Could someone who understands the situation better explain .. what are the business synergies between Broadcom and VMware? Is there any business overlap at all..?
Maybe buying and laying off is a profitable move, but I'd expect it to be done by investment firms that specialize in that. It'd be a bizarre financial gamble for a chip company. So there must be some angle where this makes sense for them and not for anyone else
It’s not that different from software focused private equity shops like Thoma Bravo. Buy a software company, starve it of resources, and price just below each clients BATNA. Revenue may decline over time, but costs fall faster and the buyer harvests that premium. There’s no synergies, just a willingness to be more ruthless and give fewer shits.
50% of Broadcom's revenue comes from Enterprise SaaS. They already have an APM play (CA Technologies), EPP play (Symantec Enterprise), and Data Security play (Symantec Enterprise). By acquiring VMWare, they can add a Private Cloud and Network Security play.
All these plays converge into allowing a company to buy their entire Enterprise Infra stack from Broadcom.
CA Tec, Symantec and now vmware - sounds like a combo of failed software companies which are no longer competitive and exclusively cater to boomer enterprise companies and close b2b deals with heavy bribes and quid pro quos
The whole point of a business is to make money. That's it. By catering to "boomer enterprise companies" also known as FORTUNE 1000 you can make billions a quarter.
No, the point of a business is to create good products. Making money is just the mechanism we've chosen to encourage people to do that, but the justification for capitalism has always been that it creates "the best products for the lowest cost". Only caring about making money, to the detriment of creating the best products for the lowest cost, is a perversion of the system, and we don't need to tolerate it.
old VMWare used to cater to boomer enterprise companies and thats how they sold their products.
These new owners however are not interested in catering to customers' needs - they just want to milk license fees like Oracle and outsource as much product development and customer support overseas as possible.
VMWare had a plenty of relatively low value sales motions such as channel sales, Mid-Market, SLED, and APAC.
By only concentrating on direct sales and renewals for F100, you will still have around 80% of the same sales revenue as before, but at a lower operational cost.
This is the same operating model that ZScaler, Crowdstrike, and PANW use.
Sometimes, that dollar on the ground simply isn't worth picking.
And ime, there's a reason why most VCs, PEs, and Sales Leadership are strongly opposed to companies and startups that target a Channel Sales GTM strategy.
They’ve run out of chip companies to buy, so they have to figure out how to buy software companies. This is a little bit speculative but I believe they’re substantially interested in VMware’s capability to buy and integrate other software companies.
It doesn't really seem like Broadcom has an overall plan. We used a load balancer, briefly owned by Broadcom, but for some reason they didn't want it and sold it to PulseSecure. Had they kept it they could have build something where they would provide an easy load balancer integration for VMware, but I don't believe that how Broadcom thinks.
Better Broadcom network drivers for VMware?
There's a lot of potential synergies, like tailoring network card to VMware, adapting their APM to enable for VMs easily. Storage solution optimized for VMware. I just don't believe that they think in those lines, or maybe they do when they want to justify their purchases, but then never follow up.
Overall I think it's weird that VMware has such a hard time existing as an independent company. They are pretty dominant in their field which very little competition. Most companies I've dealt with run VMware for at least part of their business. I see this as being just as much a failure of VMware management to run a successful near-monopoly.
> maybe they do when they want to justify their purchases
It's this. They are very strategic about where they invest money. If they can get around a 20x RoI they will build it. If they can't they'll shut downt the division.
This is all Avago. They bought Broadcom, eviscerated America's #2 communications chip company, and renamed Avago Broadcom to hide their crimes against humanity ...
On the eve of the US' favorite war criminal finally dying could we please not inflate our words. Corporate raiding is not nice but crimes against humanity?
kKR and Silver Lake (both private equity firms) created Avago.
Avago rolled up several companies including Broadcom and are 86% institution owned (Vanguard and Blackrock top 2)
Most of the layoff are marketing and sales as well as some engineering (it is a cut monthly cost and reap the revenue flow acquisition).
A slim chance of Avago/Broadcom utilizing its full enterprise SaaS hardware/software stack as I suspect it was just for "prospective show" in getting the acquisitee companies to be suckered in into the acquisition deal.
I continue to find it vexing that these articles don’t include whether this is news to the employees involved. The transitional offers were, I have heard, pretty good.
Yep, I do my development almost entirely within a Linux VM on a Windows laptop. Workstation already feels kinda neglected (lack of support for distinguishing between P and E cores is one recent unresolved pain point), so all of this is really putting me on edge.
Then I would have to reboot all the time to switch back and forth. And hardware acceleration is better on Windows, so I usually have web browsing, music, videos, messaging, etc, running on Windows on one monitor or virtual desktop while my terminal is open in the Linux VM on another. Like another commenter mentioned, power management on Windows is still better, too.
It's a pain in the ass to set up sometimes, but you can pretty much always get better battery life in Linux nowadays. Even with hybrid graphics laptops.
VMWare has the best virtual graphics performance IMHO. Hyper-V or Virtualbox is just painful in comparison. Until graphic vendors support partitioning GPU resources to allow sharing the main GPU to a VM using passthrough, it will likely remain one of the best options for many.
Yep, this is the exact reason. I started on Virtualbox but jumped over to VMWare because the graphics virtualization was too broken under Virtualbox to do testing for web browser development (I was interning at Mozilla at the time).
The theory is "we already have a finance, S&M, admin etc" so we will dump the other one wot we just bought. That will instantly fix up the PandL and BS and the share price will simply head north because we have dumped duplicated cost sinks. Loverly
Obviously, we won't bother to compare functions and functionality now 'coz ours will be the better one, 'cos its ours.
Broadcom seem to be a firm of breakers, shakers and dumpers.
So is VMware. Not as severely so, but they took apart a bunch of systems in Pivotal because they already had one. Never mind that Pivotal’s version worked and VMware’s didn’t.
Especially amusing (in hindsight) in the case of provisioning test VSphere clusters.
1/2 of all Australian employees are getting made redundant, and it looks like 100% of new Zealand employees are out. Several office locations in Oceania are gone.
Hey proxmox, maybe get off your a$$ and put out a good multidatacenter management product so that I can transfer vms/manager resources between my clusters? It's one of the few features that keeps part of my operation on vmware instead of on your product.
Yes I am aware. That uses corosync and is fine if you are running a few servers in one location with large data pipes between them. That is only part of what is needed to compete with vmware (and xcpng/xen orchestra for that matter). The missing piece is the management software to tie multiple clusters together across different physical locations for administration and (ideally live) vm migration.
Where I'm at, it's applications that teams don't want to spend time moving to containers, or they claim the app runs better on dedicated VMs, and in other cases they just aren't ready to move yet and still need to add capacity until that time comes. Even teams that are utilizing containers heavily in some areas are still building hundreds of VMs for other parts of the app.
Containers first might be fine for a net new application. But if something is already 10-20 years old, that isn't going to change overnight. I think it would take something drastic for us to get off VMs completely, even if I'm looking 5-10 years out.
You act has if windows does not exist. My company and most of the companies I know run on windows server for line of business functions which are one prem when run on VMware
Contaniers and Linux may run the cloud but at least in the US Microsoft owns on prem workload for every day business functions
For every Linux server I manage there is about 30 or 40 Windows servers
You must work in a very niche market, in my last 25 years, 100% of the company I worked for were primarly based on windows servers. Yes there are linux servers and the number is increasing, but still represents a very small percentage compared to windows server.
Outside of web development and web-based servers Yes it's growing just fine
There's no doubt that Linux owns the web but for everything else there's a crap ton of legacy business software line of business apps databases file servers and tons of other things that run on Windows server
All of those trends are based on WEB SERVERS, as is every other online metric you will find.
I can not provide you an Install count stat, i am sure someone deep inside Microsoft knows that number, but windows servers are used in non-public facing workloads. Not on the Internet.
that deviation happened years ago.
However since we are talking about vmWare which is also using mostly in non-internet facing workloads then it is relevant.
I have some 20 years of experience as a system administrator on internal IT Teams, I don't support cloud apps, I do not develop cloud apps, i dont do DevOps, the only "cloud" companies like mine use is Office 365. I work exclusive on supporting internal workloads for companies in the Manufacturing / Industrial market segments
For industries like mine windows is the dominate server platform, most of our software vendors require it, often also requiring SQL Server. Hell I have multimillion dollar pieces of equipment that come in with Windows 10 has system they are using to control them.
You kind of started off by saying that Google trends data only represents web servers which is entirely incorrect and has no relationship with how Google trends works or what that chart represents.
So I don’t really know how else to respond to this… it also relies on a secret magic number that nobody can see that shows the real truth so it’s kind of a silly argument.
If windows server usage is growing surely there must be a lot of compelling evidence to back it up?
Interesting question. Before anything else, we need some basic services like dns, mail, git, etc. How do you suggest deploying these in a on-prem/selfhosted environment? I assume not on Kubernetes or the like as that could cause chick-and-egg issues?
Its this. Domain controller, dns, nessus scanner to start at every office site. Next up legacy csttom windows apps. Maybe i could add a lot of complexity and throw those in kubevirt but there isnt a massive benefit when my work load looks like so very many other medium sized non software businesses:3-10 vms per site across 3-20 sites handles our entire workload when combined with o365 for business
Instead of leveraged buyouts, we now have layoff buyouts. Acquire firm, minimise headcount, keep lagged revenue on existing assets and IP for 5 years while reaping profits on 90% margins.
Same as: acquire renown company making a solid product, substitute product by something from China at a fraction of quality/cost, still charge the same for the next couple years until word has spread.
Pyrex is notorious for this. The whole brand used to be about it being borosilicate glass, but they substituted it for standard glass which - surprise - shatters under thermal stress.
Kodak Print for one. Kodak Print was spun off into a holding company called Kodak Alaris who then sold it to a Chinese investment firm who aren't doing anything with it other than constantly increasing prices to squeeze hospitals and university labs.
if you're talking about hand tools, they've always been average quality at best. The real advantage has been the warranty, which from what I understand is still honored.
Craftsman power tools are absolute joke and might as well have a fisher price logo on them.
the replacement ratchet I got from craftsman (lowes) to replace my small (1/4?) drive for free is much much better than the one i bought originally in 2010.
No they didn't become a private equity firm, a private equity firm's roll-up firm bought the old broadcom and took the acquisition target's name. They didn't change the ticker though it's why they're still AVGO on NASDAQ. Looks like KKR and silver lake were the private equity folks that created avago which started rolling all these firms including broadcom whose name it took
Silver Lake was also partner of Michael Dell in taking Dell Computer Corp private (while keeping VMware public) and they did all sort of financial machinations to screw VMWare shareholders
Well, very simplistically, yes it is correct and should be expected to reduce headcount post-acquisition, that is the GCSE ('grade school') business studies answer: there are core functions which are non-linear in business growth if you like; that have an 'absolute' requirement but without a marginal need to grow as fast as the rest of the company. Thus an acquired company that is well-integrated doesn't need its payroll department any more, say.
And you don't buy out a company entirely because you like the way it's running(^) and just want all the profits for yourself. You buy it as a company because you think you have some kind of 'synergy' with it, or as an individual because you think you have better ideas for it; in either case you have some change to make that makes it worth more than it's present market valuation. It would be weird for an acquisition to result in no change.
(^So you like everything except think the dividend should be higher, I suppose.)
If there are overlaps, headcount reductions of those overlap make sense. Furthermore the takeover company must have extremely efficient existing staff with maybe 20-40% spare capacity to take over. I have seen multiple takeovers with overworked of inefficient existing staff before takeover. The takeovers destroyed that acquired business within 3-5 years simply because they dont have the people to run it after firing the previous efficient and well-trained staff. In fact their own existing staff quit because felt underpaid with the extra tasks due to let go staff. Double whammy. Overlapped staff like managers and sub-c suites still retained....which could easily cost about 20-30% of the salaries of those retrenched workers. They are also the absolutely most incompetent one that drove the business to failure. After 25years seeing how mergers ended up I come to the conclusions: #1 MBA schools are absolutely wrong about the benefits of mergers (always dont trust MBAs, if they are that good, they run their own business), #2 there is no such thing as companies synergism from mergers (but MBA called it "if realized" which simply doesnt exist in reality but might hinted on paper), and #3 the person approving mergers never have any management education and a lot not even having MBAs but fully trust some MBAs wearing nice suit especially giving off London English or behave like Steve Jobs demeanor.
So the parent of this comment claiming "keep lagged revenue on existing assets and IP for 5 years while reaping profits on 90% margins" is wrong by a huge amount, right?
Next year: Tripplex, a new startup from ex-VMware employees that promises 2X the performance of any other virtualization platform and doesn't charge for "extra" features!
What’s the situation with Avago products? I use some of their fiber optic signal receivers/transmitters (200um-400um jacket I believe?) but now they’re Broadcommed.
"broadcommed"... Today's Broadcom is renamed Avago. It was Avago which bought Broadcom and adopted its name. It's quite possible something like that will happen with the VMware brand.
I really wish there was a netiquette (does anyone still remember the term?) that paywalled articles shouldn't be posted on news aggregators like this one.
Maybe buying and laying off is a profitable move, but I'd expect it to be done by investment firms that specialize in that. It'd be a bizarre financial gamble for a chip company. So there must be some angle where this makes sense for them and not for anyone else