AWS Layoffs Ensue, Anger Brews Over Broadcom-VMware ‘Disorder,’ ‘Brutality’
More layoffs are in the works at AWS, the world’s largest cloud computing provider. Meantime, four cloud computing associations are going after Broadcom for its VMware policies, pushing for European Union intervention. Finally, there’s some colocation- and cloud-related M&A to know.
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Hundreds of employees within certain parts of Amazon Web Services are losing their jobs.
On April 3, Matt Garman, senior vice president at AWS, informed staff via email that cuts are coming to the sales, marketing and global services organization, as well as the Physical Stores Technology team.
“We do not take these decisions lightly, and I know change can be difficult,” Garman said, according to the internal memo obtained by GeekWire, which broke the layoffs news. “We operate in an incredibly fast-moving industry, and it is important that we stay agile as an organization.”
The cuts, Garman said, “are preparing the organization for the future, aligning with our strategy and priorities, and reducing duplication and inefficiency. I recognize the effect this has on every individual impacted.”
An AWS spokesperson expressed similar sentiments in a statement sent to Channel Futures.
"We've identified a few targeted areas of the organization we need to streamline in order to continue focusing our efforts on the key strategic areas that we believe will deliver maximum impact. We didn’t make these decisions lightly, and we’re committed to supporting the employees throughout their transition to new roles in and outside of Amazon. These decisions are difficult but necessary as we continue to invest, hire, and optimize resources to deliver innovation for our customers.”
Within AWS’ sales, marketing and global services business, most of the losses affect training, certification and sales operations. AWS tells Channel Futures it is moving to self-serve virtual training run by external parties.
The other group impacted oversees the technology that runs Amazon’s brick-and-mortar retail stores. GeekWire reported that Amazon is ditching its “Just Walk Out” strategy, which is leading to the layoffs.
“This decision is the result of a broader strategic shift in the use of some applications in Amazon’s own, as well as in third-party stores,” an AWS spokesperson said.
AWS has not said exactly how many hundreds of staff it is laying off. The company, however, is touting its thousands of open jobs in other areas.
As GeekWire noted, this latest round of layoffs looks to dent the Seattle-area workforce the most because that’s where a lot of AWS roles are concentrated. The cuts also come as part of the wave started in 2022 and continuing throughout 2023, culminating in more than 27,000 job losses.
Four cloud computing-centric associations in Europe have called on the European Commission to “strongly condemn the conduct of Broadcom within the European Union with regard to VMware products.”
The letter comes as the groups — Beltug, Cigref, CIO Platform Nederlands and VOICE e.V. — say their members are now experiencing negative repercussions from Broadcom’s $61 billion acquisition of VMware. A previous missive “warned of the consequences of the [then] forthcoming merger,” wrote representatives for ___ on March 28.
“These concerns have now been realized. Their impact on the members of the four associations is substantial,” they said, adding, “Since its takeover of VMware, Broadcom has confronted its customers with sudden changes in policy and practices resulting in:
a) Steeply increased prices.
b) Non-fulfillment of previous contractual agreements.
c) Disallowing reselling of licenses.
d) Refusing to maintain security conditions for perpetual licenses.
e) (Re)bundling of licenses, leading to higher costs.
f) A shake up of the ecosystem of VMware resellers and partners.
g) A loss of knowledge.”
Broadcom did not immediately respond to Channel Futures’ request for a statement on the letter.
But we have more from that note, and additional insight, next.
Beltug, Cigref, CIO Platform Nederlands and VOICE e.V. want the European Commission to “take the necessary steps to stop this disorder in the virtualization market.”
If that doesn’t happen, they fear members will continue to lose to Broadcom’s higher prices (an assertion with which Broadcom takes issue — more in a bit) and other “unethical behavior.”
“A delay in the drastic changes unilaterally imposed by Broadcom is absolutely needed,” representatives for the associations wrote. “Furthermore, strong action is required to ensure that other providers will not follow Broadcom’s unacceptable example. Broadcom’s approach cannot be allowed to become a precedent.”
The complaints follow a rash of big decisions from Broadcom around VMware, including the removal of perpetual licensing and “simplification” of the portfolio into mandatory bundles that include software many organizations say they don’t need; culling the reseller and cloud provider partner rolls and putting new frameworks around those channel programs; and, contrary to Broadcom assertions and prior promises, raising prices for end users. ArsTechnica reports that attendees of a VMware User Group Town Hall in March said their costs have risen 600% after Broadcom’s changes.
But Broadcom is pushing back on those allegations. The president of the company’s Asia Pacific division told The Register that customers using at least two components of VMware Cloud Foundation will pay less because the new price includes support, which was not previously the case. Sylvain Cazard and other Broadcom colleagues also are reminding end users that all other software businesses long ago made the transition to subscription licensing — and, to be clear, VMware was working toward full implementation of that model when it agreed to the Broadcom purchase.
Still, Beltug, Cigref, CIO Platform Nederlands and VOICE e.V. are not happy.
Representatives for Beltug, Cigref, CIO Platform Nederlands and VOICE e.V. wrapped up their letter to the European Commission with a request that authorities provide “their perspective on the situation” and clarify any open courses of action.
“In the context of the VMware takeover and the change in business strategy, Broadcom's contempt and brutality towards its customers are unprecedented in the recent history of the digital economy in Europe,” they wrote. “In view of its scale and Broadcom's impact, this case cannot be left exclusively to competition law technicians. This is an issue whose economic and political dimensions must be fully understood.”
Apparently, per MLex, which covers competition matters in Europe, EU antitrust officials already have started looking into some of the matters brought up in the associations’ letter.
Meanwhile, VMware by Broadcom says it will debut some changes to VMware Cloud Foundation, starting in July. The first reportedly will revolve around single sign-on and other authentication measures; another effort that will unfold later should see more integration of VCF with other VMware products including vSphere and Aria.
While industry reaction isn’t yet widespread, one player has commentary.
Mark Boost, CEO of cloud computing provider Civo, agrees things at VMware by Broadcom will not improve without government intervention.
“Broadcom's acquisition of VMware has been sold as a signpost for the future of cloud computing, with innovation, agility and strategic foresight leading the way,” Boost said. “For some companies, this may be the case. But for the majority, it signals vast increases in licensing costs and uncertainty when facing future updates and developments, despite any updates to its Cloud Foundation bundle.”
People are frustrated, he added, and there’s more concern that if Broadcom runs rampant with VMware changes, the public cloud providers will, too, have more power to do as they please. But there’s hope, he said.
“The net is closing in on anti-competitive practices. What the ongoing VMWare story shows is that customers know this too and expect services from their cloud providers that prioritize their needs. There is a better way to make cloud more equitable for all.”
Finally, we have a little M&A news to share.
This week, colocation and cloud vendor Colohouse said it has successfully acquired Hivelocity, which specializes in bare metal hosting, network automation and virtual private cloud.
The move will “enhance our capabilities and reinforce our commitment to delivering top-tier IT infrastructure services," said Jeremy Pease, CEO at Colohouse. "Together, Colohouse and Hivelocity create a unique, next-generation provider that places the customer’s needs and success at the forefront, providing them with the connectivity and computing power required to deploy and manage modern applications and data.”
This marks Colohouse’s seventh acquisition since 2021. The company is privately held, owned by Valterra Partners.
“The combination of Colohouse and Hivelocity is the result of a multiyear strategy to acquire and develop a differentiated data center and hybrid cloud provider that provides a platform of significant scale within a high-growth market,” said Kevin Reed, managing director at Valterra Partners. “The combined business provides a talented executive team, completes strategic offerings and expands capacities across a substantial geographic footprint that will support substantial growth.”
Finally, we have a little M&A news to share.
This week, colocation and cloud vendor Colohouse said it has successfully acquired Hivelocity, which specializes in bare metal hosting, network automation and virtual private cloud.
The move will “enhance our capabilities and reinforce our commitment to delivering top-tier IT infrastructure services," said Jeremy Pease, CEO at Colohouse. "Together, Colohouse and Hivelocity create a unique, next-generation provider that places the customer’s needs and success at the forefront, providing them with the connectivity and computing power required to deploy and manage modern applications and data.”
This marks Colohouse’s seventh acquisition since 2021. The company is privately held, owned by Valterra Partners.
“The combination of Colohouse and Hivelocity is the result of a multiyear strategy to acquire and develop a differentiated data center and hybrid cloud provider that provides a platform of significant scale within a high-growth market,” said Kevin Reed, managing director at Valterra Partners. “The combined business provides a talented executive team, completes strategic offerings and expands capacities across a substantial geographic footprint that will support substantial growth.”
Not even a week into the new quarter and, well, stuff is hitting the fan in the cloud computing world, starting with AWS layoffs.
Early Wednesday, news broke that Amazon Web Services, the world’s largest cloud computing provider, is shedding a significant number of jobs. A spokesperson laid out the reasons for the AWS layoffs in a statement sent to Channel Futures, which you’ll read. The cuts come not only after Amazon as a whole already has axed more than 27,000 roles since 2022, but as end users continue to pull back somewhat on their cloud computing spending (in spite of nearly insatiable demand for generative AI workloads).
After the look at the newest round of AWS layoffs, find out the latest in the ongoing controversy around Broadcom-VMware. As Broadcom imposes more changes to VMware’s portfolio, and as end users experience the repercussions of new initiatives, four cloud computing associations in Europe are asking for help.
Calling Broadcom’s measures an example of “brutality and contempt” toward customers, the groups want European antitrust officials to intervene on behalf of the region’s cloud computing users. Find out what they have to say, what Broadcom is saying and what another cloud provider thinks.
Finally, we end with a look at some colocation- and cloud-related M&A activity. But first, we kick off this short cloud computing news roundup in the slideshow above with those AWS layoffs.
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