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News Junction > Blog > Technology > VMware/Broadcom: Prepare for legacy support
VMware/Broadcom: Prepare for legacy support
Technology

VMware/Broadcom: Prepare for legacy support

Published June 14, 2024
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Broadcom’s $69bn acquisition of VMware last year follows on from a number of smaller but significant software acquisitions the company has made over the past few years. These all appear to point to the company’s appetite to develop a software business built on acquiring the customers of these businesses.

In 2018, Broadcom acquired CA Technologies. At the time, sourcing advisory firm ISG noted that the acquisition provided Broadcom with a potential source of profit growth. “The company could extract additional value from an already profitable business and boost its top and bottom lines,” ISG said.

When it acquired Symantec for $10.9bn in 2020, Broadcom CEO Hock Tan said: “We look forward to expanding our footprint of mission critical infrastructure software within our core Global 2000 customer base.”

Broadcom said the transaction had the potential to drive more than $2bn of sustainable, incremental, run-rate revenues.

The acquisition of VMware, which completed at the end of 2023, has seen Broadcom move VMware customers away from perpetual software licences to software subscriptions. It has also changed licensing and introduced software bundles that have made the VMware platform more expensive for some customers.

CloudBolt Software, in partnership with Amazon AWS, recently commissioned Wakefield Research to survey 300 IT decision-makers about how Broadcom’s acquisition of VMware has affected their plans. Almost all (95%) of the IT decision-makers who took part in the survey were concerned about the impact of the Broadcom acquisition on their IT strategy. According to CloudBolt Software, some customers may feel they will need to accept steeper prices.

“For those planning a partial or complete shift away from VMware, the short-term disruption is expected to be severe, given the extensive planning and risk mitigation such migrations would entail,” CloudBolt Software said.

During a panel discussion that took place at the Nutanix Next 2024 conference in Barcelona, industry analysts assessed Broadcom’s plans for VMware in the light of how it has integrated the acquisitions of CA and Symantec.

Simon Robinson, principal analyst at Enterprise Strategy Group, pointed out that the architecture of datacentres has not significantly changed over the past 15 to 20 years. He said: “The opportunity that Broadcom saw was to take in a large business that has established itself in most of the datacentres globally.”

In many ways, VMware revolutionised the way datacentres running PC server racks are organised and managed. The opportunity it grabbed was that IT departments used to run applications on dedicated physical servers. As more enterprise applications were deployed, more physical servers were needed. This not only meant that IT departments filled up valuable datacentre space, but also the servers were heavily underutilised.

The ability to virtualise servers meant that several VMs (virtual machines) could run on each physical server, which increased server utilisation.  IT departments bought into this concept and went through massive server consolidation exercises, replacing physical hardware with VMs to run their enterprise applications. As VMware adoption increased, commercial off-the-shelf software that previously ran only on “bare metal” physical servers were certified to run on VMware-based IT infrastructure.

While today, containers arguably offer a more efficient option in  those organisations that have a cloud-native strategy, Steve McDowell, chief analyst at Nand, considers the situation with VMware similar to Oracle database customers. “VMware is totally sticky and it’s expensive as hell to change out,” he said.

Legacy IT

The panel of industry analysts at the Nutanix Next event agreed that VMware-based infrastructure is not going away. Even if IT leaders choose to abandon Broadcom, there are plenty of technical hurdles they need to overcome if they wish to use an alternative hypervisor, such as the Acropolis hypervisor provided by Nutanix or Red Hat’s KVM. IT leaders may find some software providers only certify their products on VMware.

IT leaders will need to prepare for the inevitable era of legacy VMware infrastructure, in the same way that they need to maintain older systems such as mainframe-based software. This will add to IT departments’ technical debt.

Natalya Yezhkova, research vice-president at IDC, said: “We’ve had a range of technologies which went away, but are still here.”

So, while containers may be the preferred IT infrastructure deployment choice for new and modern applications, there is a long tail of older software which will likely remain on VMs. The majority of these will inevitably use the VMware hypervisor. Given McDowell’s points on VMware’s “stickiness”, it seems highly likely it will remain embedded deep inside datacentre infrastructure for the foreseeable future.

McDowell added: “VMware is not going anywhere. Broadcom is laser-focused on high revenue, high-margin businesses.”

#VMwareBroadcom #Prepare #legacy #support

TAGGED:legacyprepareSupportVMwareBroadcom
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