The Broadcom acquisition of VMware shook the virtualization industry in Southeast Asia. While some see it as a mere shift of ownership, others fear price hikes, product cuts, and service quality decreases. This article analyzes the situation and potential scenarios and describes some actionable steps that businesses can take to navigate this turbulence.

VMware’s journey: From stability to uncertainty

For years, VMware remained a reliable partner to Southeast Asian businesses with its diverse offerings, configuration flexibility, and cost-effective migration. Moreover, its Partner Connect program, an extensive partnership network consisting of 28,000 companies, made it possible for a wide variety of vendors to offer highly personalized services.

Things changed dramatically on November 22nd, 2023, as Broadcom, a major player in semiconductors and infrastructure software industries, acquired VMware for $62 billion. On one hand, the acquisition brought long-needed investment and optimization to VMware. On the other, it left VMware users in shock. Fears of product development cuts, price hikes, and declining support kicked in, urging some users to seek alternative solutions.

Concerns fueled by Broadcom’s past deals

While concerns arise with any major acquisition, Broadcom’s history adds weight to these fears. Among the most vivid examples are acquisitions of CA and Symantec, when “customers saw massive price hikes, worsening support, and stalled development. Symantec redirected its focus to its biggest resellers and customers. The company largely abandoned its customer base of 100,000 to prioritize its top 2,000.” These examples fuel anxiety about VMware’s future further.

What has happened so far after the VMware acquisition

While Broadcom claims that the VMware deal is different from previous ones, layoffs and product bundling changes raise red flags.

In December, Broadcom announced the termination of all 28,000 VMware’s partnerships and introduced a revised, invite-only Broadcom Advantage Partner Program. For two months, the criteria for qualifying for the new program remained unclear. Finally, on February 7, the company announced that it had extended invitations to 18,000 «active», as they had called it, resellers. That means that the new program excludes 10,000 partners – somewhat mirroring Symantec’s fate (to a less dramatic extent though).

The future for VMware and end-ysers: A balanced view

While some radical voices predict VMware’s demise, others believe the deal came at a right time for VMware. The reality is a little more nuanced.

The positive effect of the deal is difficult to argue. Admittedly, Broadcom is already profiting from it, with its stock price soaring over 30% since the end of November. The company aims to achieve $50 billion in consolidated revenue for the fiscal year 2024.

However, what is good for the company may not be good for end-users. Product development cuts, pricing model changes, and reduced personalization due to a smaller pool of partners, will likely increase Broadcom’s profits. But will it bring flexibility, service quality, and cost-efficiency to the end users?

Southeast Asia’s opportunities in the turbulence

Despite the uncertainty, the VMware acquisition provides Southeast Asian businesses with some golden opportunities:

  • Re-evaluate your cloud strategy. Before making any moves, take a step back to analyze your workloads, growth plans, and system requirements to find a solution that would truly suit your needs in the long-term. Explore various solutions, including open-source, public, or multi-cloud.
  • Use the migration momentum. Many VMware competitors are currently making lucrative migration offers, even including free options. Use this opportunity to get a perfect solution without sacrificing your budget. As soon as you define your cloud strategy, explore what the market has to offer to VMware users seeking migration.
  • Break free from vendor lock-in. The acquisition once again demonstrates the dangers of relying on one, however prominent, vendor. To avoid such problems in the future, choose a solution that would offer greater flexibility.

Navigating regional challenges

While evaluating your options, remember some important region-specific challenges:

  • Cloud cost visibility. Carefully choose a solution that provides transparency into resource usage. Your provider should be able to demonstrate how their solution can cut your cloud expenses. This will help you avoid unexpectedly high bills – as lack of visibility is continuously named among the biggest obstacles to cloud adoption for businesses.
  • Data sovereignty: As local governments are mandating data storage within Southeast Asia, opt in for solutions that can guarantee regional data storage to comply with regulations.
  • Talent gap: The lack of internal expertise narrows down the scope of possible alternatives. If you are building a long-term cloud strategy, it is crucial to invest in enhancing your team’s expertise in order to have access to the most flexible and cost-effective options.

Don’t be afraid to make bold choices for a brighter cloud future

While Broadcom’s acquisition of VMware may benefit some parties, its impact on users remains unclear. Nevertheless, it provides Southeast Asian businesses with a chance to adopt a more strategic approach, get more suitable and flexible solutions, and ultimately build an empowering cloud future.

Dr. Kenneth Tanis the Executive Director at Sardina Systems, a global leader in automated, efficient, and reliable cloud solutions for enterprises. He brings over 20 years of experience in large-scale systems and high-performance computing and has been associated with companies such as CloudFabriQ, BNP Paribas, and OptimaNumerics.

Kenneth’s expertise spans a variety of topics, including cloud and edge computing, data center management, large-scale IT systems optimization, international business development, startup building, technology trends analysis, and sustainable technology practices.

Dr. Tan holds a PhD in Computer Science from the University of Reading, UK.

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