Broadcom plans to attack hyperscalers such as AWS, Microsoft Azure and Google Cloud after its final acquisition of VMware. This is according to a newsletter to staff made public as part of regulatory filings.
According to the newsletter filed with the U.S. securities regulator SEC, Broadcom wants to attack hyperscalers after its acquisition of VMware. In the newsletter we read multiple statements that show the intend to go head to head with the hyperscalers: “Together, we will provide customers greater choice and the opportunity to accelerate innovation by addressing their most complex technology challenges in this multi-cloud era.” But the more important is: “Together, Broadcom and VMware will increase competition faced by hyperscalers”. They also state they want to boost competition among cloud providers to reduce vendor lock-in.
From all this, we conclude that the combined company will soon want to compete with the current public cloud providers. How this is to be done has not been disclosed.
Strategy to be pursued
Perhaps the combined Broadcom and VMware will build on VMware’s current strategy. This is now focused on providing a layer that companies can lay over the various clouds, allowing them to connect the virtual networks and implement consistent security policies. This eliminates the need for them to treat their cloud environments as a separate silo. They can also easily migrate workloads between those different underlying clouds.
This strategy rivals that of hyperscalers by allowing customers to move to multiple cloud environments with less complexity and effort. Now organizations sometimes tend to move to fewer cloud environments from the standpoint of simplicity. Also, this adds functionality to hyperscalers services.
Furthermore, VMware provides the creation of large-scale private cloud environments and has an ecosystem of more than 3,000 smaller public cloud providers using VMware vStack. Again, these services are competitive to those of the hyperscalers.
However, the hyperscalers primarily differentiate themselves with their SaaS and PaaS services. How the Broadcom-VMware combination plans to address these is also unknown.
Two other regulatory disclosures
In addition to the comments about wanting to compete with hyperscalers, Broadcom made two other disclosures. First is a response the EC’s investigation into the merger between the two tech providers. According to Broadcom, there is no problem at all, since VMware’s business is based on virtualization as well as hardware. Therefore, that the merger could create a possible monopoly and make competition by competitors impossible would be wrong.
Furthermore, Broadcom also disclosed a study by IDC, which states that after a merger between Broadcom and VMware, the combined company will pay more attention to investments and partnerships. The number of investments and the number of strategic collaborations will increase in the next two years, according to this report.
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