Unleashing VMware’s Potential: Cracking the Code of Multicloud Complexity and Generative AI with Broadcom

Unleashing VMware’s Potential: Cracking the Code of Multicloud Complexity and Generative AI with Broadcom

2023-08-20 21:25:27

VMware’s future: Navigating multicloud complexity and generative AI under Broadcom’s wing

The Federal Trade Commission continues to delay its approval of Broadcom Inc.’s acquisition of VMware Inc., which some believe harms competition in the industry. As the artificial intelligence era gains momentum, the leading cloud vendors have established a significant advantage over legacy incumbents. However, if the U.S. government truly aims to preserve competition, it should recognize the potential of VMware and its enterprise ecosystem to provide customers with a viable alternative to dominant public cloud players. In this analysis, we explore the strategic fit between VMware and Broadcom, speculate on VMware's AI agenda, and provide a preview of the upcoming VMware Explore event.

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Why VMware dovetails with Broadcom’s strategy

Broadcom has a successful history of mergers and acquisitions, and VMware aligns with its criteria for a leading firm with a loyal customer base and predictable operating history. Broadcom aims to achieve an $8.5 billion EBITDA contribution from VMware post-acquisition.

Unpacking Hock Tan’s statements

Hock Tan, Broadcom's CEO, has emphasized that the company focuses on markets where it can win and has described VMware's multicloud approach as essential for customers with data that needs to stay on-premises. He also recognizes the value of VMware's ecosystem in extending its value proposition and providing alternatives to public cloud providers.

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Comparing Broadcom’s income statement with VMware’s

A comparison of the financial metrics of Broadcom and VMware reveals the significant revenue and profitability of both companies. However, VMware's performance will need to align more closely with Broadcom's financials to achieve the desired EBITDA contribution.

Key points about the Broadcom acquisition of VMware

The Broadcom acquisition of VMware stands out due to the unique position of VMware in the market, its potential for growth, and Broadcom's plan to integrate its software business under the VMware umbrella. Broadcom's investment strategy focuses on companies with a competitive edge and aims to offer customers a more appealing business case to stay on its platform.

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The importance of multicloud to VMware’s future

VMware's multicloud approach enables the company to address the complexity of deploying and managing applications across multiple cloud providers. Its strong ecosystem and existing partnerships with tech giants position VMware as a key player in the multicloud arena.

What is VMware’s AI play?

While Broadcom focuses on connectivity, VMware recognizes the importance of artificial intelligence as a workload for infrastructure optimization. VMware's success as a platform for app development depends on its AI strategy, which will likely be unveiled at the upcoming VMware Explore event.

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AI players in VMware accounts

OpenAI has emerged as a leader in AI spending and market presence, followed by Microsoft. VMware has the potential to become relevant in AI by leveraging its technology and ecosystem partnerships. However, gaps exist in VMware's data offerings and higher-level tooling for effective AI utilization.

Expectations for VMware Explore

At VMware Explore, we anticipate hearing more about VMware's AI play, cross-cloud services, and product extensions. Updates on Project Monterey and the ecosystem partnerships will also be of interest.

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