The $69B bet against replacement

Let’s dig into the mindset behind the VMware price increases that have been happening since Broadcom acquired the company in 2023.

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BROADCOM IS FITTING VMWARE INTO THEIR BUSINESS MODEL

At least with acquisitions, Broadcom has a well-defined set of business metrics they expect from their companies
Broadcom acts somewhere like private equity in terms of investment, innovation, revenue generation

IT'S A BOLD STRATEGY BROADCOM, LET’S SEE IF IT PAYS OFF FOR THEM

In essence, the bet is that there is no replacement for VMware in the Enterprise
The timing is interesting with the shifting of budgets for AI projects
It puts customers in a position to pay more for limited upside, but having to distinctly cut other areas of their technology budget (risk the business)
Customers have some options, but again they risk the business (e.g. hold off on security patches)
Once a company accepts the new pricing, what guarantees are there about no additional big increases in the future?
How much will this impact the longer-term vendor-customer relationship?

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