Broadcom tries to quash VMware price rise rumors as CEO promises they won't

Hock Tan says hiring engineers is his strategy … but still won't explain plan for massive rapid profit increase

Broadcom president and CEO Hock Tan has again felt the need to state that his company's acquisition of VMware won't lead to price rises.

Tan made the same pledge five weeks ago but, citing "questions in press reports about whether we intend to raise prices on VMware products," issued a blog post that states "The answer is simple: No."

Why double down on the no price hike pledge twice in five weeks? Because VMware customers appear to be concerned. Nutanix CEO Rajiv Ramaswami today told The Register his company – which offers an alternative to VMware – has "had more inbound calls from people we have been trying to engage without success. They want to know about potential pricing and innovation implications" of Broadcom buying VMware.

Tan's post stated only good things will happen on the innovation front.

"Broadcom has the scale and capacity to invest major resources in R&D innovation and build on VMware's talented team by recruiting the best engineers," he wrote. And he added that Broadcom plans to invest and innovate across "VMware's broad portfolio – including multi-cloud and cloud-native capabilities" with "a concerted focus on growth and innovation, while furthering our track record of delivering consistent, justifiable value with our fairly priced solutions."

The post also states: "And, to be clear, we intend to continue serving customers of all sizes."

"VMware has a robust partner ecosystem that we will build upon to help us serve even the smallest companies. In short, we plan to take a 'no customer left behind' approach."

Broadcom did not use the tactics outlined by Tan after acquiring Symantec and Computer Associates. At a November 2021 event, investors were told that Broadcom is "totally focused on the priorities of … 600 strategic accounts" and was able to reduce R&D spend by addressing their needs and downplaying work for other customers who would be "sustained". Smaller customers would be allowed to "trail" – a term that translated to many receiving strong price signals they could do better with alternative suppliers.

At the November 2021 event, Broadcom also explained that it improves profitability at acquired software companies by reducing sales and marketing expenses. The company has also signalled it intends to quickly increase VMware profits.

But Tan's post did not address that profit increase.

It may be more than a year before Broadcom's full plan becomes visible, as the company has said it aims to complete the acquisition of VMware before the end of its FY 2023 financial year, which ends on October 31, 2023. ®

Nutanix posts strong Q1

Nutanix has posted strong Q1 2023 revenue, and for the first time recorded positive non-GAAP operating income. That figure was $10.6 million on $433.6 million quarterly revenue and came after the company recorded positive cashflow in its previous quarter.

CEO Rajiv Ramaswami told The Register those results reflect the fact Nutanix has built a sustainable business and represents a strong alternative for buyers looking for a hyperconverged platform that can operate across multiple clouds.

Ramaswami added that new customers, and repeat customers, increasingly come to Nutanix for mission-critical apps. Desktop virtualization, which once dominated Nutanix's installed base, is now just 20 to 25 percent of usage. Ramaswami said while Microsoft in particular is aggressively moving virtual desktops to its Azure cloud, Nutanix can still thrive in the field because those in highly regulated industries, or who need high-performance virtual desktops, still value Nutanix's tech.