CIOs Need to Beware of Getting Caught Up in the Wheels of the Broadcom-VMware Saga

  • Rowen Grierson, Senior Director and General Manager for the UK and Ireland at Nutanix

  • 16.05.2024 02:15 pm
  • #technology #chip

The chip giant’s acquisition of VMware could drive many customers into trouble says Rowen Grierson, senior director and general manager for the UK and Ireland at Nutanix

So the deal is done: Broadcom finally owns VMware and it has wasted little time in showing its hand. But the cards being dealt to CIOs and others that rely on VMware for core infrastructure are far from great. 

Of course, Broadcom has acquired companies before, including giants like Symantec and CA Technologies, but VMware is a different dimension. It’s generally accepted today that technology is at the heart of operational excellence and competitive differentiation. And for years now, VMware has sat in the heart of datacentres, helping companies try out new services, refine workload management and better utilise their server assets. It’s also true today that companies don’t operate in isolation but live or die by the strategic partnerships in which they engage. Significant changes to those partnerships should be on the radar of all leaders with a role to play in technology vendor selection. 

Let’s look at some reasons why:

Product portfolio cuts and price hikes. Broadcom has wasted no time in announcing that many products have no independent future and the rolling up of SKUs into platforms will effectively mean higher bills for many customers. Here, Broadcom is playing a game of ‘chicken’, betting that customers won’t switch vendors whose wares are so embedded in corporate infrastructure. 

Impact of changes on predictability. It’s too soon to know how VMware culture and customer care will be impacted by the sale to Broadcom. However, an S&P Global Market Intelligence survey of VMware customers in 2022 showed significant negative sentiment. Of respondents with negative feelings about the deal, 15 percent said they feared lower commitment to innovation and eight percent referred to the potential for distraction for one or both vendors. Also, the impact of moves such as the recently announced sale of VMware’s End-User Computing business, could lead to more confusion and changes for CIOs that have invested heavily in the company’s ecosystem. Even a smaller move - such as the decision to axe free versions of the hypervisor - suggests a broader cultural change.

Channel and partner challenges. Customers will often have a stronger connection to the channel partners that deployed the technology they use than the original vendor. When the channel is impacted, end-user organisations will often feel the shift in support. Already, industry publication CRN has noted a decision by Broadcom to take many key accounts directly and another to terminate agreements with partners. The result: unnecessary disruption for customers who prefer to work with partners.

Nobody wants to have to make major changes to core providers, but they should be prepared to have an alternative vendor in situ (or at least in mind) if key suppliers make major changes. In an age of agility, the last thing you need is to be caught up in the machinations of deal-making. Little wonder that nearly a fifth of enterprise customers may “escape” the VMware stack in 2024, according to Forrester.

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