Broadcom purchased VMware in November 2023<\/a> for $69B<\/a> ($61B in stock and cash buyouts<\/a> for existing shareholders in addition to taking on $8B of VMware\u2019s debt.)<\/p>\n Prior to the Broadcom acquisition, Pat Gelsinger went on an absolute M&A tear at the end of his tenure as CEO of VMware before leaving to lead Intel in 2021<\/a>, acquiring 24 companies from 2017-2020<\/a>. What was the rationale behind this?<\/p>\n VMware’s product expertise was in virtualization and networking, which meant its stronghold was in the datacenter. The rise of cloud computing and containerization shifted the market dynamics away from VMware’s historic areas of strength. Gelsinger\u2019s M&A was an attempt to strategically rethink their portfolio investments to remain relevant in a cloud-based \/ Kubernetes-driven world.<\/p>\n Some of the notable acquisitions include:<\/p>\n Acquired:<\/strong> Dec 2019 Pivotal\u2019s Cloud Foundry-based products and services were (re-)acquired to help bolster VMware\u2019s portfolio around enterprise application development and modernization.<\/p>\n Acquired:<\/strong> Oct 2019 Carbon Black strengthened VMware\u2019s cloud-native security offerings.<\/p>\n Acquired:<\/strong> Nov 2018 Heptio, founded by two of the creators of Kubernetes, was a strategic acquisition designed to help VMware respond to the rise of containerization.<\/p>\n Acquired:<\/strong> Aug 2018 CloudHealth\u2019s value prop was around cloud visibility and cost management, which was key to VMware\u2019s multi-cloud play.<\/p>\n Acquired:<\/strong> May 2017 Similarly, Wavefront played into VMware\u2019s multi-cloud strategy with cross-cloud analytics and monitoring.<\/p>\n Acquired:<\/strong> May 2019 Bitnami\u2019s acquisition was centered around helping make it easier for VMware customers to package and deploy apps.<\/p>\n Acquired:<\/strong> Oct 2020 SaltStack\u2019s configuration management tools were acquired to help with automation and infrastructure orchestration.<\/p>\n The commonality across all these acquisitions is that they were designed to help VMware branch out from an on-prem VM-based portfolio into something that could adapt to cloud and containerized workloads. Rationalizing this expanded portfolio and trying to communicate a new vision for the brand proved to be challenging.<\/p>\n Despite the creation of the Tanzu brand umbrella, at times it felt like the company struggled to find a cohesive offering. VMware seemingly swung back and forth between wanting to offer customers choice and modularity on one hand, and then struggling to help them navigate the portfolio\u2019s sprawl on the other.<\/p>\n Under Broadcom, the portfolio has been reduced to two primary offerings<\/a>: VMware Cloud Foundation and VMware vSphere Foundation. While there are other offerings at the company on top of these SKUs, like VMware\u2019s Private AI (watch more here)<\/a>, but overall the company is taking a vastly simplified approach to the level of choice available in their portfolio.<\/p>\n There have been reports of eye-watering price hikes<\/a> post-merger. While they feel startling, it should not be surprising.<\/p>\n Broadcom\u2019s 2021 investor day highlighted their go-to-market strategy<\/a> with this line on a slide: \u201c70%+ of total ARR from ~600 strategic accounts.\u201d<\/strong><\/p>\n But the upselling is not confined to just the top-tier accounts.<\/p>\n \n “Broadcom CEO Hock Tan expects his company\u2019s VMware business to grow double-digits for the rest of the year as Broadcom\u2019s sales teams work on upselling the 2,000 strategic customers he inherited on the parts of the VMware stack they don\u2019t use.” Broadcom’s overall revenue guidance for the fiscal year is $50B<\/a>, $20B of which are expected to come from software. In the Q1 earnings call<\/a>, Tan’s answer about software revenue growth said “the star of this show is the accelerating bookings and backlog we are accumulating on VMware.”<\/p>\n24<\/h2>\n
1. Pivotal<\/h3>\n
\nAcquisition Price:<\/strong> $2.7B
\nRelated RedMonk Research:<\/strong> Pivoting<\/a>, Pivotal: transactions, Kubernetes, and taking an axe to long term support.<\/a><\/p>\n2. Carbon Black<\/h3>\n
\nAcquisition Price:<\/strong> $2.1B<\/p>\n3. Heptio<\/h3>\n
\nAcquisition Price:<\/strong> $550M
\nRelated RedMonk Research:<\/strong> The Kubernetes World: VMware Acquires Heptio<\/a><\/p>\n4. CloudHealth<\/h3>\n
\nAcquisition Price:<\/strong> $500M<\/p>\n5. Wavefront<\/h3>\n
\nAcquisition Price:<\/strong> $375M<\/p>\n6. Bitnami<\/h3>\n
\nAcquisition Price:<\/strong> undisclosed
\nRelated RedMonk Research:<\/strong> Container Trends: Plans, Orchestration and CI \u2013 A Dataset from Bitnami<\/a><\/p>\n7. SaltStack<\/h3>\n
\nAcquisition Price:<\/strong> undisclosed
\nRelated RedMonk Research:<\/strong> Compliance as Code: The Configuration Management Ecosystem<\/a><\/p>\n
\n600<\/h2>\n
\n – O\u2019Ryan Johnson<\/a>\n<\/p><\/blockquote>\n