Tuesday, August 9, 2022

Broadcom blog on VMware development plans panned by analyst

It was a move designed to quell any fears by end users and partners alike about the recent acquisition of VMware by Broadcom, but according to John Annand, a director of the infrastructure team at Info-Tech Research, a pending EU investigation seems to have “thrown a chill over the otherwise rosy communiques coming from Broadcom’s corporate towers.”

The “rosy communiques” included a blog issued on June 22 by Tom Krause, president of the Broadcom Software Group, that was entitled Broadcom and VMware: Planning for the next generation of infrastructure software.

In it, he wrote that in “late May we announced our agreement to acquire VMware. Since that time, we’ve been meeting with many VMware customers and partners to tell them more about how this combination will deliver compelling benefits to them. We’ve also kicked off planning efforts for the post-closing company.

“VMware is an iconic software company with a vibrant ecosystem, including hyperscalers, system integrators and channel partners. We don’t want to change any of that, and in fact, we want to embrace those relationships. We have tremendous respect for what VMware has built, supported by a skilled team of engineering talent. It is for all these reasons and more that we’ve committed to rebrand Broadcom Software Group as VMware.”

Krause went on to say that the company is “approaching the post-closing planning phase of the transaction process with an open mind, while drawing from the lessons learned from our previous acquisitions of CA and Symantec Enterprise.

“This means that we’ll be working in close coordination with VMware to learn more about their go-to-market, product portfolio, approach to innovation, engineering talent, partner network and, of course, strong customer footprint.”

He ended the blog by saying the company “will continue to welcome input from VMware leadership, employees, customers and partners as we plan for this next chapter, and we look forward to keeping you updated.”

The following day, it was reported that the EU planned to investigate the US$69.1 billion acquisition, with the Financial Times reporting that the EU is set for a lengthy antitrust investigation in Brussels over regulatory concerns that the deal will harm competition across the global technology industry.

“That news broke on the 23rd, a day after the blog post to which there have been no updates,” said Annand. “Now I’m hearing dates around mid-2023 for the acquisition to be finalized.”

He also questioned Krause’s closing statement saying that “as of yet, I haven’t heard of any customers or partners who are playing material parts in these conversations.”

Annand added that last November, “Krause himself said that Broadcom’s approach is to focus on the 600 accounts that generated 70 per cent of their ARR (annual recurring revenue).

“How a company is going to go from focusing on 600 customers to focusing on the roughly 4,400 $1 billion+ customers VMware has – to say nothing of the tens of thousands of smaller customers – is beyond me.”

Annand said he has had “a dozen or so conversations” with IT executives who hold an Info-Tech membership and access various services “about how they are preparing for likely license price increases.

“A couple have spoken about ditching VMware and going to something more open like OpenStack. One member decided to just go all in with Microsoft. They had modest needs and decided that Hyper-V would do as a holding technology until they eventually went all in with Azure.

“Also, one member engaged with HPE Greenlake to outsource it all.”

The blog also states, he said, that “existing and overlapping software will be offered alongside VMware offerings. This to me, belies the claim of a commitment to engineering and innovation initiatives.”

In an article posted earlier this month, Annand said the acquisition is an “easy way to return value to shareholders and do the right business thing, but it’s not a cool, interesting or good technology thing. This deal makes sense from a business standpoint, but from a technology standpoint, I am kind of appalled.”

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Jim Love, Chief Content Officer, IT World Canada

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Paul Barker
Paul Barker
Paul Barker is the founder of PBC Communications, an independent writing firm that specializes in freelance journalism. His work has appeared in a number of technology magazines and online with the subject matter ranging from cybersecurity issues and the evolving world of edge computing to information management and artificial intelligence advances.

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