In a significant move that has sent ripples across the tech industry, Broadcom Inc., a global technology leader, announced its acquisition of VMware Inc., the leading innovator in enterprise virtualisation and platform software The deal, valued at approximately $61 billion, is a combination of cash and stock, with Broadcom assuming $8 billion in VMware debt.

Its perhaps a brilliant move from Broadcom in which I can see any/all existing perpetual licences for VMware moved to Subscription based offerings. I suggest everyone purchases as many years of software assurance as they can at this point.

Can VMware enterprise platforms handle such a steep cost increase ?

With so many more virtualization offerings on the market now, and the alure of hardware management, offered by moving to Azure, I don’t think so. Especially for larger organisations that are adopting or at least experimenting with AI in which case the move to a public cloud is near essential.

Don’t get me wrong, as far as I am concerned, VMware is still the leading virtualisation platform by far and I expect it to lead this industry until its death. But that is the key word, death, when will private clouds finally be a thing of the past ? It is evident that the public clouds have won the future even if they are twice the cost, reliability and speed. there is no turning this ship around now. So as Service Providers and Corporates slowly migrate to these public clouds, the private cloud platform is becoming less essential for bells, whistles and the finance department.

Some of the other offerings for private cloud include –

• Microsoft’s Hyper-V
• Oracle VM VirtualBox
• Virtuoso
• Red Hat Virtualization
• Nutanix
• Citrix Hypervisor
• Proxmox

What is the Broadcom deal timeline ?

The acquisition was announced on May 26, 2022, and was completed on November 22, 2023. The deal received the green light from UK regulators, and VMware’s common stock ceased to be traded on the New York Stock Exchange (NYSE) following the completion of the acquisition

Who is Broadcom ?

Broadcom Inc. is an American multinational company, headquartered in Palo Alto, California. Currently run by CEO and president, Tan Hock Eng.

Broadcom designs, develops, manufactures, and globally supplies a wide range of semiconductor and infrastructure software products. The company’s product offerings serve various critical markets, including data centre, networking, software, broadband, wireless, storage, and industrial markets.

Broadcom was established in 1961 as HP Associates, a semiconductor products division of Hewlett-Packard. It separated from Hewlett-Packard as part of the Agilent Technologies spinoff in 1999. Later, it was acquired by Avago Technologies in 2005 for $2.6 billion and formed Avago Technologies. Avago Technologies took the Broadcom part of the Broadcom Corporation name after acquiring it in January 2016. The merged entity was initially known as Broadcom Ltd., before assuming the present name, Broadcom Inc.

As of today, 2023, approximately 79 percent of Broadcom’s revenue comes from its semiconductor-based products, and 21 percent from its infrastructure software products and services.

Who is VMware ?

VMware LLC is an American cloud computing and virtualization technology company. Running under CEO Raghu Raghuram, who has been with VMware since 2003, VMware is also headquartered also in Palo Alto, California.

VMware was the first to commercially to virtualize the x86 architecture. PIP has been running VMWare in its private datacentres for over 20 years.

VMware’s virtualization software provides large organisations and service providers with efficiencies of scale. The Virtualisation Software, creates an abstraction layer over computer hardware that allows the hardware elements; processors, memory, storage, and more, to be divided into multiple virtual computers, commonly called virtual machines. Thereby utilising the full power and hardware resources of all Bare Metal Servers saving on space, heat, capital and power. Users have complete autonomous access to each Virtual Machine, installing and operating its own operating system, whether that be,  Microsoft Windows, Linux, BSD, Novell Netware or MS-DOS.

What impact will the VMware sale to Broadcom have ?

The acquisition is expected to advance Broadcom’s strategy to build the world’s leading infrastructure technology company. The new VMware, as part of Broadcom, will offer enterprise customers greater choice and flexibility to address the most complex IT infrastructure challenges.

Following the closing of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio. The combined company will provide enterprise customers an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs.

What does the future look like for Broadcom’s VMware ?

The transaction is expected to add approximately $8.5 billion of pro forma EBITDA from the acquisition within three years post-closing. Pro forma for each company’s fiscal year 2021, software revenue is expected to account for approximately 49% of total Broadcom revenue.

Broadcom has announced its focus is on enabling enterprise customers to create and modernize their private and hybrid cloud environments. At present I cannot see to many ways whereby the VMware platform has any avenue for considerable improvement. Again, we see larger organisations looking towards AI in an effort to better or at least keep up with the Jones’s this transition will only escalate the flood to the public cloud platforms, primarily Azure.

Surely the VMware platform has plateaued somewhat in comparison to these public offerings.