Partners react as Nutanix doubles down on channel amid Broadcom-VMware disruption

Partners share trust in Nutanix for flexibility, profitable alternatives as Broadcom acquisition shakes up VMware business during .Next conference in Barcelona

The Broadcom-VMware acquisition was a major topic at Nutanix's .Next conference in Barcelona this week, presenting an opportunity for the vendor to deepen channel relationships and grow business with current partners.

In an exclusive interview with CRN, Nutanix SVP of worldwide channels David Gwyn explains how the acquisition impacts strategy and partner thinking: "Our number one 2024 priority is addressing the Broadcom-VMware challenge all our partners face.

"Most have significant VMware business units affected by this. We're trying to help them provide answers to customers and their own significant business model challenges."

He says that over the past year, Nutanix has focused on increasing front-end margin, significantly increasing the price advantage for deal-registered partners and rebates in its elevated partner programme.

"Front-end and back-end, they're making much more money than before. This is the year we paid out the most ever in partner rebates, with the highest price advantage yet for deal-registered partners."

He explains the vendor has created programmes specific to the VMware situation, in an effort to help partners capitalise on the opportunity.

"We identified 16,000 globally impacted accounts and put them into the Surge programme. If partners, especially top Champion partners, sell to those VMware-disenfranchised accounts, they can get up to 16 per cent rebates."

The other is the Migration Promotion - if a partner brings a customer committing to a 3-year Nutanix subscription, Nutanix will give them the 3rd year free and pay for migration services off VMware, with the partner delivering to get exposure.

"Whether EMEA, Americas or globally, I want partners cushioned from this and viewing Nutanix as an alternative. Knowing Nutanix is a product alternative is one piece, but they need to know it's profitable for backfilling that void and it's a long-term relationship.

"These programmes commit through July 2024, and we'll continue 100 per cent through the channel, unlike Broadcom taking deals direct."

Gwyn said when partners hear "we're taking our top 20-30 per cent of deals direct, that's the kiss of death - a slippery slope. So we're more committed than ever to 100 per cent through the channel."

He explains Nutanix isn't necessarily trying to move partners over, as many big existing Nutanix partners also sell VMware. "It's recognising that if you believe in partnership, when your partner is hurting, you ask how to help."

"We've known for years these partners sell VMware, so now is the time to recognise our Acropolis Hypervisor (AHV) as an alternative. AHV has competed with [VMWare's] ESXi for 10 years, celebrating its 10-year anniversary this week. When we introduced AHV, everyone ran ESXi on Nutanix, but the AHV percentage slowly climbed. Today, with 25,000 customers, 70 per cent of clusters run AHV."

"So it's a good story walking into a mostly-ESXi customer and saying 'Consider battle-tested, enterprise-ready AHV.' It's enabling partners on that story, making AHV profitable through rebates, giving assets to project that story, and long-term commitment."

He adds the pain is short-term, but customer timelines to address it vary. Some want to move off VMware now, others will take a year or more as they depreciate hardware and VMware support expires.

Read on to find out what partners from CDW and ET Works make of the vendor's overtures...

Partners react as Nutanix doubles down on channel amid Broadcom-VMware disruption

Partners share trust in Nutanix for flexibility, profitable alternatives as Broadcom acquisition shakes up VMware business during .Next conference in Barcelona

The partners' view

Several partners explain how they have strategic partnerships with both vendors, but Broadcom's decision to take accounts direct, has led them to strengthen their relationship with Nutanix.

CDW's Brandon Jackson, solutions architect lead, and Chris Jostock, pre-sales specialised engineer, agree there has been a lot of change working with the VMware brand. Jackson explains how things changed for the reseller and customers since the Broadcom acquisition: "It wasn't just the acquisition or messaging during that period. For VMware sellers, the message was 'This is the best deal you'll get. Let's get locked in.' So we locked customers into deals, which were great for Broadcom.

"However, after the acquisition, partners saw changes in programmes, account approaches, packaging, and more. What we sold as future solutions became potentially not solutions for the future due to Broadcom's changes or new directions in some areas."

He says that trust, messaging consistency, and customer choice are lacking from Broadcom's side.

Partners learn about changes alongside customers, with little time to align messaging.

According to Jackson and Jostock, the changes have created a lot of uncertainty. Customers fear locking into long contracts given potential product roadmap shifts post-acquisitions, leaving them exposed in a few years.

He also adds that the key differentiators for Nutanix are providing choice and flexibility to meet customers, wherever they are in their IT environment - whether it's the hardware, consumption model, or hypervisor they use.

Nutanix has always had a solution story that resonates when customers want options that don't lock them in, to avoid getting stuck with an unfavourable vendor.

In contrast, Jackson explains that Broadcom is limiting customer choice by requiring customers to go all-in on their platform to qualify for discounts.

But for long-standing customers, making the dramatic jump from their current environment to what Broadcom mandates is significantly more expensive. Limiting options makes it harder for some customers to feel like they are getting a good deal.

While Broadcom is taking a one-size-fits-all approach, Nutanix provides the flexibility to meet customers where they are with the solutions that fit their unique needs without locking them in.

From Nutanix's platform-agnostic perspective, they can meet customers where their business is. "In every conversation, we meet the customer where they are now," Jostock continues.

"We don't say anything bad about VMware products and solutions because we have many happy customers in that space. It's about how we can help them with where they are right now - consuming some VMware on Nutanix, great; helping with cloud deployments to alleviate pressure, great. Meeting customers where they are is important for generating solutions."

Andrew Boyce, MD of 10-year Nutanix partner ET Works, also discusses how the acquisition was "a huge disruption regularly discussed with customers, mainly around pricing changes and re-evaluating if they really need to pay for a separate hypervisor like VMware going forward."

Many customers used VMware as the default choice at the time, but now explore whether bare-metal Nutanix or shifting to Nutanix's hypervisor makes more sense. ET Works' strategy remains giving customers an unbiased view of sticking with VMware on Nutanix, shifting to Nutanix's hypervisor, or a hybrid approach.

A new partnership for the future

During the event, Nutanix also announced a new collaboration with Dell Technologies to further strengthen its position as an alternative to the VMware by Broadcom platform.

The partnership aims to accelerate customers' digital transformation journeys through infrastructure modernisation and modern application development.

This collaboration will enable joint customers to leverage Dell and Nutanix hybrid multicloud solutions, improving IT operations, resiliency, and flexibility.

According to the vendors, customers will be able to streamline private and hybrid multicloud deployments by combining Dell's server and storage offerings with the Nutanix software.

As part of this collaboration, Dell will offer an integrated turnkey hyperconverged appliance that combines the Nutanix Cloud Platform and Dell servers.

This solution will be available with a broad range of PowerEdge server models and configurations to meet the requirements of various applications.

And in addition to delivering two new joint solutions, the companies will collaborate on engineering, go-to-market, support, and services.