Broadcom asserts VMware's strategy isn't working and it basically needs rescuing
Redacted document filed with UK regulator states customers aren't buying Virtzilla's poorly-executed vision
Broadcom has argued that VMware will fail to execute its multicloud strategy – and hyperscale clouds therefore won't face strong competition – unless it is allowed to acquire the virtualization titan.
That take on the transaction emerged on Wednesday when the UK's Competition and Markets Authority revealed Broadcom and VMware's response [PDF] to its probe of the deal, and arguments for why it should be allowed to proceed.
The document includes many redactions that describe business secrets – but there's still over 40 pages to digest.
Multicloud isn't necessary, says Gartner … until it isREAD MORE
As expected, it explains why the two entities don't think the deal represents a risk to competition – pointing out that both have made their reputations on hardware interoperability and do not intend to harm themselves by changing that policy.
It also reveals Broadcom's belief that acquiring VMware will create an entity capable of creating competition for hyperscale clouds, but that VMware alone can't get that job done:
VMware has a strong core technology and operates in a proven and growing market for enterprise workloads. But VMware's own internal documents describe its market position as a [REDACTED]. Broadcom believes it can provide VMware with the scale and capabilities to reverse this trend.
We're pretty sure that redaction is not for terms like "sure thing" or "slam dunk."
Here's another section in which Broadcom is not exactly complimentary about its quarry:
Enterprises want a private cloud solution that offers the ease of use, flexibility, and resilience of public cloud. Despite having the technology and incentive to do so, VMware has been unable to satisfy enterprise demand, after many years of effort. Broadcom's investment will give VMware the scale, investment, and support it needs to deliver on its potential.
The document also states:
- VMware has been unable to persuade its customers to license and deploy its Private Cloud software;
- VMware lacks the scale needed to develop its Private Cloud software and increase consumption;
- VMware needs to invest more in R&D and provide more deployment support to its enterprise customers [but] lacks the scale to make the necessary investments.
With all of those problems and failures at VMware, The Register's virtualization desk is almost left wondering why Broadcom wants to buy it at all.
- Europe greenlights Broadcom's $61B VMware buy
- VMware teases multi-cloud generative AI offerings for August debut
- VMware's Arm hypervisor still creeping forward, slowly
- Nutanix de-converges by allowing dedicated nodes for compute and storage
Unshakeable belief in its own ability to turn things around is the answer.
The document reveals the turnaround plan includes an extra $1 billion a year in R&D spend, plus the same sum "to build deployment support capabilities [and] double VMware's professional services capabilities from $1 billion to $2 billion per year and to offer professional services to VMware's customers."
There's also a pledge to "increase the efficiency of VMware's go-to-market and administrative structure."
"Broadcom has a strong track record of fiscal discipline, and plans to achieve [REDACTED] cost synergies by leveraging Broadcom's [REDACTED]. Broadcom also plans to increase [REDACTED] over the course of its acquisitions of CA Technologies and Symantec. These cost savings will free up more resources to invest in R&D and the GSI partner network."
The two paragraphs suggest Broadcom is not a fan of VMware's sales and marketing teams, nor its back office operations.
The mention of Symantec and CA is also a little scary – customers of both reported life became less pleasant after Broadcom's takeovers.
The Register imagines VMware users will be aghast – or perhaps resigned – at some of the content in this document as it does not portray Virtzilla in a flattering light. VMware shareholders, meanwhile, might be thanking their lucky stars that Broadcom stepped in. Or perhaps they'll all shrug it off as not much more than strong words designed to impress a regulator. ®