4 ms·

Could someone who understands the situation better explain .. what are the business synergies between Broadcom and VMware? Is there any business overlap at all.

Could someone who understands the situation better explain .. what are the business synergies between Broadcom and VMware? Is there any business overlap at all..? Maybe buying and laying off is a profitable move, but I'd expect it to be done by investment firms that specialize in that. It'd be a bizarre financial gamble for a chip company. So there must be some angle where this makes sense for them and not for anyone else

trynumber9 3y ago
Broadcom/Avago is more of a corporate raiding company than anything else at this point. They took the name of one of their victims to hide it a bit.
- camel_gopher 3y ago
  So like Hannibal Lechter
- startupsfail 3y ago
  This feels like a fuckup. The acquisition should have been blocked for the same reason Nov 2017 takeover of Qualcomm was blocked.
- anonuser123456 3y ago
  Most long term Broadcom people I know are pretty happy with Hock Tan’s leadership.
smokefoot 3y ago
It’s not that different from software focused private equity shops like Thoma Bravo. Buy a software company, starve it of resources, and price just below each clients BATNA. Revenue may decline over time, but costs fall faster and the buyer harvests that premium. There’s no synergies, just a willingness to be more ruthless and give fewer shits. Edit: clarity
- sidewndr46 3y ago
  you forgot the classic move of "release the legal team to sue anyone doing anything vaguely similar to your patents"
  - smokefoot 3y ago
    Yes! And aggressively enforce your software license agreements with frequent audits. Anything to make money other than innovating and actually building better products.
natbennett 3y ago
They’ve run out of chip companies to buy, so they have to figure out how to buy software companies. This is a little bit speculative but I believe they’re substantially interested in VMware’s capability to buy and integrate other software companies.
alephnerd 3y ago
50% of Broadcom's revenue comes from Enterprise SaaS. They already have an APM play (CA Technologies), EPP play (Symantec Enterprise), and Data Security play (Symantec Enterprise). By acquiring VMWare, they can add a Private Cloud and Network Security play. All these plays converge into allowing a company to buy their entire Enterprise Infra stack from Broadcom.
- slt2021 3y ago
  CA Tec, Symantec and now vmware - sounds like a combo of failed software companies which are no longer competitive and exclusively cater to boomer enterprise companies and close b2b deals with heavy bribes and quid pro quos
  - alephnerd 3y ago
    The whole point of a business is to make money. That's it. By catering to "boomer enterprise companies" also known as FORTUNE 1000 you can make billions a quarter. Jesus HNers are dense.
    - philipov 3y ago
      No, the point of a business is to create good products. Making money is just the mechanism we've chosen to encourage people to do that, but the justification for capitalism has always been that it creates "the best products for the lowest cost". Only caring about making money, to the detriment of creating the best products for the lowest cost, is a perversion of the system, and we don't need to tolerate it.
    - slt2021 3y ago
      old VMWare used to cater to boomer enterprise companies and thats how they sold their products. These new owners however are not interested in catering to customers' needs - they just want to milk license fees like Oracle and outsource as much product development and customer support overseas as possible. with predictable outcomes obviously
Spooky23 3y ago
None. It’s a slumlord scenario. Buy it and milk as much cash as possible. VMWare has a decade to coast into oblivion.
deleted 3y ago
[deleted]
mrweasel 3y ago
It doesn't really seem like Broadcom has an overall plan. We used a load balancer, briefly owned by Broadcom, but for some reason they didn't want it and sold it to PulseSecure. Had they kept it they could have build something where they would provide an easy load balancer integration for VMware, but I don't believe that how Broadcom thinks. Better Broadcom network drivers for VMware? There's a lot of potential synergies, like tailoring network card to VMware, adapting their APM to enable for VMs easily. Storage solution optimized for VMware. I just don't believe that they think in those lines, or maybe they do when they want to justify their purchases, but then never follow up. Overall I think it's weird that VMware has such a hard time existing as an independent company. They are pretty dominant in their field which very little competition. Most companies I've dealt with run VMware for at least part of their business. I see this as being just as much a failure of VMware management to run a successful near-monopoly.
- alephnerd 3y ago
  > maybe they do when they want to justify their purchases It's this. They are very strategic about where they invest money. If they can get around a 20x RoI they will build it. If they can't they'll shut downt the division.

trynumber9 3y ago

Broadcom/Avago is more of a corporate raiding company than anything else at this point. They took the name of one of their victims to hide it a bit.

camel_gopher 3y ago
So like Hannibal Lechter
startupsfail 3y ago
This feels like a fuckup. The acquisition should have been blocked for the same reason Nov 2017 takeover of Qualcomm was blocked.
anonuser123456 3y ago
Most long term Broadcom people I know are pretty happy with Hock Tan’s leadership.

smokefoot 3y ago

It’s not that different from software focused private equity shops like Thoma Bravo. Buy a software company, starve it of resources, and price just below each clients BATNA. Revenue may decline over time, but costs fall faster and the buyer harvests that premium. There’s no synergies, just a willingness to be more ruthless and give fewer shits. Edit: clarity

sidewndr46 3y ago
you forgot the classic move of "release the legal team to sue anyone doing anything vaguely similar to your patents"
- smokefoot 3y ago
  Yes! And aggressively enforce your software license agreements with frequent audits. Anything to make money other than innovating and actually building better products.

natbennett 3y ago

They’ve run out of chip companies to buy, so they have to figure out how to buy software companies. This is a little bit speculative but I believe they’re substantially interested in VMware’s capability to buy and integrate other software companies.

alephnerd 3y ago

50% of Broadcom's revenue comes from Enterprise SaaS. They already have an APM play (CA Technologies), EPP play (Symantec Enterprise), and Data Security play (Symantec Enterprise). By acquiring VMWare, they can add a Private Cloud and Network Security play. All these plays converge into allowing a company to buy their entire Enterprise Infra stack from Broadcom.

slt2021 3y ago
CA Tec, Symantec and now vmware - sounds like a combo of failed software companies which are no longer competitive and exclusively cater to boomer enterprise companies and close b2b deals with heavy bribes and quid pro quos
- alephnerd 3y ago
  The whole point of a business is to make money. That's it. By catering to "boomer enterprise companies" also known as FORTUNE 1000 you can make billions a quarter. Jesus HNers are dense.
  - philipov 3y ago
    No, the point of a business is to create good products. Making money is just the mechanism we've chosen to encourage people to do that, but the justification for capitalism has always been that it creates "the best products for the lowest cost". Only caring about making money, to the detriment of creating the best products for the lowest cost, is a perversion of the system, and we don't need to tolerate it.
  - slt2021 3y ago
    old VMWare used to cater to boomer enterprise companies and thats how they sold their products. These new owners however are not interested in catering to customers' needs - they just want to milk license fees like Oracle and outsource as much product development and customer support overseas as possible. with predictable outcomes obviously

Spooky23 3y ago

None. It’s a slumlord scenario. Buy it and milk as much cash as possible. VMWare has a decade to coast into oblivion.

deleted 3y ago

[deleted]

mrweasel 3y ago

It doesn't really seem like Broadcom has an overall plan. We used a load balancer, briefly owned by Broadcom, but for some reason they didn't want it and sold it to PulseSecure. Had they kept it they could have build something where they would provide an easy load balancer integration for VMware, but I don't believe that how Broadcom thinks. Better Broadcom network drivers for VMware? There's a lot of potential synergies, like tailoring network card to VMware, adapting their APM to enable for VMs easily. Storage solution optimized for VMware. I just don't believe that they think in those lines, or maybe they do when they want to justify their purchases, but then never follow up. Overall I think it's weird that VMware has such a hard time existing as an independent company. They are pretty dominant in their field which very little competition. Most companies I've dealt with run VMware for at least part of their business. I see this as being just as much a failure of VMware management to run a successful near-monopoly.

alephnerd 3y ago
> maybe they do when they want to justify their purchases It's this. They are very strategic about where they invest money. If they can get around a 20x RoI they will build it. If they can't they'll shut downt the division.