Learn how to – VMWare goes to Broadcom for $60 billion

Learn how to – VMWare goes to Broadcom for $60 billion.

Broadcom is acquiring VMware for a whopping $60 billion, making it one of the biggest tech acquisitions of 2022. Broadcom CEO Tan Hock Eng had previously indicated his plans to expand, and it’s now happening. This new deal might put Broadcom in an excellent position as fusing their great hardware with VMware’s software technology will improve their hold on the industry.

For a while, VMware was underperforming on the New York Stock Exchange. As a result, the $60 billion price tag, roughly calculated as $140 per share, is a significant increase when compared to recent share prices. However, it is said to be about $4 billion short of VMware’s theoretical value when it was spun out of Dell less than 6 months ago, in November 2021. Unsurprisingly, this would be the ideal time for a big player like Broadcom to step in on a great deal, just like anybody would do when they see any great deal on Amazon or Publix BOGO this week.

VMware has few direct rivals, especially in the provision of multi-cloud services. With edge computing on the rise, it creates a need for a reliable operating network with a security overlay across multiple clouds and edge locations. VMWare fits the bill. In addition, their virtualization business is at the top of its game, and that’s saying a lot in this new age of containers and serverless applications. Their advancements in 5G could also be the rocket fuel that might propel the company to greater heights. 

The real reason Broadcom is acquiring VMWare

Broadcom has had its fair share of complications with another segment of the tech world, as many Linux users have cited multiple compatibility issues with wireless adapters, cards, and drivers. This could have been a significant factor in the need for an alternative supplier, and Broadcom wants to plug the leak. Hence, their move to VMware might offer a solution. Although VMware’s solutions are not made for open-source, they do have some tools that are, and, as such, could probably provide a degree of support for Linux software virtualization. 

The future of VMware

It would be wise for VMware to proceed as an independent entity, as previous deals of such a nature, like with EMC and Dell, didn’t stop VMware from growing both as an industry leader and a top earner. VMware has demonstrated its ability to partner closely with an owner without scaring away other partners, as exemplified by the fact that Dell’s ownership and inside access to VMware tech didn’t stop its competitors like IBM, HP and Lenovo from engaging in lucrative business with them.

However, it’s almost inevitable that Broadcom will somehow try to integrate VMware with its 5G, SmartNIC, and Arm-based processor businesses. Keeping it independent would be ideal, as this might be more acceptable to the US. Back in 2017, Broadcom tried a move to acquire Qualcomm, its US-based competitor, but was blocked by the Committee on Foreign Investment in the United States (CFIUS) on concerns of national security. However, this move was debunked as simply a competitive move to prevent Huawei from possibly gaining dominance in using 5G technology.