It has been a busy month for VMware.
The company had an analyst day back in May, and a big theme was "enabling the Dev and Ops transformation." Then, the news of the Broadcom acquisition happened. There could be interesting impacts on several fledgling products critical to developing a cloud ecosystem.
Multi-cloud is the new normal
In the results from our ESG survey "Distributed Cloud Series: Application Infrastructure Modernization Trends" from earlier this year, we see that, on average, organizations are using three cloud service providers. That number is slated to increase in the next 24 months. In the same study, 40% of organizations said they manage six or more on-premises data centers, which was also growing. Also, at the same time, organizations are reducing the number of applications per data center.
Many analysts are worried about VMware's investments going away. I find it hard to believe I would not get the proper investment in VMware Cloud, known as VMC. Currently, VMC is deployed as cloud services for AWS, Microsoft Azure, Google Cloud and Alibaba. Using the same components, on-premises VMware has VMware Cloud on AWS Outposts, Dell EMC and VMware Cloud Foundation for other vendor servers. This is important when you look at where organizations are investing.
Why is this important to a VMware cloud strategy? This is where Broadcom plays today and where they want to play more in the future. The cloud, telco edge and even bringing "cloud-like" models to smaller data centers are the future. If you look at the VMware portfolio, the movement of all the products to as-a-service models and where customers are going with their on-premises data centers and cloud, building an as-a-service model for many more Broadcom products will be necessary. Also, if you sell processors and want to sell them to cloud providers and the telco edge, it doesn't hurt to have existing partnerships and sales teams.
This ties in well with my colleague Paul Nashawaty's viewpoints on cloud-native and application modernization, when he talked about VMware wanting to be the Switzerland of clouds. Cloud-native and the app modernization ecosystem are going to be critical to cloud success. Also, I think it will be interesting if they can expand partnerships in the cloud-native space -- if Broadcom decides this is a place to dial back investments, as Paul brings up.
VMware's partnership reputation
VMware was built on a partnering model in the early days. VMworld was its own ecosystem and the place to be. As other meetups, such as last month's KubeCon, have taken over that mantle where startups go to meet with customers and partners, could VMware use this time to become a better partnering company once again?
Here is a hypothetical: What if VMware was to move Tanzu out and partner instead? Just make it even easier to put any Kubernetes environment on its hypervisor. Optimize ESX to run as optimally as possible, while providing infrastructure features that are mature in the VMware virtualization layer but not yet in Kubernetes. Basically, make the experience of building a cloud with Red Hat OpenShift or SUSE Rancher as easy as pushing the button in AWS for EKS. The VMware layer becomes all but transparent and focuses on being infrastructure as code. This could present some very interesting "Switzerland-like" partnership opportunities.
Looking into observability
So, what happens to all of the products in the VMware Cloud Management Business Unit (CMBU)? Do they pack up all the software aspects related to observability with the assets of CA Technologies? To be honest, I am never asked, "What do you think about CA's observability products?" It would lead one to think that the CMBU team could bring a core set of products that focus on configuration, security, identity access management, cost and performance. I believe this will be another place with a lot of rationalization, but ultimately it may have more investment than if VMware was an independent company.
VMware is still integrating some of the acquisitions it has made in this space to support all of the other VMware infrastructure pieces. I see VMware continuing that work and making these observability products in support of multi-cloud and other cloud technologies. A good example is the work done with the CloudHealth acquisition, which already supported cloud-native services, such as those from AWS. CloudHealth is now supporting more of the VMware portfolio.
Ultimately, it is about money
An interesting spin, especially in the IaaS or SaaS space, is that Broadcom now can benefit from the work that VMware has done over the last few years to become an as-a-service company. An example is the Universal License, which has the potential to allow customers to run their IaaS workloads anywhere. While this is still a work in progress, it is absolutely what organizations are saying they want: license portability.
But for VMware, this is still a challenge. In my experience, it takes time to transition from perpetual to as-a-service licensing. The easy part is building the model and the SKUs and communicating the value proposition. The hard part is moving the customers and the internal employees -- particularly the sales teams -- without completely breaking a company's budget and killing the share price.
While I share the caution for some of the product lines, I fall into the more optimistic view of what is going to happen. I'm not all rainbows-and-unicorns excited about this, but I think some areas make total sense. Like Paul's view on this, it is all going to come down to execution, rationalization and integration.
Cloud should be an area of investment, with observability being a place to watch. Broadcom will work to hit the numbers and continue consolidating into the future. VMware could unlock the value of other acquisitions that Broadcom has made. Bring on the popcorn, and let's watch.
ESG is a division of TechTarget.