Offers comforting vision for core customers, products, channel – though warns efficiencies are coming
Broadcom has signaled its $61 billion acquisition of VMware will involve a “rapid transition from perpetual licenses to subscriptions.”
That’s according to Tom Krause, president of the Broadcom Software Group, on Thursday’s Broadcom earnings call. He was asked how the semiconductor giant plans to deliver on its guidance that VMware will add approximately $8.5 billion of pro forma EBITDA to Broadcom within three years of the deal closing – significant growth given VMware currently produces about $4.7 billion. And subscriptions was the answer. Krause also repeatedly said Broadcom intends to invest in VMware’s key product portfolio and is pleased to be acquiring a sales organization and channel relationships that give it reach Broadcom does not currently enjoy. Broadcom’s narrow sales efforts reflect its belief that CA Technologies does best when focused on Global 500 companies through direct relationships. Krause said that when Broadcom acquired Symantec’s enterprise products, it decided to again focus on those global whales – which explains why post-acquisition Symantec’s marketing efforts became much less conspicuous and smaller customers felt so actively unloved that some sought new suppliers. A repeat of that plan is not on the cards for VMware, apparently. Krause and Broadcom CEO Hock Tan both said Broadcom plans to nurture VMware’s 300,000-plus customer base. The move to subscription-based licensing will apparently happen over the course of the next few years.
“We will make sure they are well supported,” Tan said.
