Here's what Aussie VMware partners said about the proposed Broadcom deal

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Here's what Aussie VMware partners said about the proposed Broadcom deal

Chipmaker Broadcom’s proposed acquisition of virtualisation giant VMware announced last month sent shockwaves through the global IT channel community and the technology sector as a whole.

The reception so far has been mixed, citing Broadcom’s previous acquisitions of Symantec and CA Technologies, with the likes of ex-VMware CEO Pat Gelsinger, VMware employees and Gartner analyst Michael Warrilow weighing in.

Executives from both Broadcom and VMware have made assurances the virtualisation firm won’t face the same fate as Symantec and CA, with the former saying it was now “ready to embrace” the channel and the latter assuring VMware would be front and centre of the software division.

The US$61 billion deal is a 50-50 cash stock split that values VMware shares at a 44-percent premium to the company’s US$95.71 closing price on 20 May. VMware would then join Broadcom Software Group along with Symantec and CA upon completion, and the group will also be rebranded to VMware.

The acquisition brings together Broadcom’s large direct sales force with VMware’s existing channel program.

“There’s an opportunity to embrace the channel. The two-tier distribution model, with distribution partners and key, value-added resellers,” Broadcom Software Group president Tom Krause said at the time.

“When I look at that in its totality, what we can’t do today, we can definitely take advantage of with the newfound scale between the two companies.”


CRN spoke to a number of Australian VMware partners about the deal, specifically about how they think it would impact their respective businesses, the assurances provided by Broadcom, the plan to ramp up the move from licences to subscriptions and VMware potentially putting its prices up after the deal.

For now, at least the overarching attitude can be summarised along the lines of Ronald Reagan's famous maxim, "Trust, but verify."

The Missing Link
Karen Drewitt, chief operating officer

“VMware is an important partner for us, so we will be watching with interest, but it is very early to be speculating on the impact of the deal and what the implications are for The Missing Link and its clients. This includes Broadcom’s licensing models and pricing strategy.”

“Broadcom’s comments on learning from the CA and Symantec acquisitions and their commitment to embracing the channel need to be taken at face value. Whilst there is evidence that their past commitment to channel has been chequered, the same can be said for many vendors. My hope is that they have learnt from the previous acquisitions and the positives in terms of R&D investment and product enhancements outweigh any negatives associated with the possible turmoil associated with a takeover.”

Orro Group
Jonathan Plaskow, director, Cloud Services Group

“Orro Group is looking forward to understanding how Broadcom will operate the business with specific focus around accelerating partner programs. At this stage we expect the acquisition to cause minimal disruption to [Orro Group]”.

“Broadcom Software has been actively engaged in significant acquisitions recently, and our assumption is that they will apply lessons learnt to VMware. At this early stage, it appears that Broadcom are going to leverage the VMware brand considering its very strong market awareness. We take this as a sign of looking to preserve the VMware business and continue to invest in future innovation.”

Plaskow added VMware has always been very active in the channel and anticipates this would continue under Broadcom, and could even potentially integrate some of Broadcom’s other lessor channel-friendly businesses into VMware’s channel strategy.

On the move to subscriptions, he said the shift has been happening across the market already.

“This continued trend will enable the channel to better link our cost base to revenues as we seek to engage the market with subscription-style services. It is critical to that channel that we are able to maintain our margin profile through this transition.”

In terms of pricing, Plaskow said, “Ultimately, we believe that the market regulates all prices as the market becomes more competitive (public cloud or other private cloud technologies) and that VMware will need to respond accordingly.”

John Koutsodontis, general manager of managed services

“For more than 10 years, VMware has been and continues to be a key partner of Interactive. Our aligned cultural values and customer-first approach has strengthened our relationship over the years and enabled both of us to grow and innovate in the new multi-cloud world.”

“At this stage, we expect that Broadcom’s acquisition of VMware will only stand to benefit all parties and have a positive influence on our experience, and that of our customers.”

Silverfern IT

Liong Eng, chief executive

“I believe it is a great opportunity for Broadcom to bring together its other core software stacks together with VMware to form an even more formidable software layer that can really position them well in the public cloud against the Kubernetes open-source solutions.”

“The immediate impact is insignificant at first glance but it will certainly provide us a better pathway to take our on-premise clients to the public cloud with future VMware software.”

Eng added the two companies have “lots of synergy” and there isn’t much overlap with Broadcom’s other recent enterprise software acquisitions.

On Broadcom’s commitment to embracing the channel, he said, “It is still yet to be seen. The success would be dependent on their ability to execute such a channel model. If they adopt the VMware model then there is a better chance of success.”

Speaking on the move to subscriptions, Eng said, “I see most software vendors are now adopting subscription as a service model and I could see that VMware would also bring this model out anytime even before the acquisition was announced therefore I am not surprised and deterred by it.”

Eng also expects prices of VMware products will inevitably go up following the deal, but said, “If they could maintain the pricing initially that would make many partners happy but eventually the price would go up for sure. It’s just a matter of time.”

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