Scale Computing: the dark horse in the race to find a VMware alternative?
The fallout from Broadcom’s $69 billion acquisition of VMware has been significant, especially for the infrastructure and virtualization software firm’s army of smaller VAR’s, MSP’s and other resellers. Thousands of VMware employees were laid off, while the firm’s largest customers were switched to a direct sales model. Even worse, Broadcom cancelled all VMware’s existing partner contracts, offering new contracts to a much smaller proportion of channel partners. Those resellers who have been supplying and managing smaller numbers of virtual machines (VMs) to mid-market and SMB firms for many years now find themselves in a difficult position: a trimmed-down VMware portfolio, price increases and minimum spend/core requirements (around 3000), as well as a much higher barrier of entry into the Broadcom Advantage Partner Program.
As their customer’s VMware licence renewals loom, many smaller channel partners are facing the prospect of either quoting costs that are significantly higher, or informing clients that they are unable to sell them licences any more (or both). As a result, many channel partners are looking to other virtualization suppliers as an alternative to VMware’s vSphere/Horizon and related products.
At an enterprise level, there are some obvious candidates, including Microsoft’s Azure as well as firms offering hyperconverged infrastructure (HCI) software such as Nutanix. The latter has seen an opportunity in VMware’s price changes and partner selection criteria. 2Q FY24 revenues increased 16% - $10 million higher than its most optimistic prediction - and the firm raised its guidance for the rest of the financial year, citing increased advertising spend and incentives for resellers looking to switch clients from VMware to Nutanix.
Scale Computing
At the mid-market and SMB level, price, ease-of-use, and product robustness are key considerations. Indianapolis-headquartered Scale Computing has been supplying full-stack infrastructure software solutions since 2008, originally as an alternative to VMware. With an international presence in Brazil, Singapore, UK, Germany, France and other EMEA countries, Scale’s clients sit firmly in the mid-market and SMB sectors, often in places that require infrastructure to be deployed at edge locations.
Since the acquisition of VMware, Scale Computing has been thrust somewhat unexpectedly into the limelight. It has gained strong word-of-mouth support from distributors, MSPs and VARs that we have spoken to. With solutions covering everything from virtualization technology, through security, hybrid cloud, HCI, disaster recovery, edge computing and more, the company says that it moves between 200,000 - 300,000 VMs per year. Growing steadily at a rate of 30%-35% annually, since VMware was acquired, interest in its solutions has increased significantly and the company is now sitting on inbound interest that is 500% of what it was in 2023, according to CEO and co-Founder Jeff Ready.
Feedback we received from various sources in the channel has also been very positive. Scale’s Scale Computing’s solutions operate in a resource-light environment, and while the technology is not as full-featured as e.g. Nutanix’ offerings, the products are much cheaper. The company’s core products - SC Platform, SC Hypercore, SC Fleet Manager and SC Hardware - are considered by those we spoke with to be easy to install and ‘solid’ when running. Scale Computing uses an Artificial Intelligence (AI) Ops model in its platform that helps monitor and fix problems in a customer’s IT infrastructure in real-time. Those features make Scale Computing’s products an appealing choice for smaller firms with fewer dedicated IT resources, who may operate decentralized infrastructure from a remote office or factory facility, and who need a robust and reliable platform.
In terms of partnerships, Scale Computing has well-established strategic technology alliances with the likes of Intel, Lenovo, Google Cloud, Acronis, Parallels and others. Similarly, it has developed partner programs for resellers, MSPs, and OEMs. It also offers a range of professional services for migration, and solution implementation. Going forward, Scale Computing plans to expand and develop its technology base while offering more flexible deployment options for customers. This includes e.g. running Scale Computing’s software/OS on a customer’s own equipment.
The Quick Tech Take
Scale Computing has been handed a significant opportunity to capitalize on the uncertainty surrounding the cost and availability of VMware’s offerings for virtualization and HCI. While Nutanix has been bullish about its predicted success in the enterprise sector, Scale Computing has quietly got on with the business of supplying its customers and partners in the mid-market and SMB sectors with reliable, low-cost, easy-to-manage offerings as well as its recent growth in the enterprise market. Compared with the larger enterprise infrastructure software suppliers however, Scale Computing is a relatively small firm. Its significantly increased pipeline and interest from potential new partners has created new challenges: how to scale its own infrastructure to meet demands. It might appear to be the wrong time to invest and expand, given the technology sector’s continuing layoffs and cautious approach to spending, but Scale Computing is in a different position: it can respond to the immediate opportunity to support the growth of its business as opposed to the requirement to focus on expenses and profitability.
