"A strong start": Broadcom CEO Hock Tan shrugs off VMware customer concerns over product "simplification" efforts

Broadcom CEO Hock Tan speaking during the opening stage of digital X special event, a leading Europe digitization events in Cologne, Germany on September 13, 2022
(Image credit: Getty Images)

Broadcom CEO Hock Tan says the company is aware of lingering customer unease in the wake of its $69 billion VMware acquisition, but retains a positive outlook for the year ahead. 

In a blog marking 100 days since the acquisition, Tan was largely optimistic about the group’s progress towards building the “world’s leading infrastructure technology company” as the company continues an overhaul of VMware’s business model. 

Since acquiring the cloud computing company in November 2023, Broadcom has made a number of significant changes described as a “simplification” of the VMware product portfolio, reorienting the business towards a subscription based model.

The shift has been previously characterized by Broadcom as bringing VMware in alignment with broader industry standards, and forms part of a wider transition toward subscription licensing. 

Tan claimed the changes were motivated by his desire to meet customer demand more effectively, and to provide better value through their products.

“[A]ll of these moves have been with the goals of innovating faster, meeting our customers’ needs more effectively, and making it easier to do business with us,” he wrote. “We also expect these changes to provide greater profitability and improved market opportunities for our partners.”

Despite this, he admitted being sympathetic to some less enthusiastic responses from customers and partners due to the level of change being undertaken over such a short period.

“We recognize that this level of change has understandably created some unease among our customers and partners,” Tan said. 

Citing Broadcom’s track record following previous acquisitions, a number of customers heavily invested in the VMware ecosystem have voiced concerns about where they stand as the company undergoes a significant transformation.

Broadcom has spared no time in overhauling VMware products

Broadcom’s first move was to cut perpetual licenses in December 2023.  It claimed the move was all about simplification and driven by customer complaints that VMware’s product portfolio and go-to-market strategy were too complex. 

The company announced it would continue to support customers operating under a perpetual license agreement for the period defined in the contract, but after that it would help them exchange these for subscription-based products.

Around this time, Broadcom also revealed it would overhaul the VMware Cloud Foundation and vSphere Foundation platforms, billed as another “portfolio simplification” focussed on distilling the portfolio down to what it views as VMware’s flagship enterprise solutions.

The most significant change here was the decision to halve the subscription list price and the addition of higher support service levels, which includes better support for implementing the solutions as well as lifecycle management.

In January 2024, Broadcom also axed VMware’s multi-cloud software as a service (SaaS) management suite, Aria, making it one of over 50 standalone cloud services that have been taken off the market since the acquisition.

Continuing Broadcom’s general movement away from offering individual SaaS solutions as standalone products, a number of these products including Aria are now only available as a part of the Cloud Foundation package.

Broadcom confirmed it planned to sell VMware’s end user computing (EUC) division to global investment firm Kohl Kravis Roberts & Co (KKR) as part of a $4 billion deal.

Broadcom has ramped up industry partnerships

There have been positive developments for customers since the acquisition, including closer integration with alternative industry offerings. 

For example, February saw Broadcom confirm its intention to further ‘shake up’ VMware’s licensing structure by supporting license portability of VMware Cloud Foundation to the Google Cloud VMware engine. 

This expanded support meant that customers who purchased VMware Cloud Foundation software via Broadcom could use their subscriptions for the Google Cloud VMware engine, and also in their on-prem data centers too.

Solomon Klappholz
Staff Writer

Solomon Klappholz is a Staff Writer at ITPro. He has experience writing about the technologies that facilitate industrial manufacturing which led to him developing a particular interest in IT regulation, industrial infrastructure applications, and machine learning.