken decades to develop trust,” Gwyn said.

CRN has reached out to Broadcom for comment.

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

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

Researchers pointed out that in its first quarter under Broadcom, VMware’s revenue declined by $600 million because of asset reallocation, divestiture, and customer losses over high-priced renewals and unfavorable new terms.

“Broadcom’s price increases and cost-cutting measures are expected to boost its net profits, with few credible competitors capable of helping clients replace VMware virtualization,” Forrester found. “Tech leaders should follow our advice in assessing alternatives to VMware by considering how they manage their VMware investments and those alternatives.”

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

Gwyn hopes that disgruntled VMware customers can find an alternative now, and an answer for their future estate in Nutanix.

“Where Nutanix is now, and where we’re finding these customers who are troubled by the Broadcom situation is you got to say to them, ‘Hey, it’s a time to look at getting off of VMware,’ but it’s also a time to say, ‘Maybe this is the moment where this should be the catalyst for full modernization, where I just go, OK, I need all the above,” he said.

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

Where are you seeing the traction with Nutanix for Nutanix partners. Is it around that product bundling?

The product bundling is just an abstraction to price upliftment. What they’re really doing is saying: Hey, you got to pay 3x but hey, you get this bundle.

So yes, that’s still an issue, but it’s really just a different word for the pricing issue. All that really is they’re just hitting them with a different way of licensing it to make it less possible for them to just buy the component they need.

Now, as for us, we have to try to accommodate those customers, and just because a customer looks at a tough quote … that doesn’t mean that they can very easily say, ‘OK, well, we’ll just switch.’

What does that sales cycle look like for Nutanix when they encounter a VMware customer ready to switch?

Each one is in a different phase of their deployment, and so you’ve got hardware that they’re running on that maybe is not suitable for Nutanix.

We may have to wait for depreciation schedules, or we have to show enough value that they’re willing to walk away from a depreciation schedule ahead of time.

Or maybe they begin their migration in part rather than in full, and just say, ‘Hey, as this depreciates, we’ll be starting to modernize.’

What we’re really seeing is this isn’t just a hey, you know, we used to have a virtualization platform called VMware. Now we’re going to switch virtualization platforms. That’s not where the world is right now. And in fact, most of our customers virtualization is almost like, it’s almost like legacy at this point. Everybody’s containerizing. It’s all about Kubernetes.

How is Nutanix leaning into that?

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

This isn’t small news for us. If your IT staff is recent college grads, young computer science degree holders, they are not all thinking in terms of virtual machines. That’s old school, right?

New school is containers, microservices and cloud native deployments.

Where Nutanix is now, when we’re finding these customers who are troubled by the Broadcom situation is you got to say to them, ‘Hey, you know, it’s a time to look at getting off of VMware,’ but it’s also a time to say, ‘Maybe this is the moment where this should be the catalyst for full modernization,’ where I just go, OK , I need all the above. I’m not just switching my virtualization platform, because who cares.

NKP, though, for us is true enterprise Kubernetes. It is the ability to manage and deploy large scale container Kubernetes based deployments.

There’s a complement to that called NDK, which is the Nutanix Data for Kubernetes. And that’s a unique thing.

When you’re deploying Kubernetes applications, a lot of times, they don’t have a real great way to store their data.

So you wind up with these challenges to the agility of the application, because it’s not just the containers that move, you have to think about the data, and what needs to change based on where you’re moving.

NDK is intended to simplify that. Right now you can use local data that no matter that moves with the app, and you know, the data doesn’t have to move with the app, but the data’s methodology can move with the app and just say, hey, this app’s going to work the exact same way no matter where you run it, because NDK is in place in it as a complement to NKP.

How big is the container opportunity here for partners and are you pitching this as container versus hypervisor? Are you talking to partners in those terms yet?

No, I mean, I speak from kind of my org. I don’t find us separating the two topics all that specifically. In other words, to me, it’s more of a of a modernization conversation, right? These two things coexist.

In anything larger than a medium-sized business, you are going to have both. You are going to have applications that run exclusively on top of virtual machines and a VM environment. You are going to have applications that run exclusively on top of Kubernetes in a containerized environment, but I think for the most part, it’s going to be a single organization that manages all of the above

So if you do walk into a company who is, back to the original part of this conversation, they’re looking at like, ‘Oh my goodness, we’re really getting hit hard by this Broadcom thing. And wow, we’re running on a three-tier architecture.’

And then, you know, Nutanix shows up and says, ‘Well, you know, you really ought to consider AOS, and our Acropolis hypervisor is a great alternative to ESXi, and isn’t that great?’

And they say, ‘OK, well, does that run on our three-tier architecture?’

‘Well, no, it doesn’t run on a three tier. We’re hyper converged. And that’s our that’s our story. Hyper converged infrastructure. But you should, you should be modernizing.’

And then it’s like, ‘Well, but if I’m modernizing, then I’d be going in container direction. I’d be using Kubernetes.’

And my Nutanix sales reps need to say, ‘Yeah, you should be.’

So it just completes the whole story.

They don’t have to separately exist.

So there’s an opportunity within the Nutanix partner ecosystem for partners who want to grow their container capabilities it sounds like?

That’s right, and it puts them in the best position to walk in as a thought leader and help a customer who’s struggling with what to do next. Or they can figure out: is now a time for me to make a bigger decision? And if you’re well trained on the new stuff and the old stuff, then you can truly provide some insightful thinking on what is the right thing for them to do right now.

You are rolling out some changes to the partner program as well. Can you tell me about that?

The biggest change to our partner program this year is that we added a new tier. We have a new tier called premier. We had three tiers previously, and we had a lot of people that were clustered together at the top of our partner program.

I wanted to have a truly elite tier, as opposed to a crowded top tier. So we created this new premier tier for those partners who are truly like all in.

You’re going to get higher rebates and just better incentives for all the different things that we try to incentivize, like new logo and autonomous behavior and things like that.

I deliberately didn’t make a lot of other changes, because one of the things that really drives us internally is I have these four things I hammer on. I talk about when you know, when being a good partner to our partners, we want to have four main things: profitability, product, long term commitment and trust. Those are all four critical. I also say that if any one of those doesn’t exist, then the relationship breaks.