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Podcast: The Cloudcast (.net) - Weekly Cloud Computing Podcast
Episode:

The $69B bet against replacement
Category: Technology
Duration: 00:28:29
Publish Date: 2024-03-31 05:00:00
Description:

Let’s dig into the mindset behind the VMware price increases that have been happening since Broadcom acquired the company in 2023. 

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BROADCOM IS FITTING VMWARE INTO THEIR BUSINESS MODEL

  • At least with acquisitions, Broadcom has a well-defined set of business metrics they expect from their companies
  • Broadcom acts somewhere like private equity in terms of investment, innovation, revenue generation

IT'S A BOLD STRATEGY BROADCOM, LET’S SEE IF IT PAYS OFF FOR THEM

  • In essence, the bet is that there is no replacement for VMware in the Enterprise
  • The timing is interesting with the shifting of budgets for AI projects
  • It puts customers in a position to pay more for limited upside, but having to distinctly cut other areas of their technology budget (risk the business)
  • Customers have some options, but again they risk the business (e.g. hold off on security patches)
  • Once a company accepts the new pricing, what guarantees are there about no additional big increases in the future? 
  • How much will this impact the longer-term vendor-customer relationship?

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