Last week, I penned my first formal analysis on Broadcom’s pending acquisition of VMware. Net-net, I encouraged any customers, ecosystem partners, and channel partners that weren’t sure of the deal to give it a second look if they haven’t checked in lately.
I said Broadcom will lean heavily into cloud growth and would invest in hybrid and multi-cloud products and services. I also said both CA Technologies and Symantec Enterprise were not on a leadership track with their product lines, but VMWare is, and that’s why Broadcom would handle VMware differently. Finally, I was surprised at just how communicative Broadcom has been about its vision of the deal, as this isn’t the norm for an acquiree of a public company. Normally, the acquiree says very little or nothing until the deal is approved by regulators.
As for pricing, I said if the new company had a mutually beneficial relationship with customers and partners, I expected they shouldn’t have any concerns. I inferred that if it was a money-losing relationship, they should expect changes.
I was wrong on that one.
Last week, Broadcom CEO Hock Tan made it very clear he wouldn’t raise prices. Crystal clear. Tan made this pricing declaration in conversations with some of VMware’s largest customers, and in the presence of VMware CEO Rangarajan Raghuram. This was more than what I call “executive happy talk.” In fact, Tan published a blog after the event entitled “Broadcom and VMware: Investing for customer value.” In it, Tan says, “I’ve continued to see questions in press reports about whether we intend to raise prices on VMware products. The answer is simple: No.” There we have it.
Interestingly, I did see some chatter on Twitter that this blog may be ‘exec weasel words’ and that this could mean that list prices won’t get raised and that discounts would be lowered. That strikes me as a bit fantastical. That can’t be the case. Why? Customers and channel partners would revolt if not bolt in fast fashion and lose trust in both Hock and Broadcom.
I consider this another example of Broadcom listening to its future potential customers and channel partners. While it would have helped Broadcom to be more definitive sooner, the company is responding to criticism, and we have to applaud it for that. It’s good to see Tan circumnavigating the globe meeting with VMware customers and writing about his decisions, commitments, and journey along the way.
I cannot wait to see what is in store for the cloud products and services if the deal closes, but my expectations are that this will come post-close. Then again, Tan continues to surprise us, so you never know.