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Comment by nolok | Hacker News Reader

Because they have twelve thousands vms and are themselves a provider that can't afford to have downtime for its customers.

So the thinking here was probably "there is no way they can refuse to sign right now and destroy their business in the process, so we might as well take the cake and also force them to stay after so they don't leave in 11 months and 29 days".

Turns out that thinking is wrong for that specific customers, but for how many did it work ?

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The large renewal "uplift" is partly a strategy to get in front of the C levels and board of directors.

I heard of a one billion dollar renewal quote from Broadcom. The company didn't pay anything close to that. But it bypassed middle mgmt... Not exactly sure what the overall strategy is here, but this is not an isolated incident.

My guess is that lower/middle management would have greater hatred of Broadcom…

Upper management will be the clueless putz.

The strategy is Broadcom doesn’t give a flying F about any customer smaller than Fortune 50. They really don’t. Hock has said as much.

Here’s an alternative theory - and I have no idea if it is right. But, this might have happened this way because Anexia only have 12,000 VMs and Broadcom wanted to get rid of the account. I don’t know if Anexia was considered a large or mid-level customer for VMware. As other have mentioned here… there are other customers who have many more VMs on site.

I think the original theory is right. I’ve seen it play out close up. Basically a sales guy thinks they have a client who is caught and they can basically can extort them for a ransome and they try to do it. Sometimes clients actually are not as caught as the sales guys think and this happens. The sales guy looks now like an idiot and this is a guide that other caught customers can follow.

Indeed, a sales rep might have dreamed of an extra big bonus.

That's not sales it's extortion

VMware was taken over by a company whose business model is extortion. Ie take over a company with customer that have few or little alternatives then keep jacking up prices as high as they can.

No it’s “vendor lock-in”

Wait no you’re right, they are practically synonyms.

For the sales guys involved it looked like a massive payday for him, one he could brag about for years.

The guy's name is "Hock Tan", it goes all the way to the top. Greedy billionaire trying to squeeze the entire on-prem datacenter industry. Every single one of my VMware customers is either in the process of migrating off or developing the plan to do so. At least one of them would be in Broadcom's list of 600 key accounts that Broadcom thought they could turn the screws on. They somehow seem to have forgotten that MS had just bought a chunk of that org and instead of paying VMware, they are now exiting a few dozen datacenters to move everything to the cloud. This org was highly cloud-resistant (for a handful of good reasons), but VMware forced their hand at exactly the wrong time.

I believe this course of action for VMware is going to be taught in business schools in the future.

The story is even worst than this. You can find an interview from him on YouTube post acquisition of VMWare. A business reporter naively ask him what is his strategy for the acquisition. The answer just shows there was no strategy, just, and I am paraphrasing: "I spent all this money has to be for something"

Do any business schools teach about business school fads and how often they don't work out?

I hope so.

My first lecture in project management subject about how the majority of IT projects (using the very methodologies taught in that class) fail.

The company I work for experienced this. The SaaS solution we depended on suddenly got very pricey. New pricing model and all. The sales reps were completely inflexible. It got so uncomfortable that I got to develop a replacement. When we were (gradually) moving over, they lost interest and let us off with a mild increase, and from this year on, we won’t be needing them at all.

Buy, or build?

Build -> opportunity cost, ongoing cost, legacy

Buy -> upfront cost, integrate, ongoing cost, and maybe eventually extortion leading you to Build a replacement.

This leads to many different implementations of roughly the same concepts all over, which sucks. Or open source, if it already exists. Or both. Not that open source doesn't have integration costs.

But think of this from an executive's perspective. Building really sucks. But buying sucks more in the future. You might just buy.

I've seen all of these. My preference is to grudgingly build if suitable open source doesn't already exist.

My cousin is a VMware sales girl. She didn't like the Broadcom move at all. Customers are exiting right and left. And no new contracts at all. Game over

I still don't know.

Starving the milk cows (push customers into losses) is never a smart strategy for those living on milk cows. Sounds more like inceadibly stupid. Or short sighted parasitic (squeeze all then run with the heist).

It's the FYB point[0], apparently.

[0] https://bcantrill.dtrace.org/2004/08/28/the-economics-of-sof...

> So the thinking here was probably "there is no way they can refuse to sign right now and destroy their business in the process, so we might as well take the cake and also force them to stay after so they don't leave in 11 months and 29 days".

Maybe. However, Broadcom has been bending people over the barrel for VMWare for a while now. Anyone who doesn't have a migration plan in the works at this point is an utter fool.

Turning the screws 12 months ago? Sure, probably gonna work. Now? Not so much.

Payment in advance is particularly silly, I assume some stayed, additions fell off a cliff and not enough will be paying for the next quarters to not look like a disaster for them as ones that maybe could leave see their desperation and start setting terms.

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