Sailing Through Turbulence: How VMware Customers Navigate in Broadcom's Waters

When the acquisition of VMware by the tech company Broadcom was announced last summer, there was reverberation throughout the tech space – from executive offices to tech newsrooms. Most industry watchers and frontline commentators expressed consternation and many openly espoused their concerns, all the way up to the most seasoned tech journalists and analysts. A recent survey has shed light on the feelings and decisions of VMware customers about their planned moves after the acquisition, exposing an unusually transparent cross-section of modern IT leaders, as the corporate mega-deal rained down on their world.

Understanding the Ripple Effect of Broadcom's Strategy

As the layoffs and other changes took effect, the reaction was swift and heavy-hearted. A focused survey of 300 IT director-level respondents from hundreds of VMware customer organisations provides a glimpse into that mood, and it is instructive to hear from people ‘running the boards’ at IT. It’s a little like watching what happens when blood gets on the carpet.

The Pricing Conundrum: Navigating the New Normal

One of the most telling results from the survey: a clear and consistent expectation across respondents that VMware prices would rise. Pricing increases under Broadcom’s ownership were already a hot topic in IT and industry circles, with estimates running as high as 500-600 per cent. The survey brought that conversation into focus and quantified the rising fear. Clearly, a large majority expect prices to more than double.

IT Strategies in Disarray: Seeking Stability Amid Change

With 95 per cent of respondents calling Broadcom’s acquisition a disruptive event, the ripples of that acquisition extend far beyond any IT budget line item, and into the connectivity, security and efficiency frameworks of diverse and broad-reaching businesses. The understanding that VMware is practically the operational heart of many businesses explains why so many feel so concerned.

To MOVE or Not to MOVE: The Loyalty Dilemma

In the face of such alarming change, VMware customers appear to be showing a measured but definite stick-around tendency – at least for now. The resulting picture is a complex one, a balance of loyalty and pragmatism, with just over half of respondents saying they’d stick around. And a significant number saying they’d stick around to some degree, or for the time being, while they evaluate options. The reluctance of customers who have been relying on VMware’s platform for years, or even decades, to MOVE to a new one speaks to VMware’s embedded position within the IT stack. A ‘jump’ is both impractical – IT infrastructures are simply not set up to accommodate big change – and in many cases, impossible.

Exploring the Horizon: Alternatives and Adaptations

As organisations re-architect around Broadcom’s changes, many are accelerating plans to transition to public clouds or other hypervisors. Organisations are also moving to new IT operations models as a hedge against both cost and quality of support, along with strategic shifts in licensing.

The Long View: Navigating Future Waters with Broadcom and VMware

Beyond the urgency of the day – the immediate concerns of VMware and Broadcom customers as they process their own ramifications – the survey reflects a longer-term outlook, one in which Broadcom and VMware customers find a new equilibrium. The injuries inflicted by the acquisition announcements are starting to heal. But what was planted back then might yet sprout into lasting cynicism, in the decisions customers make and in the wider industry perceptions, for years to come.

Understanding "MOVE" in IT Decisions

That emphasis is present in the way I use the word ‘move’ to refer to the tactical decisions firms must make as their technology ecosystem undergoes major changes. To ‘move’ means to compare the advantages of changing your current setup with the advantages of going another direction, not simply to change services. It means navigating the tradeoffs between cost, capability and continuity in an environment of continuing technological development.

The Broadcom-VMware drama also exemplifies how businesses prepare for and react to transformative changes in their operational technology. It further emphasises how important the words ‘move’ and ‘agility’ have become in the IT-strategy vernacular. As the dust settles and strategies take flight, the broader implications abound. How will the tech ecosystem evolve now that Broadcom has acquired VMware – and what will VMware’s role be within it?

Jun 08, 2024
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