Bengaluru, NFAPost: Broadcom acquiring VMware is really a game changer as it will help Broadcom to expand in enterprise software segment.
Commenting on the acquisition by Broadcom, Senior Analyst Tracy Woo said Broadcom is looking for avenues outside of its traditional semiconductor business and into enterprise software.
“The semiconductor market has been hard hit by the pandemic with materials and shipping supply issues and combined, with flattening growth as semiconductors start to reach their performance and innovation is at smaller and smaller increments due to actual physics constraints could be leading the chip maker to look at other areas for expansion,” said Senior Analyst Tracy Woo.
Senior Analyst Tracy Woo said VMware is a main player in enterprise software and especially wins with its management products (vRealize management suite and CloudHealth).
“These products in VMware’s portfolio have seen tremendous growth year over year and continues to far exceed its competition,” said Senior Analyst Tracy Woo.
He also said this could have implications for VMware customers as its recent spinoff from Dell was seen as the company’s chance to innovate and grow without hindrance.
“If Broadcom plans to enter the enterprise software market it could be a boon into a new area that it doesn’t have much presence for outside of CA Technologies. It could extract some functionality from VMware’s portfolio to pad CA’s product capabilities,” said Senior Analyst Tracy Woo.
Adding his views, Senior Analyst Naveen Chhabra said VMware enjoys a stronghold in the enterprise IT software business delivering strong revenues and margins.
“Parts encompassing the lion’s share of VMware’s business are currently on auto-pilot mode resulting in low investments and high margins. VMware has diversified into multiple IT software businesses and is positioned to maintaining a strong position where IT is still in control and manages both on-premises infrastructure and public cloud,” said Senior Analyst Naveen Chhabra.
He also said public companies are facing a bear market situation. “Some economists anticipate more market corrections. If and when that happens, we can expect investors to be active, at least for firms that offer steady returns without significant capital investments,” said Senior Analyst Naveen Chhabra.
While VMware execs, like Pat Gelsinger, were focused on the security market, Senior Analyst Naveen Chhabra said they only developed little security capability (organic or inorganic) in years prior.
“If Broadcom focuses on innovation, and makes cross business collaboration a priority, VMware and Symantec can potentially build on some synergies. I see two challenges though: First, it’s easier said than done and second, Broadcom’s acquisition strategy in the past does not showcase an innovation-focused mindset,” said Senior Analyst Naveen Chhabra.