Introduction
Broadcom’s bold restructuring of VMware brings a significant shift in its product portfolio, channel strategies, and go-to-market approaches, emphasizing a transition to subscription-only licenses across VMware’s offerings, all happening at once under the scrutiny of the customers and competitors alike. On February 12, Broadcom hosted a virtual analyst’s session to provide a strategy update on VMware and a view into Hock Tan’s vision for the company. This blog focuses on the core infrastructure changes and partnerships.
Building the Next VMware
Hock Tan, CEO, led the virtual event with his vision and guidance on the new acquisition. Leading off, he stated that Broadcom has the “scale to help global enterprises address complex infrastructure” challenges and that the private cloud was VMware’s focus going forward. From his conversations with CIOs, Tan identified three key issues that are top of mind for VMware:
- Resiliency and security
- Developer efficiency
- Infrastructure efficiency
It is his vision for VMware to address all three as the on-premises-to-private-cloud solution. He firmly believes that VMware has great technology and engineering but that as an organization, it was very fragmented and disorganized. Plus, clients found working with VMware very complicated.
Tan outlined three strategies for VMware. Radical simplification, which we have initially seen in the hacking of the number of SKUs and product offerings. In the longer term, we expect to see a significant change in how the VMware offerings become a common integrated stack with common releases and comprehensive life cycle management.
The next strategy is investing for innovation—an investment of billions to accelerate R&D. This strategy goes back to the focus of on-premises to private cloud. Tan further revealed his position in that “before you can dream this (multi-cloud), you need a credible private cloud.” Tan talked about how the product VMware has created has not brought this success to on-premises. Given these statements, we expect much of R&D to go toward the development of VCF and its parts including networking, storage, and Kubernetes/Tanzu abilities for on-premises deployments for resiliency and security. Expect this to follow to further the capabilities of modern application development, including open-source offerings and AI. VMware announced Private AI in 2023, which should become a reality in 2024.
The third strategy was enhancing the ecosystem. Tan’s aim is to radically simplify the VMware channel and appears to have created clear swim lanes with SKUs and pricing for each of the partner segments. The executive team was clear that all partners have currently been invited to rejoin the VMware partner program, although it is less clear how this program will play out over time. The leadership team is driving the use of the full VCF stack (not the commercial vSphere offering) for use by CSPs. Tan was clear that he is looking toward clear OEM integrated systems versus OEMs that resell software. What was also clear was that VMware is designating direct sales for VMware’s top accounts while engaging the VARs in corporate and commercial territories.
Previous actions that are notable but were not directly addressed in the analyst session include the discontinuation of Aria SaaS. This decision aligned with Broadcom’s strategy to streamline VMware’s offerings into bundled suites that can operate both on-premises and as SaaS in various cloud environments. By folding Aria into these broader offerings and advocating for a bundled sales approach, Broadcom aims to simplify VMware’s portfolio, encouraging partners to deliver Aria as a service through the Cloud Foundation suite. This change not only marks a departure from VMware’s previous emphasis on standalone SaaS products but also reflects a broader industry trend toward subscription-based models, promising faster innovation and simplified deployment and management for customers.
Looking Ahead
All in all, two words come to mind: simplify and focus. The Q&A session with Tan was extremely open and unfettered. His answers were crisp and clear as to his view of the market and VMware. It may sound like we are praising his work; rather, we are highly appreciative of an executive that is not scripted and is highly in tune with the dynamics of the market.
We have clearly observed that the reaction among VMware users remains mixed, as some express concerns over the perceived increase in costs and complexity associated with migrating to the new bundled services. However, we note that customers, partners, and employees engaged with Broadcom/VMware expect clear goals and directions that will be measured on the results as laid out by Tan.
Under Broadcom’s stewardship, VMware is poised for a transformative journey toward greater focus, streamlined operations, and enhanced efficiency, driven by Tan’s leadership. Expect a more concentrated product line, with a sharp pivot toward subscription-based and bundled offerings that align closely with market demands and emerging technology trends. Tan’s track record of operational excellence suggests VMware will adopt a leaner approach, prioritizing high-value, high-growth areas such as cloud, networking, and security solutions. This strategic realignment under Broadcom will likely see VMware accelerating innovation, improving customer value, and securing its position as a leading force in the enterprise IT ecosystem. All in all, expect the VMware engine to execute and execute well.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
VMware Explore: Making Moves with Multi-Cloud and Private AI
VMware Acquisition Close: Q&A with Hock Tan, President and CEO, Broadcom – Six Five Insider
VMware Aria: Broadcom’s Strategic Move and Its Market Implications
Author Information
Now retired, Camberley brought over 25 years of executive experience leading sales and marketing teams at Fortune 500 firms. Before joining The Futurum Group, she led the Evaluator Group, an information technology analyst firm as Managing Director.
Her career spanned all elements of sales and marketing including a 360-degree view of addressing challenges and delivering solutions was achieved from crossing the boundary of sales and channel engagement with large enterprise vendors and her own 100-person IT services firm.
Camberley provided Global 250 startups with go-to-market strategies, creating a new market category “MAID” as Vice President of Marketing at COPAN and led a worldwide marketing team including channels as a VP at VERITAS. At GE Access, a $2B distribution company, she served as VP of a new division and succeeded in growing the company from $14 to $500 million and built a successful 100-person IT services firm. Camberley began her career at IBM in sales and management.
She holds a Bachelor of Science in International Business from California State University – Long Beach and executive certificates from Wellesley and Wharton School of Business.
Steven engages with the world’s largest technology brands to explore new operating models and how they drive innovation and competitive edge.
