Key Insights for Navigating the Broadcom Acquisition of VMware

In the dynamic world of tech, mergers and acquisitions often reshape the technology landscape. One such game-changing event is the Broadcom acquisition of VMware.

This move by Broadcom, a global tech titan, to acquire VMware, a leader in cloud infrastructure and business mobility, has stirred the industry.

It's a strategic play that could redefine both companies and their offerings.

In this article, we delve into the details of this acquisition, its implications for organizations, and its potential impact on the software industry.

In late 2023, Broadcom finalized its acquisition of VMware, a virtualization and cloud computing software provider. Included in the acquisition has been a dramatic simplification of VMware’s program model and pricing structure. This impacts hundreds of thousands of organizations as a result. To put it into perspective, 84% of organizations’ workloads that have been virtualized are running with VMware.

Broadcom's decision to acquire VMware is a strategic move to diversify its business. 

The acquisition allows Broadcom to expand its software portfolio, leveraging VMware's expertise in cloud infrastructure and business mobility technology.

The deal is not just about adding new products to Broadcom's lineup. It's also about gaining a stronger foothold in the enterprise software market. This acquisition could significantly enhance Broadcom's position in this competitive space.

However, the acquisition also brings challenges. Integrating VMware into Broadcom's operations and maintaining its innovative culture will be critical tasks.

For Technology leaders, it’s important to have a baseline understanding of the program changes and potential options for an organization’s cloud strategy, both right now and in the future.

Impact on VMware's Product Roadmap and Customer Base

The acquisition could affect VMware's existing customer base and product roadmap. Customers may be concerned about potential changes in VMware's offerings.

Broadcom's acquisition could also lead to new product offerings or services. This could be a result of the integration of VMware's cloud infrastructure and business mobility technology into  Broadcom's software portfolio.

However, changes in VMware's pricing and licensing models post-acquisition could impact customer satisfaction. Maintaining trust and transparency with stakeholders throughout the acquisition process is crucial.

The acquisition could also impact VMware's partnerships and alliances within the technology ecosystem. This could reshape the competitive landscape in the technology sector.

According to SDxCentral, Broadcom and Google will also more closely align their products and go-to-market organizations to support product development, sales, deployment, and support.

What are the timelines of the new licensing models being discussed? 

The new licensing models are already being rolled out, effective 12/11/2023. They will impact customers when they are up for licensing renewal, which can take place anytime over the next 3-5 years (source: Avant Communications).

For customers waiting for their renewal to come up, now is still a great time to focus on validating your current state and exploring options for a future state. 

What is the price point for the bundle in the future? 

VMware's new price structure may lead to an average cost increase of 300% to 400% for customers (source: Avant Communications).

There is a chance that this could be higher or lower, but this is the average increase noted across the board.

Market Implications and Competitive Landscape

The acquisition could have significant implications for competition in the cloud computing and enterprise software markets. It could potentially reshape the competitive landscape in the technology sector.

The reaction from VMware's competitors will be crucial. They might respond to the acquisition by adjusting their strategies or accelerating their mergers and acquisitions.

The acquisition could also impact the broader IT infrastructure market, including hardware and software vendors. This could drive innovation and growth within Broadcom's software division

Customer Options moving forward

What are the options for affected customers? 

Customers have several options available, much of which depends on their current cloud strategy.

1. If they remain on-premises, they can renew with VMware, or switch to an alternate hypervisor like Nutanix.
2. If they move to the cloud, they can look at a VMware service provider, an alternate platform like Nutanix, or a public cloud like AWS, Azure, or Google.  

Which options can you look at with a Trusted Technology Advisor?  

If you are looking to move to the cloud, or a different cloud provider, we have all the bases covered and can offer vendor-agnostic recommendations and guidance on the following: 

• VMware Pinnacle and Premier service providers will see significant cost benefits when compared to licensing costs for end customers 
• Alternate private cloud platforms, like MSFT Hyper-V / Azure Stack or Nutanix 
• Assistance migrating to and managing public cloud environments like AWS, Azure, and Google

Should you move your workloads off VMware? 

It depends. This will be driven by cost, application dependencies, third-party integrations, hardware amortization, and more.

Technology Leaders experiencing a drastic increase in price due to the Broadcom program changes should engage with a Trusted Advisor to discuss options available to you.

Questions to ask related to VMware

• Are you using VMware today? If so it on-prem or hosted?
• Do you know how the acquisition will impact your licenses?
• Do you have a DR site?
• What is the size of your environment? #TBs of storage, #VMs
• Are you leveraging Vmware on AWS or Azure?

Future Outlook for Broadcom and VMware

The future of Broadcom and VMware post-acquisition is a topic of much speculation. The deal could reshape the competitive landscape in the technology sector.

Broadcom may face strategic challenges in maintaining VMware's innovation and culture. However, the acquisition could also drive growth within Broadcom's software division.

For VMware, changes in leadership and potential layoffs are possible. Yet, the acquisition might also lead to new product offerings or services.

The long-term success of the combined entity will depend on a clear strategic vision and careful planning.

Conclusion

The Broadcom acquisition of VMware is a significant event in the tech industry. It has the potential to impact organizations and reshape the competitive landscape.

The deal's success will hinge on strategic planning, stakeholder communication, and maintaining VMware's innovative culture. It's a complex process with many moving parts.

In the end, the acquisition could set a precedent for future tech mergers and acquisitions. It's a story worth watching as it unfolds.

If you are looking for expertise, you can contact me at [email protected] to speak with a Cloud Specialist OR you can utilize our Infrastructure as a Service (IaaS) Interactive Quick Assessment form .

This form is a quick questionnaire where you’ll define the scope of your requirements and you will receive a FREE analysis from one of our agnostic cloud engineers.

Leverage these updates to start the larger cloud conversation and help refine your cloud strategy during these changes.