EU Approval of VMware Acquisition Leaves Severe Questions – IT Connection



S. Schuchart

Abstract Bullets:

• Permitted within the EU: The European Fee has granted approval for the acquisition of VMware by Broadcom.

• Warning is Warranted: Enterprises needs to be cautious about commitments to VMware till at the least a yr after the acquisition completes.

On July 12, 2023 the European Fee (EC) authorized Broadcom’s acquisition of VMware for the tune of round $61 billion. The principle concern on the a part of the EC was that Broadcom’s possession of VMware and its almost omnipresent server virtualization software program might create interoperability points within the Fibre Channel host bus adapter (FC HBA) and Ethernet community interface card (NIC) markets. The deal provides assurances to Broadcom’s sole rival within the FC HBA market, Marvell Expertise, in addition to entry to interoperability instruments it wants.

That’s all properly and good – Fibre Channel is likely one of the most typical methods to attach block storage to compute techniques. Nevertheless, Fibre Channel is basically a legacy expertise. Whereas nonetheless widespread, it constitutes a wholly separate community and set of {hardware} for knowledge heart operators to handle. Fibre Channel’s long-time benefits in velocity and reliability have been eliminated or minimized by advances in Ethernet. To provide an instance of how a lot consideration Fibre Channel will get, the unified communication announcement is the primary time Fiber Channel has hit anyone’s entrance web page in years.

Plus, this deal excludes Ethernet NICs. Not solely does Broadcom provide Ethernet NIC chipsets, it additionally is likely one of the largest suppliers of Ethernet switching and routing chips. Nothing has been mentioned about that potential concern. Broadcom nonetheless wants approval from American regulators to consummate the deal, and GlobalData expects that to occur with few or no further necessities.

This deal remains to be problematic for enterprise clients. Broadcom has stridently claimed that VMware would be the crown jewel of its software program division. Nevertheless, with Broadcom’s previous software program acquisitions of CA Applied sciences and Symantec, there was nothing however worth will increase, slashing of R&D budgets, and layoffs. An organization sale usually brings modifications to executives, however the sheer variety of long-time leaders at VMware departing the corporate earlier than the Broadcom sale doesn’t bode properly. The rise of less expensive and web-friendly container architectures additionally represents an existential risk to VMware itself, regardless of the corporate including assist for containers to its profile.

Enterprises needs to be involved and cautious about VMware for at the least a yr after the acquisition is finalized. The extent of uncertainty round VMware at this level is just too excessive to disregard.