It’s been nearly two years since Broadcom acquired VMware, and a turbulent two years at that. There has been plenty of disruption. Customers and partners have both been fairly vocal about business model changes. But as renewal deals have been signed things have calmed down for now. I recently talked to Prashanth Shenoy, vice president of product marketing in the VMware Cloud Foundation (VCF) Division of Broadcom about what’s going on with the integration, and what we can expect in future.
A few things really stood out in this interview:
- Clarity. The way Shenoy communicates what’s going on is really admirable. It’s well worth watching the video and/or reading the entire transcript because of that. His thoughts are well structured and very clear.
- Continuity. Prashant repeatedly makes clear that in fact a lot of the changes that have been made since the acquisition were already in play with VMware. The difference is that Broadcom tore off the band-aid. Broadcom made a dramatic shift, but the direction of travel was already in place. It’s not like Broadcom came in and threw away everything that VMware was doing. It just moved more aggressively and with more clarity.
- Chutzpah. Considering all the sound and fury about the acquisition, it was interesting to have Shenoy straight out argue that VCF lowered prices. As a VMware customer, industry commentator, partner, or competitor you will be surprised to hear that. But Prashant went there and made the claim that the biggest difference is the transition to subscription-based pricing and that in some cases there were reductions over what you would have paid for the equivalent VMware offerings. Bold moves and bold claims.
Shenoy challenged me about the industry at large and the transition to subscription-based pricing – frankly he’s absolutely right that we live in a subscription rather than a perpetual license economy. These transitions are indeed painful. Adobe for example got in there fairly early – customers still complain about the transition to a subscription-based model, but Adobe’s growth since the decision shows it was merited.
Here’s his take on on “price cuts”.
In fact, when we had our subscription product for VCF, it was $700 per core per year. And we cut it down for $350 per core per year, the list price, right? Which is a 50% reduction. So, the contrary to popular belief that we raised the price, we actually decreased the price. But there was a shift from perpetual to subscription.
One big theme of the conversation, and indeed the raison d’etre for VCF is portfolio simplification – he said that before the acquisition VMware had 9,000 SKUs for its cloud infrastructure product. It is absolutely inarguable that the VMware portfolio had become complicated, unwieldy, and messy. It needed to be simplified. There had been so many acquisitions, so many overlaps born of strategic shifts, that it was hard to fully grasp the portfolio. Tanzu for example started as a container platform, before it became a grab bag of technologies.
So, we went ahead and simplified the product based on what the customer wanted. give me a platform that truly helps me give a strong alternative to public cloud, like a true private cloud platform, right? And that was VCF. So, that’s where we focused our energy and intention. Portfolio simplification.
A lot of our customers now understand the value that the platform provides. In fact, we’ve seen some major improvements in the total cost of ownership once they go through the Capex hurdle. And we have seen a lot of our customers move their workloads, including the modern workloads, containerized workloads, onto VCF to run their business. So, it’s been a pretty exciting transformation, but with its bumps. We could have done a lot better in terms of communicating why we did this and bringing the customer along. But we were so fast in making the changes that it caused some disruption in the market.”
Certainly true. Change management is hard.
One area where VMware is in excellent shape is in data, infrastructure, and operational sovereignty. The market has moved its way decisively. Global geopolitics has pushed sovereignty right to the top of enterprise IT concerns in 2025, certainly in Europe and also to some extent Asia Pac. If private cloud seemed like a luxury that only truly made sense for regulated industries, now it seems more like a luxury not to be hedging with private cloud bets. And that’s of course where VMware has been investing and building. We also spoke a fair bit about personae. Shenoy said VCF caters to three key personae – the cloud admin, the platform engineer, and the developer who doesn’t even want to think about underlying services.
What do these apps look like? Enterprises want to drive value with new AI-based applications, but they’re really concerned about compliance, privacy, and security.
How can we help customers move at the pace of AI, pace of software, pace of what the developer needs? Those are the kind of customers that we are truly helping to work with to provide them a platform, the private cloud platform, on which they can run their business for both their containerized application as well as the VM application.
When it comes to AI, one question I had was about GPUs. Don’t we live in a cloud-based GPU world now? What can Broadcom offer customers there? Well – apparently some enterprises are indeed buying their own GPUs, and Shenoy argues that virtualisation capabilities are more important than ever.
So Broadcom has a platform called Private AI Foundation that it built jointly with NVIDIA – which is designed to allow enterprises the most efficiency for the GPU hardware they buy, with 25 years of innovation behind it – dynamic resource scheduling, v-motion etc. Inference and training require high performance, and high speed data connectivity.
One of the key, again, misconceptions in the industry has been like, hey, you can run all these AI workloads on bare metal. If you look at all of the hyperscalers, they don’t necessarily run it on bare metal. They have a Linux kernel that they run on top of. It’s the same thing with us, too. We run it on top of ESX, which is our hypervisor. And all of the capabilities of virtualization that we built in also comes along with that. So, when we have run performance benchmarks with MLPerf, we’ve seen pretty much VCF and vSphere retaining 99% of the performance of a bare metal with all of the other virtualization capabilities that I just talked about.
For more about the simplification around VCF and Tanzu I again suggest you watch the video or read the transcript. How Broadcom decided what was infrastructure and what were application services as containers and VMs collided, given the application and PaaS services in its portfolio. VCF now includes Kubernetes runtime services, but not the higher level services.
Before signing off I have to mention customer feelings, which are still running hot. We’ll see over the next few years how things settle down, especially as renewals come up again. The competition, notably IBM, is very focused on competing more head to head with VMware. Hyperscalers too sense opportunity, sovereignty issues notwithstanding.
But Broadcom is absolutely crushing it from a revenue and share price perspective. Remaining employees are certainly happy with their options. And the portfolio and messaging are a lot more straightforward. VCF is a marker. It was a good conversation.
disclosure: VMware is a customer and sponsored the video. IBM is also a customer.
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