A questionable partnership
During numerous presentations given by IT industry executives, amongst the most over-used phrase is “partnership” and specifically, the supposedly “strategic partnership” they have with key customers.
There are few opportunities for IT leaders to be involved early on in product development. It is certainly possible to work with startups and looking at this week’s in-depth article on neocloud providers, there appears to be a golden opportunity for some IT leaders to lead the conversation when it comes to delivering services that meet the demands of enterprise AI acceleration. But it’s much harder working with established enterprise software providers.
VMware was certainly a big risk for IT buyers when it first appeared in 1998, with the company positioning x86 server virtualisation as an alternative to physical servers. There would have been some IT leaders who took a punt at the new technology on offer and helped VMware seed the market for server virtualisation, from where it has grown into the dominant player. Arguably, those early adopters were strategic and the benefits of the partnership was reciprocal, with customers seeing lower hardware costs on top of what is likely at the time to have been an attractive commercial proposition from VMware.
Decline in trust
Tesco’s lawsuit against VMware and its parent company Broadcom, along with reseller, Computacenter, shows just how sour a relationship can turn, after just five years. Imagine being a customer negotiating a long-term contract with a key IT supplier for a platform on which the majority of your IT infrastructure relies upon. It is also fairly obvious that you’d want the option to renew at the end of the contract period, with renewal fees laid out in black and white in the original contract.
Broadcom says it is not bound by such a contract as its terms and conditions stipulate that it does not have to provide products and services that are no longer available. And as such, it is refusing to honour Tesco’s right to renew VMware products and support services.
Dell, which was a distributor of VMware products, is now tied up in the legal case. It supplied VMware products and support services to Computacenter and says its contract with VMware has an implied “covenant of good faith and fair dealing”. Its latest legal filing essentially states that VMware UK cannot say products are not available simply on the basis of a change in pricing structure, which appears to be exacly what Broadcom/VMware is trying to do.
No doubt, more arguments from all parties will arise in the coming months and each will give IT leaders an insight into the precarious position they may find themselves in with key IT providers.