Dell terminates framework distribution agreement with VMware

20, Feb - BLOG

Dell has finally turned the page on VMware. The former owner of the virtualization specialist, which sold its $67 billion nugget to Broadcom, has put an end to its flagship distribution agreement with the latter. From a document filed with the US Securities and Exchange Commission (SEC), we learn that on January 25, Dell Technologies gave Broadcom written notice to terminate the commercial framework agreement signed on November 1, 2021 between Dell and VMware (following the separation of the two companies). "The agreement provides that in the event of a change of control by either party (as defined in the agreement), the other party may terminate the agreement by giving 60 days written notice," the notice said. Since the change of control of VMware occurred at the time of the acquisition, which was ratified on Nov. 22, 2023, Dell did not take the time to terminate the agreement.

The agreement between Dell and VMware covered various business activities between the two parties, including how the company acts as a distributor of VMware products and services, as well as how the parties would collaborate on certain solutions and go-to-market activities. While it looks simple on paper, that's not the case in real life. "The decision has not resonated with hardware manufacturers, who are losing a revenue stream, nor with customers, who prefer to buy licenses bundled with hardware because it is often more efficient than buying them separately," The Register writes.

Dell is downplaying the impact

While the value to customers of integrating VMware products and services with those of Dell Technologies is not in question, the termination of the agreement is primarily a reflection of Broadcom's decision to drop the virtualization vendor's perpetual licenses and no longer allow them to be resold to vendors such as Dell, but to direct its partners to subscribe to a range of products.

A Dell spokesperson, said that "Broadcom is an important and valued partner for Dell Technologies. We will continue to grow our relationship with Broadcom to benefit our business, our customers and our partners." It remains to be seen whether this declaration of intent will be enough to assuage the anger of partners facing a complete overhaul of the program that has so far bound them to VMware.