Broadcom CEO Hock Tan solutions questions on VMware throughout an analyst Q&A session at VMware Discover 2024.Patrick Moorhead
Broadcom CEO Hock Tan took the stage at Discover 2025 to make his case for why VMware Cloud Basis is the optimum platform for enterprises combating modernization and AI on this more and more risky world. His keynote centered primarily on personal cloud as the inspiration of the reworked enterprise, the place IT turns into an enabler of innovation as an alternative of an inhibitor. Personal cloud can also be the place organizations can concentrate on delivering AI and what’s subsequent, figuring out that safety, governance and compliance are givens moderately than factors of concern. One should modernize to do AI properly, however modernizing solves for a lot of different non-AI-related initiatives, too.
Regardless of this, Broadcom continues to face challenges from the likes of Nutanix, Crimson Hat and others attempting to capitalize on the disruption brought on by Broadcom’s acquisition of VMware — though the deal closed almost two years in the past. So, how did Tan’s keynote land? Is that this personal cloud factor actual? And is VCF the compelling personal cloud — and personal AI platform — that VMware claims? Let’s dig in.
(Observe: Broadcom is an advisory shopper of our agency, Moor Insights & Technique, as are a lot of its opponents.)
The Disruptive Personal Cloud Market
As virtually anybody following this sector is aware of by now, the virtualization and personal cloud market was disrupted when Broadcom acquired VMware for roughly $60 billion in 2023. Virtually instantly following the shut of the deal, Broadcom started to implement licensing and help adjustments that will align with its long-term objective of rationalizing the VMware portfolio and tying all the corporate’s know-how right into a single built-in personal cloud platform. On the similar time, the corporate additionally doubled down on cloud R&D.
Whereas opponents tried to take advantage of this disruption by advertising and marketing campaigns, the corporate constructed VCF 9.0. At VMware Discover 2024, Tan unveiled this platform, utilizing Broadcom’s inner expertise with personal cloud as his case research. A big world firm with a number of traces of enterprise attempting to eat the general public cloud and all of this nice VMware know-how was shedding by way of price, management and organizational integration. VCF 9.0 was the platform that delivered on the promise of the cloud with out the associated fee and complexity.
Quick-forward a 12 months, and Tan’s keynote comes at a time when the corporate’s newest reported earnings confirmed its software program division returning $6.6 billion in income, which represents 25% year-over-year development. This prime line, together with a 76% working margin, was reported as Tan declared that 87% of Broadcom’s prime 10,000 prospects renewed their licenses. (Observe: Broadcom will announce its FY2025 Q3 earnings on September 4.)
Regardless of this unbelievable development, opponents and naysayers framed this as merely a step within the migratory course of as massive prospects look to untangle their VMware dependence — a course of that inevitably takes time.
We consider the long-term reply depends upon one factor: how a lot worth does Broadcom ship with VCF? Maybe a greater approach of claiming that is, how a lot worth do prospects understand from utilizing VCF?
VCF 9.0 Is Personal Cloud Reinvented
Personal cloud will not be a brand new time period. Those that have been round this trade for a while might bear in mind this time period gaining recognition within the 2008 timeframe as personal organizations tried to imitate the general public cloud with their very own virtualized infrastructures with some trace of a self-service portal wrapped round them. Regardless of the failures firms bumped into as a result of back-end complexity, organizations realized even again then that totally embracing the general public cloud was not the reply.
The numbers don’t lie. Broadcom’s personal analysis confirmed that 92% of IT executives surveyed stated they belief the safety of their very own personal cloud greater than the general public cloud. And 70% of these executives cite the necessity to repatriate not less than a few of their functions and knowledge on-premises. This isn’t a revolution in opposition to public cloud; moderately, it’s a rationalization course of as firms discover the correct steadiness of public to non-public.
As a part of Tan’s keynote, he looped again to what Broadcom delivered in VCF 9.0, a product innovation cycle that consumed over 1 million engineering hours and resulted in additional than 8,000 patents. Tan centered on three primary themes for IT operations — themes that convey the promise of a public cloud expertise to the personal cloud.
Growing developer velocity with out compromising IT management. Anyone who has been in IT understands the stress between IT and the enterprise facet. Software builders and knowledge scientists want to have the ability to spin up environments shortly to construct and deploy functions wherever. However, IT organizations want to make sure that insurance policies and guardrails will not be compromised. VCF 9.0 delivers the cloud expertise builders need whereas enabling IT to make sure that its guardrails and insurance policies underpin the provisioned environments.
Delivering velocity of innovation with inherent safety. Everyone acknowledges and embraces the concept that safety is completely essential to the enterprise. Nonetheless, many have a frustration with the tons of of safety merchandise deployed and working in an unoptimized approach. With VCF 9.0, Broadcom has constructed safety into the bottom ranges of the platform and up the stack to embed safety all over the place so customers can eat IT companies with out worrying about integrating safety.
Sustaining a cloud platform that helps the wants of at present and tomorrow. That is actually about learn how to handle the previous and the brand new. Or the current and the longer term. For a lot of organizations, these are two compute, storage and networking environments managed by two groups. Broadcom believes it has the one, hybrid platform that may help legacy traces of enterprise functions alongside your agentic AI functions.
The query is, does VCF ship this contemporary cloud expertise and meet these three key necessities? We consider the reply is sure. Tan laid out this imaginative and prescient finally 12 months’s Discover, which we discovered fairly compelling. This 12 months, he’s exhibiting how the corporate has executed and the way prospects have realized these advantages.
Considered one of Broadcom’s prospects made a easy but profound assertion: “Cease pondering of your atmosphere as servers and storage and networking; consider it as a cloud platform.” When adopting this mindset, the worth of VCF turns into obvious. It is a fashionable approach to take a look at issues.
Subsequent-Era VCF — Personal AI-As-A-Service And Extra
The necessities that information an enterprise towards personal cloud will even information it towards personal AI as enterprise adoption of AI occurs in earnest. The identical challenges — safety, velocity and optimizing infrastructure — are maybe much more essential.
The keys are to convey fashions to the place the info is and to supply prospects with alternative. That is what personal AI-as-a-service is: Ship a platform that permits prospects to make the most of the fashions they need for his or her knowledge on their very own infrastructure — Nvidia, AMD or Intel.
Successfully, VCF is delivering its personal AI manufacturing facility for free of charge. Nonetheless, moderately than forcing prospects into a particular structure or framework, Broadcom permits them to make use of their chosen instruments.
That is compelling for activating AI in the true world. Whereas hyperscalers and the biggest of the big enterprise prospects can afford to put money into the most expensive and performant infrastructure and tooling (and refresh it yearly), the remainder of the market must leverage the infrastructure they’ve already invested in. And they should make AI as frictionless as potential. That is what personal AI-as-a-service goals to ship.
How Broadcom Can Win In This Market
Broadcom has delivered a compelling platform with VCF 9.0. Extra importantly, it has painted a imaginative and prescient that we consider aligns properly with how the IT group of tomorrow can ship the velocity and autonomy that builders need with out compromising on safety, management or price.
Regardless of all of this product goodness and VCF’s incumbency out there, some mistimed licensing and channel bulletins early on sowed seeds of doubt amongst VMware prospects. This gave Broadcom’s opponents a variety of ammunition to attempt to seize market share.
Are Broadcom’s opponents going to achieve success — both by beating VCF on the deserves, or as they proceed to drive FUD within the market? How does Broadcom counter?
We consider that whereas the corporate has quietly designed and delivered the main personal cloud platform, it needs to be extra vocal and direct out there. Whereas opponents declare to be the extra reasonably priced possibility, these claims are sometimes primarily based on upfront reductions that don’t totally account for price over the long run. And whereas these opponents discuss vendor lock-in, they’re in actuality merely suggesting that prospects transfer from one proprietary cloud stack to a different.
We wish to see Broadcom ship deeper evaluation evaluating itself in opposition to its primary opponents, exhibiting what a totally burdened price of possession would seem like on VCF versus different cloud platforms. We might additionally wish to see the corporate showcase extra of its buyer successes with firms each massive and small, such because it did with Grinnell Mutual and Barclays throughout at present’s keynote. These proof factors will assist the corporate counter the market noise being generated. Even higher could be all this storytelling with concrete enterprise outcomes included.
No matter its go-to-market actions, Broadcom has nailed the technical capabilities with VCF 9.0. When pondering of the wants of the trendy enterprise at present (and tomorrow), Broadcom has proven it has delivered the correct platform for the correct time.
Moor Insights & Technique supplies or has offered paid companies to know-how firms, like all tech trade analysis and analyst corporations. These companies embody analysis, evaluation, advising, consulting, benchmarking, acquisition matchmaking and video and talking sponsorships. Of the businesses talked about on this article, Moor Insights & Technique at the moment has (or has had) a paid enterprise relationship with AMD, Broadcom, IBM (Crimson Hat), Intel, Nutanix and Nvidia.
