Broadcom completes VMware acquisition, promises investment

Broadcom has completed its $61 billion acquisition of cloud software maker VMware.

Hock Tan, president and chief executive officer of Broadcom, said on Wednesday the combined company would focus on enabling enterprises to build and modernize their private and hybrid cloud environments.

"Broadcom has a long track record of investing in the businesses we acquire to drive sustainable growth, and that will continue with VMware for the benefit of the stakeholders we serve," Tan said in a statement.

Chipmaker Broadcom plans to invest in VMware Cloud Foundation, the software stack for building cloud environments. Also, VMware will continue offering its catalog of cloud and edge software, including the Tanzu cloud-native application platform and VMware's software-defined edge for running enterprise and telco workloads across locations.

Where Broadcom hardware and VMware software might work together well is at the edge, where companies run computer systems to collect and analyze data gathered from devices running in stores, hospitals and factory floors.

"That's an area where Broadcom's hardware business might be a potential enhancement for VMware's [edge] strategy," said Shamus McGillicuddy, an analyst at Enterprise Management Associates.

McGillicuddy expects Broadcom to roll into VMware software from previous acquisitions, including security, infrastructure management, application development and network monitoring.

The acquisition is one of the largest in the tech industry. Broadcom first announced plans for the takeover in May 2022. The proposed acquisition raised concerns among VMware users and employees, who were uncertain which product lines Broadcom would continue to support post-acquisition.

In 2019, Broadcom acquired security company Symantec for $10.7 billion and sold most of its Cyber Security Services business to Accenture six months later. Months after acquiring CA Technologies for $18.9 billion in 2018, Broadcom sold off its Veracode SaaS platform, which allowed developers to test applications for security holes.

However, Tan insists that Broadcom is committed to supporting and growing VMware's business and plans to invest $2 billion a year in the company. Half of the money will go to research and development and the other half to accelerate "deployment of VMware solutions through VMware and partner professional services."

"As a part of Broadcom, VMware will have more resources and scale to support the number of customers that want its technology and services, and help customers deploy it more than it was able to as a standalone company," Tan said in a previous blog post.

Completing the acquisition means VMware can provide enterprises with a more precise product roadmap, no longer having to hedge on its plans, said Paul Nashawaty, an analyst at TechTarget's Enterprise Strategy Group.

"This should clarify any confusion about what's in the market for enterprises and give them clarity on the future direction," Nashawaty said.

What's unclear is whether VMware under Broadcom will innovate as well as it did when it was independent. Now, its product strategy will have to align with Broadcom's, Nashawaty said.

"How those two strategies will move forward, I don't know," he said.

Some analysts believed VMware was open to acquisition because it was losing mindshare among large corporate IT shops increasingly moving to SaaS-based software, lessening the need for infrastructure to run applications on premises.

Also, major cloud providers -- AWS, Google and Microsoft -- offer virtualization software built into their platforms, competing with VMware's software.

VMware has responded to changes in the industry by shifting its focus to multi-cloud technology. It also started offering SaaS subscriptions in 2021, which analysts said was later than most of its competitors.