Broadcom is buying VMware for $61 billion - the deal which had been rumored became official today.
If the deal goes through, Broadcom will be just the latest in a series of tech firms that have owned the virtualization pioneer - all of them wanting to extend their markets by association with VMware's game-changing technology.
And it might be the least popular. In a brusque opinion today, Forrester analyst Tracy Woo said the acquisition "sparks fear of price hikes, diminished support, and stunted innovation. At a time when VMware customers need to re-establish confidence in the company’s strategy and innovation plans after beloved ex-CEO Pat Gelsinger’s departure, this would be a notable departure from that course."
The company was founded in 1998, and has been owned by EMC and Dell, before being spun out again in 2021.
In its early years, VMware was the only commercial virtualization game in town, more or less. Enterprises wanted to convert their data center infrastructure into flexible resources, with pools of storage and compute, which could be deployed more efficiently, and the VMware's ESX hypervisor was just the ticket for doing that.
VMware added more resources on, evolving vSphere, a full on cloud virtualization platform, that could run on in-house hardware or, potentially, public cloud services.
For the next few years, VMware owned virtualization, claiming up to around 2013 that 80 percent of virtualized servers in the world were running its software. It offered its own vCloud Air service (previously VCHS) as a serious alternative to Amazon Web Services, with its own data center space.
AWS was at that stage having trouble convincing users to go all-in on the public cloud, while VMware was presenting the combination of its private vSphere cloud and public vCloud services as a more rational evolution for on-premises IT.
The peak of that argument was probably a joint announcement when Amazon and VMware announced vSphere on AWS in 2016, where AWS effectively accepted that in-house IT would continue while VMware acknowledged that the AWS public cloud was unstoppable.
At the same time, the open source world was still proposing OpenStack as a potentially cheaper open source platform for public cloud. But in the event, AWS wiped the floor with both vCloud Air and OpenStack in the public cloud space, and VMware sold off its public cloud services to France's OVH (later OVHcloud).
A series of owners
Since 2004, VMware had been owned by EMC, a storage company that saw VMware as a way to branch out into a growing software area, and which also grabbed a strong security position by purchasing RSA.
EMC put Pat Gelsinger in charge of VMware and let him run it independently, and VMware often seemed to be the central plank of EMC.
Its independence continued when Dell took over the whole EMC show in 2016 - a deal enabled by Dell issuing stock in VMware. Gelsinger remained in charge till he went to head up Intel in 2021. At the same time Dell announced it was spinning off VMware.
Broadcom is set to be the next owner - and once again, it's an outsider wanting software credibility. Originally best known for its network cards, Broadcom has expanded its coverage by acquisition, but this is a giant leap into enterprise software for the company.
By this stage, enterprise software has been losing ground to the cloud for some time, so VMware no longer has quite the glory it used to. But enterprise software is still a gigantic segment, and VMware retains its importance there.
That significant role is what Broadcom wants - but customers will fear that the opportunistic chipmaker will attempt to exploit VMware's captive enterprise market - and Forrester's Woo warns that this could lead it to discover that maybe those customers aren't tied quite so tightly to VMware, in a modern world where the cloud is the center of gravity, not the enterprise data center.
"If VMware customers are spooked by the Broadcom acquisition, Red Hat and hyperscalers stand to benefit," says Woo. "VMware customers looking to fully move off VMware could migrate to Red Hat’s open-source Kernel-based Virtual Machine (KVM) as an alternative hypervisor. And although Pivotal (now VMware TAP), took an early lead as a multicloud container platform standard for enterprises, Red Hat’s OpenShift Cloud Platform has surpassed TAP in total market share and capabilities as VMware faltered in satisfying its customers."
It's not the same world as when VMware gave EMC, and then Dell, a huge standing in enterprise software.
It's also possible some will contest the sale. Broadcom has been fined by the US FTC for abusing a monopoly position, and has also settled an antitrust case with the EU. Gaining a strong position in virtualization could lead to raised eyebrows among regulators.
All told, I'd predict this won't improve VMware's standing in the industry.