VMware will be in a "fine position" should its proposed acquisition by Broadcom fall through, according to one industry analyst.
VMware's portfolio and current business strategy has put it in a strong position to attract other prospective buyers, according to Bola Rotibi, chief of enterprise research at CCS Insight, speaking to IT Pro.
“Certainly, it would signify that it was still potentially on the market for being sold, but VMware can certainly run on its own,” she explained.
The comments follow news that chip giant Broadcom could face an EU investigation into its proposed acquisition of VMware, putting the future of the cloud giant in uncertain waters.
Reuters cited people close to the situation who stated that EU regulators could open a full-scale investigation into Broadcom’s $61 billion deal, to determine whether it would constitute an unfair consolidation of power in the sector.
“If you think about VMware Explore, it showed good strategy and a good portfolio," added Rotibi. "VMware has found a way to align its virtualisation market share with supplying its client base with multi-cloud support, and is also doing a lot around providing sovereign cloud solutions, with strong operational support for multi-cloud services and strong partnerships.”
“I would expect all the authorities to do their due diligence, and to make sure that this is a deal that makes sense. Personally, I think it will go through, because VMware is not the only multi-cloud player in the market and Broadcom is not different from the other large players that bring together software, hardware and semiconductors.”
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The deal is hoped to improve Broadcom’s standing in the software market, but faces a number of regulatory hurdles before VMware can join the former’s subsidiaries, which includes Gen Digital (formerly Symantec and NortonLifeLock).
Regulators in Canada, South Africa, and Brazil have already given the deal their seal of approval, but those in the US, EU, and UK have not yet made their decisions public. In the UK, the Competition and Markets Authority is in the process of investigating the deal, and has invited interested parties to offer comments with a deadline of 6 December. No date has been set for its phase 1 decision.
Talk of the deal dominated the conference on day one of this year’s VMware Explore Europe, the company’s first annual conference in the region since becoming an independent entity.
Raghu Raghuram, CEO at VMware, addressed the deal at the very beginning of his keynote, noting that “once the acquisition is completed, VMware will become the software arm of Broadcom”.
Broadcom has made efforts to allay fears that VMware could face cuts as part of the deal, or change for the worse under Broadcom management. Hock Tan, president and CEO at Broadcom, denied rumours that Broadcom would seek to raise VMware’s prices as a result of the deal in a November blog post.
“VMware has a robust partner ecosystem that we will build upon to help us serve even the smallest companies. In short, we plan to take a “no customer left behind” approach,” Tan wrote.
“As workloads continue to grow rapidly across environments and multi-cloud options expand, a combined Broadcom and VMware will be focused on giving customers greater choice and flexibility over where and how they run their critical operations.
"We will invest in and innovate VMware’s products to create the next generation of technology that solves customers’ most complex IT challenges.”
When VMware left Dell’s control in 2021, much was made of its potential as an independent entity, and its strong standing as a leader in the sector, but just six months after this, Broadcom formally confirmed it would acquire VMware for $61 billion.
“Today’s move will strengthen our mission to be the Switzerland of the cloud industry, uniquely positioned to provide our customers with the best combination of options as we grow our robust ecosystem of partners,” wrote Raghuram at the time.
Regulatory investigations have put into question, or directly curtailed, several high-profile deals in the past year. In January, it was announced that Nvidia would walk away from its proposed acquisition of Arm, following moves by the Federal Trade Commission (FTC) to block the deal, and longstanding concerns over the deal in the UK, specifically aimed at what the deal might mean for domestic jobs.
IT Pro has approached Broadcom for comment.
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Rory Bathgate is Features and Multimedia Editor at ITPro, overseeing all in-depth content and case studies. He can also be found co-hosting the ITPro Podcast with Jane McCallion, swapping a keyboard for a microphone to discuss the latest learnings with thought leaders from across the tech sector.
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