Current reaction to the Broadcom VMware acquisition

Much analysis has been done on VMware Inc.’s customer response. for the company to be acquired by Broadcom Inc. for $61 billion. The ongoing reaction to the Broadcom VMware acquisition was one of the topics discussed by CUBE Research industry analysts John Furrier and Dave Vellante on the latest episode of the CUBE Podcast.

“At HPE (Discover), there was this narrative: At HPE, the messaging was like, ‘We don’t want to poke the Broadcom bear, but we have a lot of upset customers,'” Vellante (pictured right) said.

It’s often said this way, but the acquisition of Broadcom VMware brings a different perspective.

“Broadcom is doing exactly what it promised when it announced it was buying them in 2022. (Broadcom CEO) Hock Tan provided the rationale,” Vellante said. “They basically said, ‘We’re going to use the same playbook.’ We will concentrate the company. We are going to narrow down the list to the best clients. We intend to invest in research and development.”

At MWC in Barcelona, ​​Broadcom CEO Charlie Kaw explained it from a semiconductor perspective, speaking to CUBE. According to Vellante, the roadmap to acquire Broadcom VMware was telegraphed.

“They killed the ELA, the enterprise licensing agreement, (which is) like all you can eat. They said, “We’re not going to do this anymore.” So now we have all these orphaned licenses that people will have to pay for,” Vellante said. “They said we won’t sell vSAN and NSX anymore, and all these things are separate. But we will have one SKU.”

The Broadcom VMware acquisition leaves many challenges ahead

In implementing its strategy, VMware began to focus on its most important customers. However, according to Vellante, this presents various “problems” when the full kit is not needed.

“Well, there are a few options. HPE basically said, “We’ll help you identify your licenses.” You don’t want to pay for orphaned Oracle licenses or orphaned Salesforce licenses, for example,” he said. “It can be really expensive. We will help you find and optimize them.”

The second thing HPE said it would help with was private cloud and GreenLake. According to Vellante, this could include many options.

“We’ll help you scale it up, scale it down, blow it up, blow it up, burn it down, burn it down, whatever,” he said. “Third, if you don’t want to pay VMware – because of Broadcom, because they charge too much, that’s fine, we’ll help – HPE has their own virtualization solution, Red Hat, Nutanix, KVM, there are many options.”

According to Furrier, Hock Tan is a very pragmatic person. However, VMware experts also noticed another quality.

“I’ve talked to probably over two dozen different executives, and the people at Hock Tan … say he listens,” Furrier (left) said.

According to Furrier, most CEOs are very dogmatic. However, Tan is willing to listen to issues on which he may initially differ.

“Private AI, he obviously wasn’t at that very high level from what I heard. And Chris Wolf had a long chat with him because they baked it years ago,” Furrier said. “Remember, they were the first to introduce private AI and everyone was throwing tomatoes… and it was actually the right thing to do. Now everyone is talking about AI factories, private AI cloud.”

Nvidia’s massive growth continues

Last week, Nvidia Corp. surpassed Microsoft Corp. and became the most valuable listed company in the world. While they were probably unknown to anyone outside gaming and cryptocurrency circles before, Furrier says the company has managed to attract mainstream attention.

“Incredible growth. And to think they just beat Apple and Amazon has these guys in the rearview mirror,” Furrier said. “It was really Microsoft, Apple and Nvidia, and then the collapse of Intel. It’s almost supersonic travel. Will it survive?”

According to Furrier, the rumor in Silicon Valley is that everyone is selling off their stocks due to the huge profits. The question is: will this lead to the company’s collapse?

“Will their success be their failure? Sometimes success can cause problems. We’ll see how they handle it. I don’t think it will be a problem, but you have to be careful about it,” Furrier said. “That’s what some people are talking about.”

Watch the full podcast below to find out why these industry professionals were mentioned:

George Gilbert, principal analyst at theCUBE Research
Peter Thiel, chairman, founder and former CEO of PayPal
Dave Duggal, founder and CEO of EnterpriseWeb
Mark Terenzoni, general manager of security services at AWS
Chris Lynch, executive chairman and CEO of Atscale
Charlie Kawwas, CEO of Broadcom
Hock Tan, chairman and CEO of Broadcom
Chris Wolf, global head of AI and advanced services at VMware by Broadcom
Krish Prasad, senior vice president and general manager of VMware Cloud Foundation at Broadcom
Michael Dell, president and CEO of Dell Technologies
Rob Strechay, managing director and principal analyst at CUBE Research
David Floyer, retired analyst at theCUBE Research
Jensen Huang, founder and CEO of Nvidia
Antonio Neri, president and CEO of HPE
Neil MacDonald, vice president and general manager of HPE’s computing business units
Jerry Chen, general partner at Greylock Partners
Venkat Rajaji, VP of Product Management at Cloudera
Ali Ghodsi, co-founder and CEO of Databricks
Mark Zuckerberg, CEO of Meta Platforms
Lina KhanChairman of the FTC
Sanjeev Mohan, Director of SanjMo
Donald Trump, 45th president of the USA

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Photo: SiliconANGLE