VMware Explore: All Eyes on Approaching Broadcom Acquisition
Broadcom will immediately invest $2 billion in VMware when the deal closes.
Also during VMware Explore 2023, VMware and Nvidia announced a new full-stack platform for private generative AI for enterprises.
VMware Private AI Foundation with Nvidia will enable enterprises to customize models and run generative AI applications, including intelligent chatbots, assistants, search and summarization. The platform will be a fully integrated solution featuring generative AI software and accelerated computing from Nvidia, built on VMware Cloud Foundation and optimized for AI.
Jensen Huang, Nvidia’s founder, said the two companies have been working on this “dream” and “vision” for many years.
“VMware reinvented enterprise computing and defines it to this day,” he said. “VMware is the operating system of how the world’s companies are run, 300,000 companies around the world are run on VMware. Today, we’re reinventing enterprise computing after a quarter of a century. In order to transition to the future, in order to transition to accelerated computing and generative AI, our teams, hundreds of engineers, worked on this for several years. This is groundbreaking computer science.”
During his keynote, VMware‘s Raghu Raghuram said multicloud and generative AI are major themes for VMware, but it wasn’t that long ago that multicloud was still a new concept.
“A few years ago when we first talked about multicloud, a few of you were doing it,” he said. “But today, more than 75% of you are using two public clouds or more. You’re using a private cloud and you’re building out your edge. This is multicloud here today. That’s an everyday part of your reality.”
VMware is focused on helping partners and customers be successful by helping them adopt what it calls a cloud-smart approach, Raghuram said.
“The cloud-smart approach is about finding the right infrastructure for the right application, and taking an architected approach to your cloud journey, and tying it all together with common management, and networking and security so that you achieve your digital transformation even faster while optimizing your expenses,” he said. “So we created a whole set of cross-cloud services to help you along this journey, to help you accelerate your application delivery, to modernize your cloud infrastructure, to deliver on the vision of autonomous workspaces and build out the software defined edge. Many of you have been very successful on this journey over the last year.”
During an executive Q&A, Raghuram detailed how Broadcom’s ownership of VMware will differ from Dell Technologies’ previous ownership of his company. Dell completed the spinoff of its 81% equity ownership in November 2021. EMC acquired VMware in 2004, and Dell and EMC merged in 2016.
“Structurally, the difference is when we were owned by EMC and when we were owned 80% by those companies … we operated as a completely standalone company with our own operating board and governance, and so on and so forth,” Raghuram said. “Post the close of this transaction, we will be 100% owned by Broadcom. So we will not have our own stock ticker, for example. We will not have our own board, so we will just operate as part of Broadcom. That is a big difference.”
Sumit Dhawan, VMware’s president, said Broadcom’s operating model is when they acquire businesses, they let them operate independently.
“So our operations in terms of the strategy that we laid out and the portfolio we deliver, and how we serve customers, that will stay on as a mission of VMware regardless of the ownership,” he said. “So it’s more important to know what’s similar, which is we’ve always had a focus on our strategy and mission, operated independently … under EMC and Dell, and it’s going to be the same [under Broadcom].”
In an interview with Channel Futures, Ricky Cooper, VMware’s head of worldwide partner and commercial sales, told us how partners can make use of Private AI Foundation.
“They’ve got to make sure that they’re producing solutions that customers can derive value from,” he said. “That’s the piece that’s causing the caution I would say at the moment. Once you get a couple of use cases, and they’re coming, we’re hearing about it every single day, then you’ve got a proposition for the customer and you’ll see things just take off. And then the beauty of IT is that you see everybody replicate the same thing, so you’ll get to four or five real big use cases. There’ll be niche ones, of course. You’ve got some big partners want to be involved in the huge initiatives, and you’ve got some niche partners.”
Partners have “huge plays” and everyone has a different role to play, Cooper said.
“But the first thing is we’ve got to bake out what those use cases are and what value the customers get, because that’s going to drive the profitability for everybody,” he said.
Cooper began his role with VMware a little more than a year ago, and says a lot of changes have taken place since then. The most important is increasing ease of doing business for partners.
“Our partners now have to know so much and piece together so much in order to provide the customer with that solution,” he said. “So ease of doing business with VMware is critical because if you’re 10% of that process, you don’t want to be the block in the chain. You want to make it easy to do business. We’re experts in producing solutions and producing products. They’re experts in how you quote, how you order, how you put it into the hands of the customer. How do you finance some of these partners? They’re taking a lot of strains; it’s not just the operational, it’s the financial strains. So the strain isn’t with us anymore. And I would say we had multiple people touching orders, multiple people to go and pay on touching those orders. Now, it’s very simple. If you increase the benefits to the partners and to the distributors, they carry the motion for you.”
VMware partners are excited about Broadcom‘s upcoming acquisition, Cooper said. The applause and cheers following Tan’s speech “speaks volumes” about the “sense of excitement.”
“Last year was trepidation and everybody was guessing,” he said. “Nobody knows anything different than they did this time last year, but they’re coming to terms with some of the great statements that Hock made about the $2 billion investment he was talking about. And he mentioned it again today about the partner ecosystem and working with partners, and they’re essential to the go-forward motion. They’re very much in Hock’s plans through what he said. So I think that then drives excitement.”
In the meantime, it’s been business as usual for VMware and its partners, Cooper said.
“I can’t worry about what the future might hold so we’ve done a really good job this year of delivering through some of that turmoil,” he said. “I listed all of the things that we’ve had to deal with, the conversion of some of our perpetual business into SaaS and subscription. Operationally, that’s huge. To our partners, that’s huge. Partners at one point were worried — please don’t switch off perpetual — and the governments and the public sector particularly love that whole motion. It’s still there and we still have the SaaS piece. Then we’ve got the spinout from Dell. We’ve got the proposed acquisition here. There are so many things that have happened. Now we’ve got AI taking everybody’s attention. Yet we’re still delivering for partners, and our partners are responding to that. So that’s been our focus.”
Not all VMware partners are making full use of what the company has to offer them, and the Partner Connect Portal is showing them how they can do more and get more, Cooper said.
“That partner portal has been fantastic because you can actually talk to them about, ‘OK, you’re in these two lines of business, here are the other lines of business,’ and they [say], ‘OK, we’ve got a practice here; OK, we can drive some value in this area,'” he said. “So you’re having more meaningful conversations. You’re able to talk to them about how you can improve incentives and make the best of the VMware relationship. That’s what it’s all about. So digitizing that. We were behind the industry and now we’ve come up to speed, and it’s been very helpful in taking partners to a place that they haven’t been before with VMware.”
Cooper said he’s going to be busy in the months ahead following VMware Explore.
“We’ve done a lot this year,” he said. “Partner Connect 2.0 has been well received, but there’s still work to do there as well, taking our customers’ and partners’ feedback, and then really starting to explore this opportunity with regard to AI while keeping the main focus on our multicloud vision, and really just making sure we still feel that. Many of our customers are adopting the cloud first, but there’s still a long way to go for all of our customers. And we’re seeing more and more business from the midmarket. As their capabilities grow, they’re starting to use our software more and more, which has been fantastic to see. We’ve got great growth in commercial and midmarket, so they’re obviously maturing, using what we used to consider enterprise software in these areas. So we’ve got to start that journey for many of the customers and then they get to cloud chaos. And you look at our cross-cloud capabilities there … helping them to secure, protect and manage their environments. So that’s going to be a huge piece for us.”
Cooper said he’s going to be busy in the months ahead following VMware Explore.
“We’ve done a lot this year,” he said. “Partner Connect 2.0 has been well received, but there’s still work to do there as well, taking our customers’ and partners’ feedback, and then really starting to explore this opportunity with regard to AI while keeping the main focus on our multicloud vision, and really just making sure we still feel that. Many of our customers are adopting the cloud first, but there’s still a long way to go for all of our customers. And we’re seeing more and more business from the midmarket. As their capabilities grow, they’re starting to use our software more and more, which has been fantastic to see. We’ve got great growth in commercial and midmarket, so they’re obviously maturing, using what we used to consider enterprise software in these areas. So we’ve got to start that journey for many of the customers and then they get to cloud chaos. And you look at our cross-cloud capabilities there … helping them to secure, protect and manage their environments. So that’s going to be a huge piece for us.”
VMWARE EXPLORE — The opening keynote of VMware Explore 2023 featured a surprise appearance by Broadcom CEO Hock Tan talking up his company’s upcoming $61 billion acquisition of VMware. He also said, upon closing, Broadcom will immediately invest $2 billion in VMware.
This week, the UK’s Competition and Markets Authority gave its final blessing to the long-pending transaction. And Broadcom expects to close the purchase on Oct. 30.
Tan’s comments were via video and he was in the audience during the opening keynote.
Broadcom’s Hock Tan
“I’ve said this before and it’s worth repeating. The proposed combination of Broadcom and VMware is pro-competitive and will deliver great value,” Tan said during VMware Explore 2023. “It will advance the vision of workloads running in a multicloud environment. Our combined customers and partners will have access to a stable, growing and powerful multicloud platform underpinned by world-class security, and enabling them to accelerate innovation for all their applications.”
VMware Explore: Investing in VMware Products, Services
Once this transaction closes, Broadcom will focus on investing in VMware products and services, Tan said.
“In fact, Broadcom will immediately invest an additional $2 billion a year to better unlock customer value,” he said. “Half of that investment will be focused on R&D. The other half will focus on helping to accelerate deployment of VMware solutions through VMware and partner professional services. Broadcom will invest in growing VMware’s partner ecosystem to help them grow their own businesses and better support our mutual customers.”
In the meantime, the transaction is progressing well, Broadcom is in the advanced stages of regulatory review and “we’re working very well with the regulators,” Tan said.
“We are highly confident this transaction will close within Broadcom’s fiscal 2023,” he said. “The potential of what Broadcom and VMware can do together for customers is just simply enormous.”
VMware’s Raghu Raghuram
Raghu Raghuram, VMware’s CEO, said Broadcom announcing the acquisition in May 2022 is one of the most important milestones of the last 25 years for his company.
“Now, over the last year, I have spent a lot of time with [Tan] and I know that he’s spent a lot of time with all of you, meeting hundreds of you in one-on-one and group meetings,” he said. “And I can tell you today that he’s even more excited by the potential of VMware than he was last May.”
Scroll through our slideshow above for more from VMware Explore 2023.
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