VMware Broadcom Merger - What Innovation to Outsource

Machine-generated from the episode audio and not hand-corrected, so names and technical terms may be imperfect. The audio is authoritative.

All right, you're listening to another episode of the CTO advisor podcast. We're gonna try something a little different this week It is just me. m. m. Central time us. This is an exciting time. We have a great list of speakers. com to register again, that's CTO a B is a victory C as a conference comm to register. You won't regret it It is a great event. If you're listening to this podcast after the knife go back and watch the replay I want to talk to you today about this Broadcom VMware proposed merger it is Something that has been near and dear to I don't want to say my heart But I think it exposes one of the challenges of putting so much Faith in the vendor Ecosystem when it comes to innovation and moving the ball forward So this is not just about Broadcom and VMware But how do you?

Outsource Parts of your innovation strategy while keeping other parts in so let's talk about the problem Over the past 20 plus years VMware has sadly become one of the most critical vendors in your enterprise IT landscape police for most of us from not just VMs, but virtual desktop infrastructure security networking When it comes to the software defined data center this ability to extract away data center components VMware has kind of led the charge VMware vSphere is the gold standard when it comes to enterprise Software data center software.

5 you've built around that you've built your virtual network constructs whether you adopted VMware products directly such as NSX or you've gone with solutions that complement VMware environments you've kind of adopted their language in their approach and you built this ecosystem of not just VMware software but components that lay on top of that your DR and backup and Disaster recovery are based off of the ability to replicate storage from one data center to another day center data center based on virtual machines based on virtual machine networks as we move into the public cloud and hybrid cloud, which is what the virtual conference plug is about we start to adjust our infrastructure designs to accommodate not just virtual machines, but virtual machines in a public cloud containers VMware has done a great job of Moving VMware vSphere from just being VM centric to Kubernetes first API and You start to rely on this innovation Then come along Broadcom Broadcom announces that they're going to acquire VMware for some 61 billion dollars or 67 billion dollars if you include that it throws a big set of questions in and Broadcom has been extremely vague on What they plan on doing with VMware, you know, Haktan has gone on a Roadtrip tour with some of the biggest VMware customers.

I've talked to a couple of them They said those conversations going extremely. Well, they feel that Broadcom is looking to at best partner with these top, you know, five hundred six hundred customers and They feel pretty comfortable that VM VMware is not going to Pull back in areas that are important to them. What are these areas? One is this cross cloud conversation? VMware has Put all the chips into basically two areas Obviously vSphere is going to continue to be their flagship product they want to extend vSphere by pushing it all the way down to the network card or Nick similar to Amazon's Nitro where hypervisor functionality is pushed to a network card or DPU VMware wants to follow suit with VMware vSphere So as much as the hypervisor that can get off of the general-purpose CPU to make the CPU more efficient VMware wants to do that.

We'll stick a pin in that because that is one of the regulatory concerns for the Broadcom Acquisition the other area is cross cloud VMware wants to build tools Not just VMware vSphere, but all of these cross Cloud platform tools that allow you to build what the cube and wikibon will call the super cloud Your ability to manage your hybrid multi cloud infrastructure from a single pane of glass That is you know We'll talk about the super cloud tomorrow's event actually David lithicum chief cloud strategy officer for Deloitte is going to do a whole session on super cloud and automating the super cloud that is generally what VMware is talking about is being able to manage your Hybrid infrastructure using VMware tools.

This isn't just vSphere Again, this is talking about how do I orchestrate storage? How do I manage networks natively across clouds? how do I and Able developers to do CI CD pipeline. How do I? ensure compliance across multiple clouds VMware's tackling this problem and this goes back to kind of how we rely on vendors to innovate and Solve these hard problems These are hard problems. If we look at the alternative. We'll looking at Walmart in their triplet system how they're using their internal IP to solve these both technical and people and process challenges using just in-house software Most of us don't have that capability when we look towards a VMware to solve these problems enter Broadcom Broadcom Traditionally have bought software companies such as CA and Symantec and put them more or less in maintenance mode Focus on the top five six hundred customers their feature requests catered to them and then everything else flows down But you're no longer looking at CA and Symantec to lead innovation in their areas CA has primarily a Mainframe software they do some great backup software for the mainframe Management software for the mainframe and a bunch of other software.

It's not just a mainframe company Then there's Symantec who is a security company and I'll be frank Neither one has you know knocked my socks off and the and announcements in the past two or three years of how they've moved the discipline of managing mainframes further or the discipline of integrating Symantec security into Broadcom chips so when I look at VMware being acquired by this company in the promise from Broadcom that they're going to get an additional four billion dollars a year Profit before tax and interest that is I can't tell you an astounding Number the investment that it takes to innovate at the level that we as Consumers want VMware to innovate it.

I'm at a loss to understand those two competing priorities The this priority to increase profits to four billion to plus plus four billion dollars a year in three years in this priority to support the cross cloud as I look at the problem this problem needs a massive investment from a company with massive resources, and I don't see complementary efforts of cutting making cuts in Accelerating innovation spending less on R&D overall But focusing that spin in such an intense manner that it moves the needle For this intractable problem.

We understand the folks that's looking to this podcast Kind of understand the problem. This is not easy stuff if you go back and listen to our podcast with Rob Hirschfield from Rackin we went into some detail about what it takes to build a super cloud from a platform team perspective You know just the simple Problem of registering a VM on multiple clouds the ID From the VM is different from one. The machine ID is different on on the format is different from one cloud to another cloud so that's that's my biggest problem, so if you're a VMware slash Broadcom customer and in hot time and his team's coming in to ask you or Or convince you to be on board or ask you what your top questions are you know excellent about this four billion dollar number in the investment and commitment needed to Go to cross cloud and for you to continue to outsource this part of your innovation to VMware if this is still the relationship to do that with that is I think the number one question Advise you to ask Hot time in his team because they're not talking to me obviously because I would tell you Now let's go to the financial slash regulatory problems that I see in this deal the EU is zoning in on this problem that Dale Highlighted or took advantage of when they bought VMware you couple vSAN VMware engineering Dell server engineering and you get VxRail VxRail was the tightest HCI Implementation you could buy on the market and still is to this day as a result it showed in a marketplace and Dale completely dominates the HCI market and took leadership from Nutanix the EU has taken notice and said hey This is an unfair advantage fast forward to Broadcom Broadcom makes these chips.

I talked about that you put inside of a server and you run the hypervisor on You can run network functions as separate. They're called DPUs data processing units the idea is that if you couple Broadcom and VMware engineering and If DPUs are the future of data center innovation It's I don't think it's a stretch to say that Broadcom would have a competitive advantage over Intel Nvidia and any other DPU startup or manufacturer to create hypervisors on a chip the counterpoint from Broadcom is that There's plenty of competition in the cloud market so that that that Shouldn't be a problem.

This argument does not make sense to me there's competition in the cloud market, but there's not competition for DPUs running vSphere and Regulators are becoming much smarter about these things. They're not saying Generically that there's X market and because there's X market subsets of the market are Independently available to compete. They're now looking at the market for data center DPUs Amazon is not going to sell you nitro Azure Google is not going to sell you these individual components to go into your data center You may say I'm going to run my VMware workloads on VMware in AWS But that's a partnership and not a competition So I personally don't buy this idea that VMware competes with cloud providers And therefore there is no anti-competitive concern I'm saying that if the new definition if of anti-competitive concern is that you don't want VxRail again Broadcom has some explaining to do on how they're going to remedy The the this action do I believe this is enough to derail the acquisition?

No 21 billion dollars to Michael Dale personally, I don't think that's going to stop this transaction I think Broadcom and VMware are going to make some concessions and say that they're gonna play nice similar to how they play nice with EMC and that will address most Regulatory concerns which brings me back to my original concern. Is there enough R&D? Money left over for VMware to move the needle even if the acquisition doesn't close We have to ask the same question Can VMware meet the level of investment that you need to make?

decisions around your hybrid Infrastructure can it be? The control plane or do you need to look at open source projects such as cross-plane and Build a triplet a Walmart type super cloud to manage your hybrid multi cloud infrastructure I don't know the answers to these questions yet. I would love to hear your feedback You can DM me on twitter at CTO advisor. You can comment on the blog post itself I'm really looking forward to hearing from you join the the Sessions tomorrow at the CTO advisor hybrid cloud conference CTO a VC comm Registered join the chat and let me know your thoughts.

I'm looking forward to it Let me know what you think about this format where I just you know, rant inject my thoughts into the podcast stream Tune in next week. We are going to have a special podcast with Brian Chambers the director of architecture at Chick-fil-a We're going to talk about Kubernetes at the edge and what it takes for architecture team to run a platform