Broadcom’s Acquisition of VMware Closed: What Now?

Nov. 30,2023 | Infrastructure, VMware, Broadcom

The long-announced acquisition of VMware by Broadcom back in May of 2022 closed November 22, 2023, having finally received the blessing of the Chinese regulators, the last hurdle. Now that they have made it official, it’s time to revisit our article on this almost a year ago this month (VMware’s Fiscal Year End and Broadcom’s Acquisition Implications). In that blog, we encouraged VMware customers to plan ahead and understand Broadcom’s culture and motivations for the acquisition – and plan accordingly.

Business (not) As Usual

We are currently seeing many VMware deals put on hold pending more reviews during this newlywed phase. Getting pricing and deals approved has become a challenge for partners. As multiple news outlets have reported, Broadcom has directed resellers to cease deals co-mingling Carbon Black and VMware End-User Computing. If you are working with one of these resellers and you are in the middle of a new purchase or renewal, you may be in for a rough ride.

“I see no benefit to partners from this acquisition,” said Howdyshell. “As a partner, we don’t know who to call. Nobody has reached out to us. There is a lot of uncertainty at the highest levels of customers who don’t know if they want to proceed with multimillion dollar ELAs (Enterprise Licensing Agreements) and TLAs (Technology License Agreements).” – CR Howdyshell, CEO of Fulcrum IT Partners, VMware Partner from CRN.com.

Reorgs, Executives, Staffing and Customer Service

After any acquisition, one of the fundamental concerns is always around responsiveness and customer service. This will be uniquely challenged post close given the massive changes underway and the vastly different corporate cultures. Already Broadcom has announced post close that Silicon Valley employees are expected work in the office, which will be a sudden change for many.

VMware has now restructured in four areas:

ANS – Application and Network Security
Software-Defined Edge
VMware Cloud Foundation
Tanzu Platform

In addition to this restructuring, there have already been layoffs – both announced and yet to be announced across the globe at VMware. While there is not yet an exact number, there are local articles from all over North America of locations laying off 100 – 500 employees at multiple locations.

Customer service concerns are a real issue as a recently completed survey showed that 60% of VMware customers expressed their concern with “VMware’s ability to provide high-quality technical support, with those interviewed stating the difficulty in receiving support via phone calls. Others lamented slow response times to emails during outages.”

This same survey said that 87% of respondents said they are actively researching alternatives infrastructure platforms.

Licensing Change to Subscription

There is a reason that most of the technology giants having moved from perpetual licensing to subscription based, are setting all time revenue records. Most firms, having bought into the consistent notion of subscription-based pricing are not looking back over the last several years and wondering how they are spending even more money than they did previously.

So, it’s no surprise that VMware has aggressively been pushing this model, but is it really benefiting customers? Now with Broadcom in the mix and their desire to bundle lines of business and mingle product portfolios to maximize revenue, customers on the whole will definitely pay more than they did pre acquisition.

Don’t Panic

It’s not too late to navigate this acquisition if you are in the middle of a transaction (renewal, new purchase, etc.) or planning one. The key word here is planning. As the last year has taught IT leadership, to get any deal you want on your terms, the key is disruption.

Disruption in the form of aggressively introducing competition (real or perceived) and create your own opportunities and leverage. To accomplish this, planning is required as far out as circumstances allow. Market research, RFIs, RFQs, RFPs, and more to discern the best market options and pricing that fits your business.

NET(net) is here to help you, as we have extensive experience in this area, both in leaning into disruption as well as market data (we call it Federated Market Intelligence) that will set your company up for long-term technological and fiscal optimization.

About NET(net)

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. Over the last 20 years, NET(net) has influenced trillions of investment, captured hundreds of billions of value, and has helped clients cost and value optimize all major areas of IT Spend, including XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, and Telecommunications, among others. NET(net) has the experience you want, demonstrates the expertise that you need, and delivers the performance you demand and deserve. Contact us at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1 (616) 546-3100 to see if we can help you capture more value in your IT investments, agreements, deployments, and relationships.

NET(net)’s Website/Blogs/Articles and other content is subject to NET(net)’s legal terms, offered for general information purposes only, and while NET(net) may offer views and opinions regarding the subject matter, such views and opinions are not intended to malign or disparage any other company or other individual or group.