“Don’t Break VMware,” Customers Ask Broadcom in Our New Digital Pulse Survey

Some mergers and acquisitions are controversial. When Broadcom announced at the end of May that it had reached an agreement to acquire VMware, we saw an obvious and immediate absence of synergy between the two companies from a technical and product point of view, but also from a cultural point of view. With Broadcom acting as a specialist in the deployment of finance-oriented legacy software, what would be the future for VMware, one of the leading architects of cloud computing? We argued that this could slow innovation at VMware just at a time when new cloud-native software stacks risked making its traditional virtualization platform less attractive than it had been before.

Consulting our 451 Alliance, polling several hundred business leaders for their thoughts on the deal – just as we did with Dell-EMC in 2015 and IBM-Red Hat in 2018 – we get a clear idea the importance of VMware for its users. The majority of survey respondents do not view enterprise software in terms of legacy, but rather view it as supporting their mission-critical IT systems and requiring deep expertise and continuous innovation to ensure its long-term future. term. The most frequently expressed sentiment emerging from the survey, addressed to the acquirer, is “don’t break VMware”.

Why do you feel negative about this offer?

Reactions to the deal captured by our survey were mostly neutral (44%) or negative (40%) impressions and were strongest among organizations that identify as existing customers of both Broadcom and VMware ( 56% negative, 27% citing “very negative impressions”). This could be due to the negative experience of past Broadcom software acquisitions (such as CA and Symantec), fueling concerns about the management of VMware tools considered important to their business.

After a general negative sentiment that existed about one or both vendors prior to the deal, the top three concerns on the list are that the pace of innovation will be stifled, the general lack of obvious synergies between the two companies and the potential impact on software. license terms and conditions. Given the experience of CA and Symantec users over the past few years, these fears appear to have some basis in reality. However, since the deal was made public, Broadcom and VMware executives have been actively reassuring customers that this deal will be different.

Why do you feel positive about this offer?

Those who view the acquisition as a positive see it primarily as a way to bolster the viability of both companies, although there is some support that the two have strong products that could complement each other, and therefore boost more product innovation. In this regard, Broadcom’s decision to position VMware as its flagship software brand and retain its identity plays in its favour. The CA and Symantec brands have lost a lot of visibility since their acquisitions, largely because portfolios were fragmented.

VMware is very common in the enterprise IT sector and its brand is much more valuable. There is also a much wider ecosystem of value-added partners that help support and grow the business. Broadcom has already signaled its intention to pay more attention to these partners than it has in some previous acquisitions.

A number of respondents to our survey felt there were synergies that could be exploited, with several highlighting networking and the periphery as potential areas. “Getting into distributed platforms is actually really exciting, and I think they’re going to be a pretty big force around edge computing,” one respondent said.

Which of the following statements best describes VMware today?

There is a stark contrast in how the two separate businesses are perceived. Nearly 54% of respondents to our survey say they view VMware as a “critical infrastructure or systems” provider (vs. 20.3% for Broadcom), while 44% say it “provides modern technology” (vs. 22.1% for Broadcom) and 46% agree that he “has deep expertise” (vs. only 11.9% for Broadcom). Meanwhile, some 37.7% say companies are not well aligned, 46.9% are neutral and only 12.4% think they are well aligned.

A VMware healthcare customer pointed out that VMware could not have been bought by any of the usual suspects without raising neutrality issues. “With a Broadcom, or someone else not already in the market, picking them up, business is business as usual.” Another commented: “As long as they keep it separate it’s fine.”

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