SMBs: Enjoy your on-prem pricing while it lasts

What’s happening?

Small to medium-sized businesses (SMBs) are carefully assessing recent changes that could have a major impact on the cloud computing and virtualization technology sector. One notable company acquisition in 2023 could cause SMBs to contend with an entirely new vendor landscape, complete with licensing model changes, product streamlining, and shifts in partnership strategy. 

While customers who use bundled solutions may realize substantial savings, those who rely on a traditional virtualization platform and hypervisor solution—in many cases, SMBs—could see more than a 10-fold increase in price.    

While companies previously enjoyed perpetual licensing that aided forecasting and rewarded ownership tenure, these days pricing for virtualization solutions is more subscription-based, per core. Free versions of solutions may cease to exist. And bundled offerings with minimum purchasing requirements may become the norm.

For technology giants, implementing these sweeping moves provides a simplified user experience and increased value—but not all organizations may be poised to benefit. 

Broader implications 

Those most affected by the changes have taken note in heated forums, debating whether to stay or leave for competitors offering enticing safety nets. But this is a big deal, regardless of your stance. With a single company holding a substantial portion of market share in virtualization technologies, the tone for the virtualization and cloud computing industry can be set quickly in just a few moves. Here’s what to watch out for:  

• More businesses will be forced to operate with increased risk. Quality services and technologies for virtualization and cloud computing may become less accessible to those without large purse strings. Without well-architected solutions in place, more organizations will fall under the cybersecurity poverty line, and threat exposure may increase.
• Price hikes may trickle downstream. These changes go beyond the company level, as customers who decide to pay the higher prices (or simply have no choice due to contract lock-in) must recoup the costs somehow. It’s possible that those costs will reappear as higher prices for their own offerings.  
• Overpaying may become the norm. The move toward less flexibility and more consolidated product offerings means that SMBs will likely be forced to pay for more than what they need, perhaps for needs that extend beyond the cloud.   
• Companies may be more willing to explore open-source solutions. After being burned by enough technology providers, and amidst the unsteady flurry of activity in mergers and acquisitions, it’s natural for companies to grow disillusioned with proprietary software and look elsewhere. While in this case, the conversation revolves around moving to Proxmox, a general shift towards free and open-source software (FoSS) may be a new trend.  

Adapting to change is key 

There is a growing feeling that providers do not have their clients’ best interests in mind, especially if those clients are SMBs, which lack the negotiating power and attention that enterprises often enjoy. In an environment where SMBs are increasingly treated as second-class customers, IT leaders of these organizations must take their fate into their own hands, as they might already be used to doing. 

Does moving to the cloud make sense for your organization? Don’t expect the industry to provide what you need by default. Put in the time to rightsizing your environment and proactively explore all options. Keep your eyes peeled on the market, what’s going on in the industry, and who is here to stay. The tech climate is changing—rapidly. Will your organization rise to the challenge?   

Considering cloud migration? SEI Sphere can help. 

All businesses should have access to the benefits of virtualization without compromising budgets, well-built architecture, or security. If you don’t have a clear picture of what the cloud would cost or is currently costing your organization, SEI Sphere^® can give you some answers with a right-sized cloud estimate based on an assessment of your performance data. We are well equipped to ingest your logs and analyze the data in days, not months. Our cloud solution guides you through the cloud environment from design to optimization to support.