Virtualization

VMware's in court again. Customer relationships rarely go this wrong

Have you ever seen the 'Are we the baddies' sketch, Broadcom?

OPINION If you're a tech company marketing manager writing white papers, you'll love a juicy pull quote. That's where a client says something so lovely about you, you can pull it out of the main text and reprint it in a big font in the middle of the page.

"VMware is essential for the operations of Tesco's business and its ability to supply groceries" is a great candidate from 2019.

Or it would be, if it wasn't followed by accusations of massive contractual misbehavior threatening the client, and requests for many millions of dollars in damages – and rising. What looks great as marketing blurb isn't so hot on a court filing.

What a filing it is, too. Tesco is the UK's biggest supermarket chain by revenue, with around 40,000 server workloads keeping the ship afloat. Before Broadcom swallowed VMware, Tesco bought perpetual licenses and support that could run to 2030. Broadcom, Tesco claims, is refusing to honor the support contracts until Tesco switches to new licenses. This, it is further claimed, puts the retail giant at risk of being unable to operate.

Thus, Tesco is looking for damages of £100 million and rising from Broadcom, VMware, and the somewhat unfortunate reseller Computacenter. It's hard to feel sorry for a reseller. That's how bad this is.

Assuming Tesco's claims are true, this is extortion. Running an enterprise on unsupported software, while not exactly unknown, is corporate malpractice. Running unsupported software on which your entire business depends is nigh on suicidal. But who's holding the gun here?

Pulling patches, support, and upgrades that you are contractually obliged to provide, while demanding more money for a worse deal, doesn't look like being a good partner. It looks like running a protection racket. It looks like extortion. Nice multibillion business you've got there, man. Shame if anything, y'know, happened to it.

Can we assume Tesco is entirely accurate in its claims? Not until the case is heard, but the circumstantial evidence is there. The affair is in danger of turning into a class action lawsuit. The UK company is joining Siemens and AT&T.

Perhaps Broadcom has never lost similar cases? Um, no. Perhaps Broadcom is putting up a spirited public defense, rather than blaming its clients for doing it wrong? Um, no. Surely, it couldn't be so crass as to say its new licensing policy is not only blameless but very popular because it's bringing in so much more money, man, rather than 1,000-percent-plus price hikes? It is. All these stories are from just three months this year.

As The Register's European editor wearily remarked: "Search the site for Simon and VMware. We've got pages of this stuff. Go. Look."

It's not hard to guess Broadcom's motivation. Perpetual licenses can be a very bad idea for a vendor unless carefully constructed to be not really perpetual at all – the thing being licensed can cease to be under agreed conditions, for example. You can unilaterally revoke them if your client base is too poor to sue, or you have an off-ramp that doesn't hurt too much. Neither seems to be the case here, in which case you negotiate with the licensees. If you try to strong-arm your clients by removing support, especially contracted support, you are not only acting unethically, to say the least, you are putting both you and your client at tremendous risk. Plus, you look like a gangster betting that a company will cave from fear of the consequences rather than stick it out.

Broadcom's policy seems to accept that. And the bigger the client, the better. Bigger equals more pressure, right? To which the right answer is do you feel lucky, punk? Do you think you'll win in court?

Does Broadcom think there's no real chance of a big client getting crippled because it didn't honor a contract and bad things happened? Better pray that doesn't happen.

Even if you win, somehow voiding the contracts that were signed in good faith and that so many of your best clients are confident taking to court, then what? Migrations will flock faster than swallows, African or European. If you're reading this, Broadcom, click on that search link above.

Ask yourself: would you want to trust your company to someone like that? How does someone like that look to the industry? If you didn't answer arrogant, greedy, unethical, untrustworthy, and full of it, why not?

While your respectable, blue-chip, long-established clients are taking you to court because they can find no other responsible way to continue to use your product, consider how many enemies you want to make before it becomes too many. Sure, court cases can be part of hardball negotiation, yet that's not what this looks like.

At some point, this has to stop. Virtualization, even as a deeply embedded framework, is a layer in the stack that can be replaced. The equation of migration is always complicated. It balances risk versus reward, ROI, inertia, future roadmaps, and more. Overarching it all is trust.

When you look in the mirror, Broadcom, what do you see? ®