News of Broadcom’s plans to acquire VMware triggered concerns among customers, partners, and industry watchers, many of whom remembered Broadcom’s history with previous major acquisitions, including network switching vendor Brocade in 2016 for almost $6 billion, software firm CA Technologies in 2018 for $19 billion, and Symantec’s enterprise security business in 2019 for $10 billion. The $60 billion deal involving Broadcom and VMware has resulted in some layoffs, changes in VMware licensing, adjustments in production, alterations to the partner program, and a lawsuit filed by AT&T against Broadcom. Meanwhile, competitors are seeing some victories in winning over VMware customers, although widespread migrations have not been reported by analysts.
We have been following this development since Broadcom first announced its intention to buy VMware in May 2022. Here is an account of what has happened so far, along with the most recent news and analyses.
Sept. 23, 2024: Broadcom has retaliated in the ongoing legal battle with AT&T over VMware software support services, accusing AT&T of engaging in “sensationalism” and alleging that AT&T had planned to cease using VMware software but postponed the decision. In a new legal document, Broadcom claims that AT&T’s lawsuit aims to gain more time to switch to alternative software while still benefiting from discounted support services, which Broadcom has already discontinued for perpetual license holders.
Sept. 5, 2024: AT&T is taking legal action against Broadcom due to their forceful management of VMware support contracts. “Broadcom is trying to retroactively change existing agreements, compelling us to buy hundreds of millions of dollars in bundled services,” AT&T mentioned in a lawsuit it lodged against Broadcom in New York’s Supreme Court. “Without these support services, AT&T cannot prevent frequent software errors, security vulnerabilities, or system outages.”
Aug. 30, 2024: “The future of the enterprise, your enterprises, is private,” declared Broadcom president and CEO Hock Tan during a keynote speech at the latest VMware Explore conference. “Private cloud. Private AI. Powered by your own data. It’s about remaining on-premises and in command.”
Aug. 19, 2024: The current VMware Explore event is notably the first since Broadcom completed its acquisition of VMware last November. Enterprise clients have raised questions regarding VMware’s future trajectory, alterations in licensing, and continuity in product development after the ownership shift. One analyst remarked that customers expect ongoing innovation within the VMware suite, with a focus from Broadcom on better integration, design, and simplified adoption processes.
Aug. 14, 2024: The shift in direction under VMware’s new ownership is prompting certain enterprise clients to explore other solutions offered by companies such as Scale Computing, Nutanix, and Oxide Computer. Scale Computing recently reported a surge in sales and a doubling of its customer base over the past year, attributing this growth to the alterations Broadcom has implemented in VMware’s sales strategies.
July 01, 2024: Nutanix began actively targeting VMware customers potentially seeking alternatives following the acquisition by Broadcom and subsequent unpopular decisions. Additionally, Nutanix has formed strategic partnerships with some occasional rivals including Dell, Cisco, and HPE.
July 25, 2024: Broadcom has extended the support period for VMware vSphere 7.x by an additional six months. Initially set to end in April 2025, the support for the product, which debuted in 2020, will now continue until October 2025. For more details, visit this link.
June 26, 2024: The latest updates to VMware ECS 3.5 focus on streamlining the management of edge devices, applications, and infrastructure at various locations. Important enhancements include zero-touch orchestration, a pull-based architecture, and comprehensive edge fleet management. For further information, click here.
April 23, 2024: The Cloud Infrastructure Services Providers in Europe (CISPE) has voiced severe objections to Broadcom regarding its recent licensing changes. CISPE argues that these adjustments pose a threat to the economic sustainability of numerous cloud services in Europe due to significant price increases and modifications in product bundling and billing practices. Additional insights are available at this article.
April 16, 2024: Broadcom has made adjustments to its VMware pricing strategy, transitioning to a per-core licensing approach, a metric already employed for licensing among end users. Amidst customer dissatisfaction and queries from European regulators, Broadcom’s President and CEO Hock Tan has affirmed the company’s commitment to supporting its clientele and detailed the continuation of VMware product offerings and support. Read more here.
Feb. 27, 2024: Broadcom reintroduced the VMware VeloCloud SD-WAN brand, linking it with Broadcom’s Symantec Enterprise Cloud security service edge, to launch their unified SASE solution.
Feb. 26, 2024: Broadcom entered into a contract to divest its end-user computing division to KKR for $4 billion. KKR announced that this unit will operate independently under its current leadership, headed by Shankar Iyer.
Jan. 22, 2024: Amidst concerns from VMware clientele regarding Broadcom’s recent moves, these shifts were somewhat anticipated given Broadcom’s history with previous acquisitions such as CA and Symantec. Although there isn’t a mass exodus, customers are starting to explore other options as Broadcom’s influence grows.
Jan. 05, 2024: According to Steven Elliot, group vice president of infrastructure software at IDC, the reductions in workforce and streamlining of programs are seen as beneficial and essential. He highlighted that Broadcom is not just reducing personnel but also paring down its product lines to concentrate on its key expertise.
Dec. 01, 2023: A recent report to the California Employment Development Department by Broadcom highlights the upcoming termination of 1,267 VMware employees scheduled for January 2024. Learn more about the layoffs here.
Nov. 30, 2023: Post-acquisition layoffs are a common occurrence as companies streamline for efficiency, addressing overlaps. The changes at VMware also included the departure of Sumit Dhawan, the company’s president since 2021, who moved on to lead Proofpoint as CEO. Meanwhile, concerns about how these changes might affect client loyalty are growing. More on the concerns here.
Nov. 21, 2023: Just days before their merger agreement was set to expire, Broadcom’s acquisition of VMware for $69 billion received the green light from Chinese regulators, confirming the deal’s closure on November 22. Click here for details on the regulatory approval.
Aug. 25, 2023: The VMware Explore 2023 event in Las Vegas was marked by significant cloud announcements, yet the main spotlight was on generative AI, reflecting a broader trend across the tech industry. VMware is actively integrating generative AI capabilities into their offerings. Explore the developments at VMware Explore 2023.
July 19, 2023: The UK’s Competition Market Authority (CMA) provisionally cleared Broadcom’s proposed acquisition of VMWare, paving the way for the $61 billion deal to progress. The CMA conducted a thorough review to determine if the merger would negatively affect the competitive landscape for Broadcom’s rivals in server virtualization software.
May 05, 2023: Broadcom announced plans to invest $2 billion annually in enhancing research and development efforts for VMware’s offerings. Hock Tan, the CEO of Broadcom, stated that being under Broadcom would provide VMware with greater resources and capacity to meet customer demands and expand deployment capabilities beyond its independent operations.
Feb. 20, 2023: In their ongoing effort to finalize the $61 billion acquisition first publicized on May 26, 2022, Broadcom and VMware have mutually agreed to a 90-day extension, as revealed in a regulatory notice. This adjustment sets the new deadline for completing the merger at twelve months from the initial announcement date.
Nov. 21, 2022: An inquiry into Broadcom’s planned purchase of VMware was launched by the UK’s Competition and Market’s Authority (CMA). The investigation aims to assess whether the merger could substantially lessen competition across any relevant UK markets.
Sept. 22, 2022: Concerns among VMware’s enterprise customers have increased due to Broadcom’s history with previous acquisitions. Their worry stems from Broadcom’s post-acquisition strategies, which typically involve raising prices, cutting back on support, and halting innovation post-acquisition of CA and Symantec, as noted by Forrester senior analyst Tracy Woo. Woo advises VMware clients to prepare for alternative solutions.
July 04, 2022: According to Network World columnist Tom Nolle, the combination of Broadcom’s hardware with VMware’s software might serve as a crucial link between data center applications and cloud services.
May 26, 2022: Observers in the industry think that Broadcom’s intended acquisition of VMware might create new avenues to engage enterprise and telecom businesses with cutting-edge technology. However, some are skeptical about whether Broadcom will allow VMware to continue advancing their technologies for 5G and software-defined networking (SDN).
May 25, 2022: The initiation of the Broadcom-VMware transaction occurred when the semiconductor firm and the infrastructure software leader publicly disclosed their intentions for a takeover valued at approximately $61 billion in stock and cash.
