Tuesday, May 21, 2024

EU Approval of VMware Acquisition Leaves Critical Questions – IT Connection


S. Schuchart

Abstract Bullets:

• Permitted within the EU: The European Fee has granted approval for the acquisition of VMware by Broadcom.

• Warning is Warranted: Enterprises ought to be cautious about commitments to VMware till at the very least a 12 months after the acquisition completes.

On July 12, 2023 the European Fee (EC) permitted Broadcom’s acquisition of VMware for the tune of round $61 billion. The primary concern on the a part of the EC was that Broadcom’s possession of VMware and its almost omnipresent server virtualization software program may create interoperability points within the Fibre Channel host bus adapter (FC HBA) and Ethernet community interface card (NIC) markets. The deal offers assurances to Broadcom’s sole rival within the FC HBA market, Marvell Expertise, in addition to entry to interoperability instruments it wants.

That’s all properly and good – Fibre Channel is without doubt one of the most typical methods to attach block storage to compute techniques. Nonetheless, Fibre Channel is basically a legacy know-how. Whereas nonetheless widespread, it constitutes a completely separate community and set of {hardware} for knowledge heart operators to handle. Fibre Channel’s long-time benefits in velocity and reliability have been eliminated or minimized by advances in Ethernet. To present an instance of how a lot consideration Fibre Channel will get, the unified communication announcement is the primary time Fiber Channel has hit anyone’s entrance web page in years.

Plus, this deal excludes Ethernet NICs. Not solely does Broadcom provide Ethernet NIC chipsets, it additionally is without doubt one of the largest suppliers of Ethernet switching and routing chips. Nothing has been stated about that potential difficulty. Broadcom nonetheless wants approval from American regulators to consummate the deal, and GlobalData expects that to occur with few or no further necessities.

This deal remains to be problematic for enterprise prospects. Broadcom has stridently claimed that VMware would be the crown jewel of its software program division. Nonetheless, with Broadcom’s previous software program acquisitions of CA Applied sciences and Symantec, there was nothing however worth will increase, slashing of R&D budgets, and layoffs. An organization sale typically brings adjustments to executives, however the sheer variety of long-time leaders at VMware departing the corporate earlier than the Broadcom sale doesn’t bode properly. The rise of less expensive and web-friendly container architectures additionally represents an existential menace to VMware itself, regardless of the corporate including assist for containers to its profile.

Enterprises ought to be involved and cautious about VMware for at the very least a 12 months after the acquisition is finalized. The extent of uncertainty round VMware at this level is just too excessive to disregard.

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