Broadcom and VMware at VMware Explore EU

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Hey, how's it going, it's Keith Townsend, principal of the CTO Advisor. I'm here with my partner, Dan Newman, CEO of the Futurum Group. In case you missed it, CTO Advisor, now part of the Futurum Group. Yeah, I got to figure out how we do this though, or it's easier for you, because you're like, I'm Keith Townsend, CTO Advisor, but I want you to put the little underscore. Maybe you can do one of those little video pop-ups that when you say it, it goes part of the Futurum Group.

You know what, you said it, and it's done. And by the way, I couldn't be happier to have you. You know, I couldn't be happier to hear. The reaction from the market has been exceptional. All our combined customers are excited, they're eager to do more business with us, eager to get more advice. It's been exciting, right? It has been really exciting. I mean, it's taken us on this journey all the way to beautiful sun setting in Barcelona. You see us squinting a little bit, we're chasing daylight.

But it has been great, it's been good to be here. I honestly was heading over to Barcelona to spend some time with you, but also expecting to be here on the other end of a closed transaction where VMware was going to have been acquired by Broadcom, and I was going to see the new VMware by Broadcom. And I got to be candid, I came and ended up being a little different than I expected, because now we have VMware in limbo of being acquired by Broadcom, and it's been a super interesting set of conversations I've had with friends, some of the people you've introduced me to, some of the people I've worked with and partners, but I'd say it's a worthwhile trip.

You know, it has been a worthwhile trip. You know, you usually speak at the CEO level, no lower than a CIO, I would say. And I operate, you know, CIO down, and I've gotten the chance to introduce you to some of my folks in the community. The reaction has been pretty good. People are like, hey, this guy actually does know a little bit of stuff about technology other than talking to all of the big fancy CEOs. I got to meet Haktan for the first time, which was really cool.

I was surprised at how well he understands the problem space and how VMware by Broadcom will address the problem space. He seems to have a clear vision, which is always a good thing. Simple is powerful. And if you kind of look at the ethos of the way that Haktan runs the software companies he's acquired post-acquisition, he simplifies that. He likes flat organizations. He likes not having a lot of managers with very small teams. He looks for efficiency. He looks at numbers and metrics, but he also, you know, if you heard the way he explained it here, both on the main stage and from what you've told me a little bit, he's kind of come up with the kind of pillars of messaging.

He's not going to kind of buy into some of the, quote, like kind of press headline stuff. And he's saying, look, we're going to put our heads down. We're going to get to work. We're going to go out and we're going to win our customers by focusing on the best products in the portfolio. We're going to try to find a way to keep the best people here that fit within the plan. And you know, whenever you make these kinds of, you're never going to get it all right.

But the early indications, and I've said this from the beginning, you and I have had talks about it for now a year. I said from the beginning, this will be more successful than people probably, than a lot of the naysayers thought it would be. You know, during some of the analyst sessions, some of the pushback was, well, what about VMware customers leaving VMware? And you know, he had a pretty visceral reaction to the question, but overall he reacted to what I've been hearing from customers.

Customers have fast forwarded their true ups with VMware and they're trying to lock in permanent non-client contracts over the next three, four years to be locked into the VMware relationship. And if you, anything, it validates Hawk's approach to acquiring VMware. The strength of the brand, VMware's position in the industry. So you know, we've talked about some of this forward. What's your, you know, it may not be VMware by Broadcom, but do you have any changed outlooks after this short couple of days at VMware?

What if they lower the price? All these people, you know, no one's ever even considered the fact that, you know, there could be enough efficiencies that they could actually create a more price effective vSphere, maybe pouring resources into Tanzu. I mean, I'm being a little provocative. I don't see that as the outcome, but it'd be interesting, all these people that ran to lock in these bigger contracts and then it's like, oh, I could have gotten cheaper. You know, this isn't a singular where you get to roll your minutes over.

I'm sure the contracts are pretty, like you said, ironclad. You know, I think there's a couple of things that are going to happen now either way. I mean, one is there's no undo button on a lot of the actions that have taken place. So the personnel and the leadership in the future look of this company is going to be different. And I do still have a strong belief that the deal will get done. I have no specific insight to that.

And if I did, I wouldn't talk about it. But the deal is also going to be able to take advantage. I think this whole private AI is a really smart strategy. I think public cloud companies are going to dominate the workloads. And in the long run, they're going to be more and more focused on Kubernetes, on portability of workloads. And they're going to try to centralize. Now, they're not great at multi-cloud. It's actually really interesting. I talked to Matt Hicks yesterday at Red Hat, the CEO of Red Hat.

And you know, he was actually kind of saying that, like the one thing about the public cloud companies, they're all good at kind of workloads on their cloud. So there is still a real need for this. I'd also say, though, is that VMware, you know, there is a longer term, the choice between, you know, virtualization and Kubernetes is going to be substantial in the sense of, you know, can VMware establish the same kind of trusted leadership in multi-cloud for the Kubernetes side, the Tanzu side, that it's been able to grow with vSphere?

That would make it a very powerful company. Having said that, that's the thing is the current administration has not been successful. The current leadership has not really been successful. But Hawk seems committed to it. And people wondered about that. But you know, you saw today, you had a chance to hear from the new GM of Tanzu that, you know, there are some people that even said, maybe he's going to get rid of it altogether. And that doesn't seem to be.

No, he's actually built the four different BUs. There's Edge, there's Core Compute VC, VCF, or cloud, as they call it. There's the network BU, and then there's the app BU. And when I challenged them on why are they building these silos, they pointed back to Hawk's comment of it being all about VCF, having a cloud platform that you can then have these three other add-ons. So it doesn't matter where a customer comes into the conversation. It all leads back to VCF and VMware's ability to replicate what the cloud providers do.

Anywhere. So, I think they've, like you said, the bell can't be unrung. The changes in the organization are going to be permanent and they're going to resonate throughout the rest of the industry. And VMware has kind of laid down a gauntlet. Ironically, they bought up OpenShift. They bought up IBM AI on OpenShift on VCF. So VMware is leaning into the application space, into the AI space, into the Edge, and using their assets, at least their core assets, to the best of their ability.

And I'm glad you called that out, because I think the IBM partnership's really great. There's a nice hedge there with OpenShift. I don't fully understand, I guess, other than the kind of like merchant silicon. AWS says, well, we build a chip for AI, but we also sell NVIDIA. I guess maybe to some extent VMware says, look, we have a huge customer base and some of them are going to want to use Red Hat. And, by the way, they all want to do AI.

There's a huge, like I would absolutely say there's, I can say this with some confidence, that there's more OpenShift on VCF than there is Tanzu on VCF. So customers want what they want and Hawk and team are delivering what customers, what they believe customers want, and there's nothing bad in that. $69 billion in spend. There's no way they can walk away from it. So a prediction, you know, besides the fact that I still believe the deal is going to get done, is the value returned to Wall Street, to investors, and actually to customers, is going to outperform by a pretty large amount what the expectations were 18 months ago when this deal came down.

Someone asked me if VMware still matters, and I said they matter about $69 billion worth. Matters to me. I'll take just a little bit of it. I'll take just a little bit of it as well. If you want to learn more about the CTO Advisor, now I'm part of the Futurum Group, you can visit either website. We're continuing the integration. You'll see more collaborations like this. com. You want to follow me, I'm at CTO Advisor on Twitter.

Dan? At Daniel Newman, UV. Don't ask why there's a UV at the end, but it's there. Talk to you next, CTO Advisor Studio.