You guys, I Promise I Won’t Completely Dismantle VMware. Honest!

Posted on Saturday, May 13, 2023 by Ned Bellavance

Featured in this episode of Chaos Lever

The beleaguered attempt of Broadcom to acquire VMware continues to hobble along in the courts. With investigations launched by the UK, US, and EU, an actual merger appears increasingly unlikely, but Broadcom isn’t ready to give up the ghost yet.

To push back on the speculation that VMware R&D would be gutted and go into full revenue extraction mode, CEO of Broadcom Hock Tan has promised to spend $2B a year on research and development at VMware. Or more accurately, he promised to invest an incremental $2B a year to better unlock customer value, with “half focused on R&D and the other half focused on..VMware partner professional services.” There’s definitely enough weasel words in his actual statement to easily wriggle out of the $2B commitment.

It’s also important to note three things. 1) VMware spent $2.7 on R&D last year, so this is a decrease in spending. 2) Hock Tan included R&D and Professional Services in his statement, meaning less for both. 3) VMware (if acquired) would be the gem of their larger software portfolio, all of which could now be considered VMware in some way. Further diluting the investment.

Broadcom was pretty aggressive about their revenue projection and cost cutting when the deal was first announced, and now they appear to be trying to straddle the line between happy investors and satisfied regulators. I’ll note, no one appears to give a fig about the customers. As is tradition.