After joining an exclusive group of VMware Cloud Service Provider program partners, RapidScale is offering an on-ramp to smaller IT services providers that lost their contracts after Broadcom acquired the virtualization software company two years ago.
RapidScale on Wednesday rolled out an Accelerated VMware Adoption Program for former partners still interested in maintaining their practice. The program is geared toward VMware Cloud Foundation platform providers and their customers. As of the Nov. 1 launch of the new VCSP program, uninvited partners may no longer sell VMware, although they can serve existing customers for another year.
RapidScale is happy to accommodate, the company’s President Duane Barnes told Channel Dive.
“We can immediately swap out the license keys from wherever they are today to our license keys the moment they sign with us, so there's not a delay or potential interruption in service,” Barnes said.
RapidScale can acquire hardware that smaller partners are no longer authorized to resell. The company is encouraging MSPs to sign up as commission-based agents selling RapidScale-billed services to customers.
It represents a major shift for MSPs but one that might be vital to their survival.
“We've put ourselves out there, as many of our competitors have, to offer a landing spot for the MSPs that were sort of displaced and/or the customers directly that were displaced,” Barnes said.
The clock is ticking as untethered partners seek a place for their VCF business. They can roll up under a larger partner, convince their customer to switch to a different OEM or find another alternative.
“Whether you go with RapidScale or not, you have about 10 months to find a provider that's still in the program, or self-service yourself somehow,” said Barnes.
Mass consolidation
Broadcom has made a number of changes to the VMware channel since it acquired the provider for $61 billion in 2022.
Existing partners had two initial choices: join the Broadcom Advantage Partner Program for VMware Resellers, or apply for VCSP, which lets partners rent licensing.
The VCSP option was an easy decision for RapidScale, which packages VMware licenses into consumption-based bundles. The company was also one of the few partners large enough to qualify for the program, which was trimmed from “thousands” to approximately 450 in 2024.
A second cut brought the total below 20. RapidScale, TierPoint and Flexential are among the survivors.
Broadcom wants to retain VMware partners that "consistently engage” with end customers, and cut out those that simply serve as intermediary sellers. Barnes understands the rationale, but he’s concerned that smaller partners aren’t getting the message.
“Some don't even know they got cut, to be honest with you. I've run into some at different shows and conferences, and they're like, 'What are you talking about?'” Barnes said.
Other MSPs are hoping Broadcom will reverse course and invite them back into the program. That’s not happening, Barnes said. He and executives from other exclusive VCSP partners heard that from Broadcom CEO Hock Tan when they met with him in Las Vegas at VMware’s annual Explore conference in August.
VMware rival Nutanix has positioned itself as an alternative for disgruntled CSPs and MSPs, and some MSPs have taken that route. But Barnes sees consolidation as an industrywide trend.
“Nutanix could do the exact same thing in a year or two. You're sort of moving the problem from one vendor to another. It all comes down to scale. Nobody wants to deal with a bunch of small MSPs, if you're Broadcom or Nutanix or Microsoft, or anybody,” he said.
Shift to agency
Broadcom’s channel changes have disqualified smaller partners from transacting as well as supporting VMware licensing.
Displaced MSPs must rethink how they monetize VMware services. They can add professional services, provide application development or part with services revenue entirely. Selling RapidScale’s services is another option.
VCSP companies generally operate through their own indirect channels, using an agency model where the selling partner receives a monthly commission, and the CSP supports and bills the end customer. Technology advisors have been selling RapidScale for years, working under contracts RapidScale has established with technology service distributors.
VMware’s crackdown on direct agreements gives TSDs an additional reason to recruit MSPs into their channel.
“Where most of the MSPs that do business with the TSDs today, it's just telecom business. Contact center-as-a-service, unified communications-as-a-service. There's no cloud, no services. This is just adding on,” Barnes said. “There should be a huge educational opportunity in the channel for existing MSPs participating on the telecom side.”
It’s a significant change for an MSP’s delivery model.
Many MSPs historically have refused to sell in an agency model because they want their own name on the customer invoice. Setting a customer up with another service provider seemed counterintuitive, but Broadcom’s changes are forcing the shift.
RapidScale has put a team in place to teach MSPs how to sell its services through TSDs.
“We have to be able to do that, and so we've rolled out a sales playbook for MSPs to our entire sales team,” Barnes said.
