Gartner and Canalys are a little concerned about Broadcom’s $61 billion acquisition of VMware .
Canalys chief analyst Alastair Elms warned that Broadcom had no experience in merging VMware with existing software and security assets from CA and Symantec and success will depend on how Broadcom executes against this plan.
“Integrating the different parts of the business will be complex, with some parts overlapping and others lacking clear synergies.”
Elms said the benefit of the deal is it will give VMware “true independence” from Dell, with Michael Dell selling his 40 percent stake, allowing it to pursue its goal of being the ‘Switzerland’ of the IT industry, and strengthen its alliance partnerships.
If Broadcom does seek to reduce its dependence on Dell as a distributor and reseller this will be a benefit for VMWare’s other distributors that have lost market share to Dell, he said.
Elms believes is one of the biggest worries for partners is Broadcom’s history of stripping costs out of CA and Symantec and focusing the businesses on direct enterprise customers.
Andrew Lerner, research VP at Gartner expects Broadcom to increase pricing for VMware customers and adjust R&D spending.
“Broadcom has publicly stated that it runs acquired software businesses differently than they were operating previously, to create financial returns consistent with their own ‘disciplined’ business model and reiterated on their call discussing the acquisition.
“We expect Broadcom will focus R&D on private cloud technologies, most notably NSX, vSAN and vSphere. Note that Broadcom spends a lower amount on R&D as a percent of revenue, compared to VMware.”
Lerner remained optimistic that Broadcom has learned from its past and said that Broadcom’s decision to rebrand the software group under the VMware moniker indicates a potential adjustment to prior software acquisitions.
