After Broadcom acquired VMware in November of 2023 for $61 billion, the global semiconductor and infrastructure software giant began zigging and zagging on how it would handle VMware’s established, then-28,000-strong channel partners and partner program.
At first,
in mid-December 2023, thousands of VMware resellers, distributors, and service providers were told that the established VMware partner program, along with its incentives and their status within it, was being terminated and that it would be replaced with the Broadcom Advantage Partner Program for VMware Resellers, effective Feb. 5, 2024.
That was the first shot across the bow for those partners,
leaving many talking about what they would do and where they would go if things continued to change in ways they did not appreciate.
But now Broadcom has announced that it is zigging and zagging no more, as the company has unveiled its plans to cut off the smallest, lowest-revenue VMware partners from the company’s partner program so that Broadcom can focus on its most profitable partners. The
details were revealed in a recent post by
Brian Moats, the senior vice president of Broadcom’s global commercial sales and partners, on the Broadcom partner news website.
“Broadcom has refined its partner strategy and program over the past 18 months to align with our go-to-market mission to deliver the industry-leading private cloud platform that fuels our customers' innovation,” wrote Moats. “Given our strategic direction, and as a result of our comprehensive partner review, Broadcom is reducing the number of partners authorized to resell VMware solutions in the Americas, and Asia-Pacific and Japan regions.”
In the wake of the changes, the company will “focus on deepening our relationships with those partners who are committed to delivering the transformative customer experience around VMware solutions, as demonstrated by their historical performance levels, technical and other relevant expertise, and ability to make the investments necessary to offer customers the levels of service they expect and deserve,” wrote Moats.
What Partners Are Being Cut by Broadcom?
But for VMware partners who have not reached those higher business performance targets, it is the end of the road as far as Broadcom is concerned.
The partners being cut from the company’s partner program were mostly participants in what had been the lowest Registered tier of the program, which was just “streamlined” to now include only three top tiers of the Broadcom Advantage Partner Program – Pinnacle, Premier, and Select.
“The vast majority of customer impact and business momentum comes from partners operating within the top three tiers,” wrote Moats.
In addition, participatory requirements will increase for Pinnacle and Premier partners that continue in the program, he wrote. “We are beginning the process of transitioning partners who no longer meet the minimum program requirements or have not demonstrated consistent engagement. This is essential to preserve the integrity of our partner ecosystem and ensure every customer interaction is rooted in capability and commitment.”
This Is Broadcom Being Broadcom: Analysts
“This is not a surprise at all,”
Zeus Kerravala, founder and principal analyst at ZK Research, told ChannelE2E. “While Broadcom can spin the message any way it likes, there is only one thing the company cares about. It is not customers or partners – it is driving shareholder value by maximizing profitability.”
The company has drawn a line in the sand for its partners from here on out, said Kerravala. “Broadcom wants to continually raise prices and this requires selling a full-stack VMware Cloud Foundation (VCF) solution that involves VMware plus other aspects of the Broadcom portfolio. Not all partners are equipped to do this and, if you are not, you are out. If you are not willing to invest big dollars in training, you are out. If you do not carry high volumes, you are out.”
And for MSPs that do not want to be 100% all-in with VCF and Broadcom, “you should strongly consider looking at Nutanix or other alternatives,” said Kerravala.
Another analyst,
Paul Nashawaty, principal analyst for application development and modernization for SiliconANGLE, told ChannelE2E that Broadcom’s moves here “feel like a calculated next step. Broadcom has been signaling a tighter, value-driven ecosystem ever since the VMware acquisition. Now they are putting it into action by doubling down on high-performing, technically capable partners. It is not just about trimming fat, it is about consolidating influence to deliver predictable revenue and service excellence.”
The company’s playbook is well known and has for a long time focused on operational efficiency, profitability, and streamlined go-to-market motions, said Nashawaty. “VMware’s sprawling partner base was never going to survive intact. I would say, based on data, over 70% of industry analysts, including theCUBE Research and other research firms, predicted partner consolidation within a year of the acquisition. So if anything, the surprise is how long it took to get here.”
With this partner program revamp, “Broadcom is putting its signature on VMware by moving from a broad partner model to a selective, performance-based ecosystem,” he said. “In other words, it is ‘fewer, better, stronger.’ In an era of rising cloud complexity and enterprise demands, this might benefit customers, at least those served by the chosen few.”
Nashawaty calls the move a major inflection point for Broadcom and VMware. “The partner ecosystem is becoming a strategic moat rather than a volume game,” he said. “By elevating program requirements and eliminating the Registered tier, Broadcom is betting big on technical sophistication and lifecycle services, which aligns well with trends in private cloud modernization. Industry data shows that 45% of enterprises are shifting workloads back on-prem or to hybrid models, often citing performance, control, or cost. So aligning with strong partners who can deliver VMware Cloud Foundation at scale is a sound strategic move.”
But while that may be good for business customers, it is not so great for MSPs, especially smaller or regional ones, he said. For them, “this could be a serious shake-up. Many will lose authorized reseller status, forcing a pivot to referral models or potentially out of the VMware ecosystem entirely. This is tough, considering that MSPs drive roughly 30% to 40% of VMware-related SMB revenue, depending on region. However, those MSPs that have already invested in VCF expertise and hybrid cloud services stand to benefit immensely. They will gain greater visibility and customer opportunity.”
Alastair Edwards, chief analyst at Canalys, said that with Broadcom concentrating its efforts and investments on VMware’s top enterprise customers – especially its top 10,000 accounts – “Broadcom is willing to accept a high level of attrition, as we have seen with the move to raise the minimum core threshold for VMware customers.”
By cutting the bottom tier of VMware partners, Broadcom “is saying to its smallest, least-focused partners ‘either you step up or we do not want you,’” said Edwards. “It seems somewhat ruthless but it makes business sense. I suspect even VMware’s distributors would agree with that logic, as they also make most of their money from serving the larger partners in the top three tiers. If anything, I am surprised VMware has not been more aggressive.”
And while many partners are frustrated with Broadcom’s tactics, he said, “ultimately, it is driving tremendous growth for VMware at the moment. And as the majority of its sales go through the channel, partners are directly benefitting from this growth. Broadcom significantly reduced its direct focus over the last couple of quarters, after initially taking 2,000 accounts direct and backtracking on that after realizing how important its channel really was.”
Principal analyst of the Enderle Group,
Rob Enderle, said that despite all the commotion in the partner marketplace about Broadcom’s actions, companies do make these kinds of program adjustments from time to time.
“They have limited resources to assist partners and they cull those that fail to meet certain performance requirements, thus assuring the ones that do perform get adequate help,” said Enderle. “No company can help everyone, and by optimizing their efforts, the rest have greater possibilities. Rationalizing resources after an acquisition is normal. Often you get rid of redundant and underperforming groups in order to improve operational efficiency.”
Vendors Weigh In
Madhura Maskasky, the co-founder and chief product officer for Platform9, which offers VMware Cloud migration services for VMware customers, and Jimmy Chui, CEO of ClearScale, an AWS Premier Tier Services Partner and cloud consulting company, also shared their thoughts with ChannelE2E on Broadcom’s partner program reductions.
“This is yet another in a series of sudden changes of policies, all resulting in continued breach of trust, from a vendor that once enjoyed huge success thanks to a broad partner ecosystem,” Maskasky told ChannelE2E. “This latest move represents a big blow to partners in the Registered tier, many of whom have been a VMware partner over multiple decades.”
And the impacts are felt by other Broadcom VMware partners as well, she said. “This has to be viewed holistically across their changes in business practices, including their stringent licensing requirements that make it much more difficult for the entire partner ecosystem to continue to do business with VMware.”
The biggest impacts, though, are about trust, she said. “What once used to be a trusted relationship now seems to suffer with huge uncertainty around what is to come in the future.”
Chui, of ClearScale, told ChannelE2E that “Broadcom's post-acquisition changes to VMware continue to demonstrate their overall enterprise strategy with [securing] premium profits. This is disrupting customer budgets, operational stability, and critical support access.”
And for MSPs, said Chui, Broadcom’s acquisition of VMware “has dramatically impacted MSPs, often forcing them to significantly alter their business models and client relationships,” and leaving many MSPs unable to resell or support VMware products.
“The bottom line is that … many MSPs face a forced evolution, needing to either invest heavily in Broadcom's specific VCF vision or diversify their offerings to alternative cloud and virtualization platforms, demanding training and fundamentally re-evaluating their service portfolios.”
