How does VMware’s cloud strategy stand to be impacted by the Broadcom acquisition? Observability, partnerships, and as-a-service models are important considerations.
This month has been jam-packed for VMware.
Among the many topics covered at the May analyst day was “enabling the Dev and Ops transformation.” After that, the Broadcom acquisition became public knowledge. A number of emerging items that are essential to building a cloud ecosystem may see intriguing effects.
“Broadcom-VMware” The norm has shifted to multi-cloud
Organizations typically use three cloud service providers, according to our ESG report “Distributed Cloud Series: Application Infrastructure Modernization Trends” from earlier this year. Over the following twelve months, that figure is expected to rise. Another increasing trend was the fact that 40% of firms handle six or more on-premises data centers, according to the same survey. Also happening at the same time is a trend toward fewer apps per data center among various enterprises.
Concerns regarding the future of VMware’s investments have many analysts up in the air. It is difficult for me to fathom that VMC (VMware Cloud) would not receive the appropriate funding. At the moment, VMC is available as a cloud service on Alibaba, Google Cloud, Microsoft Azure, and AWS. If you want an on-premises solution, VMware offers VMware Cloud on AWS Outposts, Dell EMC, and VMware Cloud Foundation, all of which use the same technology. When considering where companies are putting their money, this becomes crucial.
In what ways does this contribute to a VMware cloud strategy? Here is where Broadcom is active at the moment and plans to increase their presence going forward. Moving “cloud-like” models to smaller data centers, the telco edge, and the cloud are all parts of the future. Considering the current state of VMware’s product line, the trend toward as-a-service models, and the direction that customers are taking their on-premises and cloud data centers, it becomes clear that many more Broadcom products will require the development of an as-a-service model. Possessing preexisting relationships and sales teams is also beneficial when selling processors to cloud providers and the telecom edge.
My coworker Paul Nashawaty recently made a comment about VMware aiming to be the Switzerland of clouds, which aligns with my own views on cloud-native and application modernization. The success of cloud computing will depend heavily on cloud-native technologies and the ecosystem for app modernization. Additionally, I find it intriguing to see if they can forge new alliances in the cloud-native arena, especially if Broadcom chooses to reduce its efforts in this area, as Paul mentions.
VMware’s standing in the collaboration
From its inception, VMware relied on a partnership approach. VMworld was a world unto itself, with its own ecosystem. Has VMware missed an opportunity to reevaluate its partnership practices in light of the rise of alternative gatherings like last month’s KubeCon, which entrepreneurs utilize to connect with customers and partners?
Just for fun, what if VMware decided to cut ways with Tanzu and form a partnership instead? You should just make it even simpler to install its hypervisor on any Kubernetes environment. Bring infrastructure elements that are developed in VMware’s virtualization layer but not in Kubernetes up to speed so that ESX can run as efficiently as possible. Simply said, make it such that constructing a cloud with SUSE Rancher or Red Hat OpenShift is as simple as clicking a button in AWS EKS. With its emphasis on infrastructure as code, the VMware layer almost disappears. In this regard, intriguing “Switzerland-like” collaboration possibilities may arise.
Investigation of observability
When VMware’s Cloud Management Business Unit (CMBU) stops making products, what will happen to them all? Will they be incorporating all of CA Technologies‘ observability-related software features? Frankly, “What are your thoughts on CA’s observability products?” is a question that never comes up. One could assume that the CMBU group could offer a standard suite of products with an emphasis on performance, pricing, security, identity access control, and configuration. Just as before, I expect a lot of red tape here, but in the end, it might attract more investors than VMware would have gotten on its own.
All of VMware’s other infrastructure components rely on the company’s ongoing efforts to integrate its acquisitions in this area. With the continued development of these observability products to bolster multi-cloud and other cloud technologies, I can see VMware carrying on with that effort. The efforts put into the CloudHealth acquisition are a prime example; these services were already compatible with cloud-native infrastructure, including AWS’s. A larger portion of VMware’s product line is now supported by CloudHealth.
Ultimately, it is about money
One intriguing twist is that Broadcom can now take advantage of VMware’s efforts to become an as-a-service company, which is particularly relevant in the IaaS or SaaS area. An example is the Universal License, which has the potential to allow customers to run their IaaS workloads anywhere. Although it is still in its early stages, this is precisely what organizations are expressing a need for: the capacity to transfer licenses.
However, VMware continues to face this difficulty. Moving from perpetual to as-a-service licensing is a lengthy process, at least in my experience. Conveying the value proposition and constructing the model and SKUs are the simple parts. The challenge lies in influencing both external customers and internal staff, especially sales teams, without destroying a company’s budget and stock price.
I tend to have a more hopeful outlook on what’s going to happen, while I do share the caution regarding some of the product lines. It’s not all unicorns and rainbows for me, but I do see how some parts make perfect sense. Execution, rationalization, and integration are the three deciding factors, as Paul sees them.
Investing in the cloud and keeping an eye on observability is a good idea. For the foreseeable future, Broadcom will strive to achieve its financial goals and keep consolidating. VMware has the key to unlocking the value of Broadcom’s other acquisitions. Gather your popcorn, because we are going to watch.