VMware Partners To Broadcom: ‘Don’t Screw VMware Up’
‘Hopefully [Broadcom] brings good things. If they bring bad things, we’ll have to deal with it. Deep down I don’t want them to screw it up. … It’ll be a big deal if they screwed up,’ says one top executive from a national VMware channel partner.
VMware partners have a clear message for Broadcom, who is reportedly in discussions to acquire VMware: don’t mess up the company’s channel.
“It’s a pretty simple message really: don’t screw VMware up by forgetting about the partners. We still have to make money together to keep our customers happy,” said one top executive from a solution provider that’s a national VMware partner, who declined to be named.
“Partners are going to have to work with VMware regardless. When EMC was the primary owner, you had to work with them. When Dell was the primary owner, you had to work with them. We will still have to work with VMware if they change ownership to Broadcom because [VMware is] too prevalent in the industry. Period,” said the top executive whose solution provider has been selling VMware for well over a decade. “So hopefully they bring good things. If they bring bad things, we’ll have to deal with it. Deep down I don’t want them to screw it up. … It’ll be a big deal if they screwed up.”
[Related: Broadcom’s VMware Acquisition: 5 Things About Dell, Stock Prices And Hock Tan To Know]
On Monday, multiple news outlets reported that semiconductor and technology conglomerate Broadcom was in talks to acquire VMware. The deal would provide Broadcom with one of the largest enterprise software companies in the world with an annual run rate of $12.8 billion as well as new technology to boost its semiconductor business. VMware was recently spun out of Dell Technologies in November, becoming an independent company for the first since 2004.
VMware partners CRN spoke with said the news that Broadcom is looking to acquire the virtualization superstar was “surprising.”
“It’s surprising that Broadcom would buy it. Everyone always thought VMware was going to go standalone, either separate itself as a public company or have a bunch of private equities buy it out,” said one sales leader from a VMware partner who did not wish to be identified. “That’s a boatload of money that [Broadcom] is going to have to raise.”
The executive said many of North America’s largest and most innovative channel partners are all VMware partners.
“I don’t think there’s many channel partners that make any of CRN’s solution provider lists who isn’t a VMware partner,” said the executive. “Broadcom will need to make sure that it keeps [VMware’s] partner business intact. … Partners need to be able to work with VMware more than ever. Our hope is nothing from the channel—so like channel account managers, incentives inside partner programs, money to help with technical training, etc.—gets gutted.”
If VMware is acquired by Broadcom, VMware needs to come out with “strong messaging” for channel partners.
“[VMware’s] communication needs to be clear that either, ‘Nothing is changing.’ Or ‘We’re doing this differently now,’” said the top executive. “VMware is a whole lot bigger than CA Technologies and Brocade. So Broadcom better be prepared.”
Broadcom’s Acquisition History
Broadcom has a history of making multi-billion acquisitions including software standout CA Technologies in 2018 for nearly $19 billion in an all-cash deal.
In late 2019, Broadcom acquired Symantec’s $2.5 billion Enterprise Security business for $10.7 billion. Additionally, in 2016, Broadcom purchased networking and storage hardware company Brocade Communications for $5.5 billion.
However, not all attempted acquisitions have been successful for Broadcom in recent years.
Last year, it was reported that Broadcom was in talks to acquire big data analytics company SAS Institute for somewhere in the range of $15 billion to $20 billion. Last July, the deal ultimately fell through due to reports of SAS Institute’s co-founders changing their minds.
In 2018, Broadcom withdrew its whopping $117 billion bid to acquire fellow chip giant Qualcomm after receiving pushback from the U.S. government under former President Donald Trump’s administration.
VMware Stock Is Soaring
VMware and Broadcom investors have taken the news of Broadcom’s potential acquisition of VMware in different ways.
VMware’s stock is up 21 percent as of Monday afternoon, trading at $115.81 per share. VMware’s market capitalization now stands at $48.7 billion, compared to $40 billion on Friday prior to the acquisition news.
However, Broadcom’s stock is down 3 percent today, trading around $526 per share as of Monday afternoon. The company’s market cap has dropped from $223 billion on Friday to around $215 billion today.
VMware is set to report its first quarter 2023 financial earnings results on Thursday.