VMware-Broadcom Deal: Dell, IBM, Crowdstrike, Nutanix CEOs Explain Opportunity

Broadcom’s $61 billion bid for VMware has tech CEOs feeling chatty about what could happen if the gigantic deal makes it through.

The megadeal between Broadcom and VMware has loosened the tongues of tech CEOs who wager if the company that emerges can keep innovation alive, it will hold on to customers despite some churn.

“My gut says they will gain some and they will lose some,” Arvind Krishna, IBM’s chief executive, told CRN last week. “The virtualization world likes those products. Now it’s up to them to keep innovating.”

Since the $61 billion deal was announced in May, several industry analysts, partners and customers have expressed varying degrees of concern. Reseller partners hope VMware’s support and channel environment remains in tact, post close, while customers are concerned about a price hike and for products that don’t fit Broadcom’s revenue goals. Financial analysts meanwhile see the deal more in terms of Broadcom — a serial acquirer — balancing its portfolio between its hardware and software businesses.

To allay concerns, VMware CEO Raghu Raghuram told partners Broadcom is not just buying VMware, it is buying VMware’s strategy for the foreseeable future. But Raghurman has not said whether he or any member of the company’s current leadership will remain post close. He is in line to receive about $50 million by way of a “golden parachute” if he departs. Broadcom CEO Hock Tan and Raghuram have said a combination will give both companies a chance to develop stronger solutions for their customers’ multi-cloud environments.

“Combined with Broadcom’s existing software portfolio, we’ll create a uniquely powerful value proposition to our enterprise customers, one that will enable them to effectively develop, run, manage their applications seamlessly, securely, across from on-prem, private cloud to multi-cloud,” Tan said.

The CEO of Crowdstrike, which competes with VMware’s Carbon Black, sees those customers coming to him.

“We got a lot of customers that have called us (and) said, ‘Hey, I’m concerned about the Carbon Black acquisition. We lived through the Symantec acquisition. We know what’s going to happen.’ Prices are going to go up, service is going to go down,” Kurtz told hundreds of vendors, channel partners and others attending the Best of Breed conference in Atlanta.

The deal has elicited feedback from Dell Technologies CEO Michael Dell, Scale Computing CEO Jeff Ready, Nutanix CEO Rajiv Ramaswami and IBM CEO Arvind Krishna.

Here’s what these tech titans with a combined $178 billion market cap have to say about the biggest tech merger of the year:

“It’s up to them to keep innovating”

IBM CEO Arvind Krishna

Market Cap: $111 billion

“We are a partner. I just want to be clear. Look, the whole world competes,” Krishna told CRN last week.

“We can partner with Microsoft and we can partner with AWS. And we run Linux on those clouds. We run Red Hat Linux on the spot. We run OpenShift on those clouds. … We run a lot of our software portfolio on top of VMware. VMware in turn becomes the layer that helps to abstract out hardware, whether from Lenovo, HP, Dell and many other partners.

So I would to call it more of a partner, not a competitor. So what are we hearing? Look, I think that vSphere, vSAN, NSX have a really strong position in the ecosystem. I think that the 20,000-plus—I think it is that many, but there could be more—clients who use it are probably very reluctant to move. …

Now, commerce is always going to cause some to churn, some not to churn. So my gut says they will gain some, they’ll lose some.

But it comes down to not what is happening today. I think it’ll come down to what is going to happen in 2023 and 2024. As long as they keep innovating on the products, they keep giving more function back to their clients—it’s a strong franchise.

That falls away, then that’s a different question. But I think the virtualization world likes those products. Now it’s up to them to keep innovating.

“They’re concerned about … being looked after”

Crowdstrike CEO George Kurtz

Market Cap: $36 billion

“We’re actively working on replacement deals right now,” Kurtz told CRN, adding that it creates yet “another opportunity for the partner community.”

“They’re concerned about the acquisition, as most customers are, and they’re looking for alternative solutions,” he said, saying the concern is around “Being looked after. Right? Being looked after.”

“Obviously, there’s always a transition period and disruption from a customer perspective. We’re obviously helping customers. If they have potential challenges with their current vendors, that’s what we’re focused on.”

“There is no doubt customers are concerned”

Nutanix CEO Rajiv Ramaswami

Market Cap: $5.9 billion

“I think there is no doubt customers are concerned,” Ramaswami told CRN. “But it takes time to migrate. It doesn’t happen overnight. And so when we look at this coming fiscal year we’re not anticipating that’s going to lead to a huge surge in revenue. As I said on the call, we’re not factoring in any major upside.”

We do expect to see some long-term benefits from this action as customers will look for alternatives,” Ramaswami told investors on a call last month. “So, that’s what I would say for the VMware-Broadcom situation.”

“I’ve been telling you that VMware is old, overpriced stuff for a long time”

Scale Computing CEO Jeff Ready

Privately Held

“My banner to the world for over 10 years has been, ‘There’s an alternative to VMware, right? I mean, people say ‘Who is your No. 1 competitor? I always say VMware. It’s not always VMware, right? It could be VMware in different flavors, and there’s other competitors. It’s not just them.

But the reason I always say the competitor is VMware is because that’s sort of the standard traditional way to do things. It’s effectively the incumbent,” Ready told CRN.

In the end, I’m like, OK, just put VMware down for a second, right? And look at Scale.

If there’s a way we could botch it, it would be that we don’t get people to look. Like somehow, despite me saying it all the time, we end up overlooked by these channel partners, but hopefully not.

My message has been consistent. All the other folks that compete with VMware in some capacity, or for that matter, folks who keep up with Broadcom in some capacity, right are going to be coming up with statements and positioning and doing different programs to try and capitalize on this deal. One thing I can say about Scale is my message doesn’t have to change. I’ve been telling you that VMware is old, overpriced stuff for a long time, right? And now, you know, it’s going to be older and more overpriced.

“I’m excited about the opportunity to see VMware’s heritage of innovation and invention continue”

Dell Technologies CEO Michael Dell

Market Cap: $25 billion

“We received this unsolicited offer from Broadcom—we weren’t expecting that,” said Dell. “We have a duty to consider unsolicited offers. And so we did that. There was a lot of work by the full board that went into that and whether it was in the best interests of the company and the shareholders.”

“Broadcom is a very successful, strong technology company with a track record of R&D investment. And their R&D investment has been growing quite tremendously over the last decade or so,” said Dell.

“As we met with the Broadcom team, they explained to us that they intend to invest and grow the value of VMware’s successful businesses and to make VMware the flagship of the software business inside Broadcom,” said Dell. “They also have an appetite to continue to grow after this acquisition, both organically and inorganically. So I’m excited about the opportunity to see VMware’s heritage of innovation and invention continue and deliver even greater value for the combined set of stakeholders—including customers, partners and employees.”