Broadcom's acquisition of VMware: the story so far

At the end of 2023, Broadcom acquired VMware. Learn what this could mean for the firm and its customers.

Since 1998, VMware has been at the forefront of the virtualisation industry. Today, it has an extensive portfolio of products that are used by businesses of all shapes and sizes – from SMEs all the way up to enterprises.

But in November 2023, its fortunes took a very different turn. It was acquired by Broadcom – a global supplier of semiconductors – for an eye-watering $69 billion.

This news has shaken the industry – and has had real-world consequences for many VMware clients.

The product portfolio has been cut down to size and rebranded as VMware by Broadcom. The new owner has also announced it will be increasing investment in VMware Cloud Foundation, its software-defined hybrid cloud platform.

As well as rejigging – or, some would say, slashing – its product portfolio, VMware is moving away from perpetual software licensing. This means IT departments the world over are having to make decisions about whether to stay with VMware or switch to another provider.

Broadcom's CEO Hock Tan has laid out a three-point plan for the company. These are:

1. "Radical simplification" of the portfolio, drastically reducing the number of SKUs
2. Pouring resources into R&D for on-premise and private cloud solutions
3. Enhancing the VMware ecosystem

It's all change, with products being discontinued, the payment model changing and job cuts within VMware.

First, let's take a look at the portfolio.

What does Broadcom's takeover mean for VMware's product portfolio?

Over the years, VMware's product portfolio has grown large and complex. Advocates for the takeover say it needed cutting down to size.

Broadcom is doing this by narrowing down the portfolio to a handful of the most popular products. It says it's doing this based on partner and customer feedback.

Virtual desktop infrastructure products such as VMware Horizon have got the chop, as has Carbon Black, its endpoint security solution.

The free edition of the vSphere Hypervisor is now at EOGA (end of general availability) with no equivalent replacement in sight. This is a result of Broadcom's jettisoning of perpetual licensing.

Meanwhile, global investment firm KKR is acquiring VMware's end-user computing division and setting it up as a standalone company.

For some, these changes will cause disruption and may lead to their leaving VMware altogether. For others, they're a welcome simplification to an overly complex product portfolio.

How is licensing changing?

The most significant change is that Broadcom is moving towards a subscription software licensing model across all its products.

VMware Cloud Foundation is now the company's flagship product for enterprises running hybrid clouds. In a bid to drive adoption, Broadcom has cut the annual subscription cost of VMware Cloud Foundation.

However, this move away from perpetual licences isn't the only change that Broadcom has made. It's also announced that it won't be offering support and subscription (SnS) renewals for perpetual offerings.

Finally, hybrid cloud endpoints running VMware Cloud Foundation can now take advantage of a new "bring-your-own-subscription-licence" scheme – a new kind of licence portability that will be welcome to some.

What does this mean for VMware?

Unsurprisingly, Broadcom's takeover has led to job cuts. But it's also prompted some employees to quit. This is partly in response to Broadcom's insistence on a return to office-based working, sharply contrasting with VMware's hybrid work arrangements.

There's likely to be a renewed focus on research and development, as signalled by Hock Tan. There is, for instance, a new business unit dedicated to application and network security. Another focuses specifically on Tanzu. These are potential growth areas for the company.

What does this mean for IT?

Under Broadcom's ownership, VMware is going down the Adobe route, making software solely cloud-based. This means that IT leaders running VMware infrastructure are having to transition to a subscription model. It's also impacting existing supplier relationships with VMware partners.

Another big change is that bills have shot up – despite the price cut for VMware Cloud Foundation.

This will, of course, impact businesses in different ways. Some large enterprises are in a strong position to keep using VMware's products.

For smaller businesses, however, the price hikes are proving difficult. Many are considering moving to another provider.

What are the options available to existing VMware users?

If your company uses VMware products, you're at a fork in the road. You can continue to use VMware or you can switch.

This will depend largely on your budget. It's worth noting that you can't switch for free – so while you may want to move to a more affordable provider, you'll probably have to spend a lot of money on switching.

This means that your decision needs to be fully in line with your business goals. If switching is more economically viable, go for it. If not, you can stick with VMware and adjust to the new product portfolio.

The main thing to remember is that there are many options available for running cloud infrastructure, no matter what size your business is. This is one area where a cloud consultant or MSP could help you make the right move.

How we can help

If you're struggling to keep up because of changes to VMware since its takeover by Broadcom, you may be looking to migrate to another cloud. This is something that we here at Ascend Cloud Solutions can help with.

We're VMware cloud computing experts with more than 400 successful migrations under our belt and counting. Whatever your destination, we can help you get there with a minimum of disruption.

Every step of the way, we pay close attention to your business's unique needs. This is to ensure that the migration helps your business grow in the long term.

So if you're looking for a new home in the cloud, get in touch today. We'd be more than happy to talk you through your options and get you on the road to cloud success.