Acquisition of VMware by Broadcom

This blog was written on October 26, 2022 by Hock Tan, Broadcom president and CEO, Broadcom, Inc.

What a combined Broadcom and VMware can deliver to our customers

Over the last several weeks, I have had the opportunity to visit with Broadcom customers around the world to discuss what’s on the horizon as they navigate increasingly complex IT operating environments. During these visits, I’ve also answered their questions and shared our vision of what a combined Broadcom and VMware will look like following the close of the transaction.

It’s clear from these conversations that 3 topics are top of mind for customers as it relates to the VMware-Broadcom transaction: multi-cloud, cloud-native apps and pricing. Ultimately, what I’ve stressed to them has been straightforward: our customers are and will remain the most important part of our business. That said: I want to discuss each of these topics and share my current thinking to help address the concerns I’ve heard.

Broadcom’s strategy
I hope I’ve made clear that at Broadcom, we are continuing to embrace and invest in customers’ priorities. My priorities for Broadcom are very much aligned with customers.

By investing and innovating in infrastructure software and VMware’s broad portfolio – including multi-cloud and cloud-native capabilities – we will bring our customers greater flexibility and deliver new solutions to help them connect, scale and protect their IT infrastructure. This will also empower our customers to modernize and architect their IT infrastructure while ensuring there will be large-scale, secure, and reliable, yet flexible, solutions to do so. Similarly, continuing to develop our ecosystem will enable partners to grow their businesses with expanded offerings of the combined portfolio and even better meet customers’ needs.

Multi-cloud
As I met with customers across the US, UK, Germany and France, I asked about their current and future priorities. For some time, Broadcom has recognized that the future of enterprise IT is multi-cloud – the ability to distribute applications and services across a combination of clouds. It’s one of the many reasons Broadcom solutions complement what VMware does in the multi-cloud space across private, public, edge and sovereign clouds today. It’s clear our customers have already adopted this mindset, too. I’ll share an example.

While in London, I met with the CTO of a global financial services firm. We discussed the increasing need for financial institutions to adopt innovative solutions and ensure legacy infrastructure is efficient and secure. We agreed multi-cloud solutions meet this need, ultimately improving performance and strengthening resilience at a lower cost. Customers are enthusiastic about the multi-cloud vision and, with increased resources from Broadcom following transaction close, the potential to implement it as VMware grows and increases momentum in the space.

Cloud-native apps
Customers are similarly excited about VMware’s momentum around cloud-native apps. Containers are changing the way modern applications are built, resulting in faster and more predictable development and deployment. Developers also can take advantage of Kubernetes clusters, which more efficiently use the containerized infrastructure that power those applications. Kubernetes clusters bring other advantages, including making apps more resilient and easier to manage, bringing cost savings to organizations; and making apps more portable between different clouds and internal environments, because Kubernetes clusters can run on premises or within public clouds. The resulting modern applications are more scalable and flexible, accelerating the speed and agility of innovation within organizations. By providing customers with the environment and hands-on guidance to help build cloud-native applications quickly and upskill their teams along the way, a combined Broadcom-VMware can help them drive forward their businesses.

Since the announcement of our intention to acquire VMware in May, I have had the opportunity to spend time with many VMware and Broadcom customers, partners and the VMware Product and Go-to-Market leadership teams. I have gained a deeper understanding of the VMware Tanzu portfolio and the strategic importance of cloud-native applications and modern app development and management. Customers are telling me that modern applications are a central part of their go-forward strategy in a multi-cloud world, and that the VMware Tanzu portfolio of products and solutions are an important area of focus for them.

Many customers and partners are asking me how I see the VMware Tanzu portfolio and Broadcom’s future commitment to the Tanzu business. My answer to them is that I see Tanzu as a strategic part of the VMware software portfolio and it will remain that way as we move forward within Broadcom. VMware Tanzu customers are running some of the most mission critical applications in the world. As customers think about future investments in cloud native applications and the modern application development space, they should feel confident in Broadcom’s commitment going forward.

Pricing
We work with our customers every day to tackle a wide spectrum of challenges, and we are constantly innovating to create the next gen of technology to address their needs. This is largely what has made our business successful, and we intend for this to continue.

Our growth into a global technology leader was not based on taking existing products and raising their prices, but by creating technology and products that provide clear value to customers and continuing to improve them. We fuel growth by offering more and better products so customers are using more of our entire portfolio of technology products, rather than just one or two. By delivering long-term value to customers and investing in improved, customer-focused R&D, we can innovate, scale and offer better products without raising prices.

VMware develops technology for the future and addresses a growing market. The Broadcom business case for this transaction is premised on focusing on the business model, increasing R&D, and executing so that customers see the value of the full portfolio of innovative product offerings – not on increasing prices. Following the close of the transaction, we will invest in and innovate VMware’s products so we can sell even more of them and grow the VMware business within enterprises, deepening and expanding the footprint instead of potentially raising prices.

Of course, our other main priority once the transaction is complete will be integrating VMware and its employees. VMware is an innovation success story – but the company’s story is far from finished and we’re excited to help write the next chapters. I have tremendous respect for what VMware has built, and experiencing the company’s excitement for the future at VMware Explore in San Francisco earlier this year reinforced my belief that we are on the right path.

I came away from my recent travels even more excited about what a combined Broadcom and VMware can deliver to our customers, and I look forward to continuing these valuable conversations as we progress toward closing. More than that, once we complete our transaction, I look forward to starting the important work of fostering an environment of growth and innovation aligned with our customers’ priorities.