Outlook for VMware under Broadcom
At the time of writing, there has been no official statement from Broadcom, so this is all speculation. But one thing is certain: with VMware, Broadcom has added a real cash cow to its portfolio. VMware is firmly entrenched in customers' data centres, offering virtualisation of compute, storage and networking, as well as management components - a must for larger companies.
With the rise of AWS and Azure, VMware has reinvented itself with its multi-cloud management. At this year's VMware Explore, this was complemented by Generative AI, particularly the focus on Private Generative ID in the local datacentre. But VMware has also made inroads outside the datacentre. Many hypervisor vendors are integrating VMware into their datacenters, whether through VMware Cloud on AWS, Azure VMware Solution, etc.
And anyone talking about IT cannot avoid the topic of containers/cloud-native applications. The path via Tanzu/Kubernetes is a logical progression for many VMware customers. Then there is the FinOps Play powered by VMware CloudHealth, various VMware security products and a comprehensive end-user computing portfolio with Horizon, WorkspaceONE and the like.
Challenges and opportunities
VMware has a much broader portfolio and customer base than Symantec and CA. Most importantly, VMware has built long-term relationships with many customers and partners. Broadcom may favour its top 2,000 customers, but partnerships need to be nurtured by partners. In the datacentre, VMware is top dog, but there are alternatives. Customers' cloud plans could get a boost from this news. VMware is certainly hoping that customers will start their multi-cloud journey with VMware Cloud on AWS, Azure VMware Solutions and so on, and then move to the hypervisors' native services as required.
The $69 billion purchase price is not a sum that can be easily written off. We therefore expect Broadcom to show some tact. The next steps will certainly be considered and strategically approached.
Portfolio structure and focus
In recent years, VMware has built a broad portfolio through acquisitions. However, this model, in which specialist distributors compete for the favour of VMware's core account managers, has led to a certain lack of clarity. A reorganisation and streamlining of the portfolio would be good news for partners and customers. For example, Symantec and Carbon Black have overlapping technologies, so a clear focus on core products would be desirable. Broadcom has already announced that it will invest billions more in development.
Licensing and customer confusion
VMware's product list is now so long that it could be used as a sleeping pill. The variety of bundles, support metrics and historically grown customer relationships leads to some confusion. Broadcom has already expressed an interest in focusing on subscriptions rather than purchases. Customers should therefore be aware of this issue. At the moment, both options exist on an equal footing, but it is expected that Broadcom will soon set an end date for the purchase of licences.
Technology development
In his two keynotes at the VMware Explore events in Las Vegas in August and Barcelona in November, Hoc Tan emphasised several times that major investments are being made in product development (R&D). In the virtualisation space, from which VMware emerged, there will be further developments in terms of performance, simplifying complexity and exploiting synergies.
One of the biggest areas of development will be artificial intelligence. VMware has already partnered with NVIDIA in the Private AI Foundation, which has now been joined by Intel. So you have strong partners in the chip industry. The approach of running AI workloads in your own datacentre, rather than sourcing them from hypervisors, is particularly interesting for organisations that work with sensitive data - or for those that can deploy compute power in their own datacentre. AI is a big topic that organisations need to understand and learn about in order to get value from it. It is not a matter of a few clicks, and this is where the Private AI Foundation wants to help.
Tanzu - VMware's Kubernetes solution - will also see a surge in development over the next few years. Customer demand for containerisation of applications is growing rapidly and, of course, VMware already has a large backpack of solutions that have worked well for virtual machines and can now be adapted for containers.
It will be interesting to see how VMware continues to drive the multi-cloud story. What is certain is that the solutions on AWS, Azure and the like have already found their raison d'être and are an ideal complement to traditional virtualisation in your own datacentre. In fact, the VMware Cloud (VMC) is the easiest way to move workloads from one cloud to another, regardless of the type of cloud: Public Cloud, Private Cloud, Sovereign Cloud or simply a hosted cloud in a colocation.
Standardise the offering
Broadcom CEO Hock Tan has already earned a reputation for simplifying and focusing the portfolio. We have seen this at CA and Symantec. The new VMware business units (only four now!!!) already give a flavour of where the focus will be: VMware Cloud Foundation, Tanzu/Cloud Native, Software-Defined Edge and Application Networking and Security. Previous portfolio components such as EndUser Computing and Carbon Black no longer appear here and are likely to be outsourced.
We expect a much smaller number of products or product bundles. In the datacentre, for example, we expect to see a vSphere variant; for enterprise customers, VMware Cloud Foundation is likely to be the standard or highest level. Between these two extremes, there will be fewer products offered exclusively as subscription variants. The situation will be similar in the other three business units.
