At VMware, ‘change’ and ‘uncertainty’ loom after its $69 billion acquisition by Broadcom, which left customers on edge
- Broadcom closed one of the biggest tech deals ever when it acquired VMware on November 22.
- VMware employees, some of whom face job cuts, say it’s the end of the company’s work culture.
- VMware competitors see the acquisition by Broadcom as a major opportunity to win over customers.
Employees and competitors alike say it’s the end of an era now that Broadcom has completed its $69 billion acquisition of VMware in one of the largest technology deals in history.
Since its inception in 1998, VMware has been a pioneer in the development of virtualization technology, and in recent years it has focused more on cloud computing technology. Broadcom announced its intention to acquire VMware in May 2022, and the deal was completed on November 22 after a year and a half of seeking approval from countries such as the United States, United Kingdom, and China.
This is not the first time VMware has been acquired. EMC purchased VMware in 2004, and VMware later became a part of Dell when Dell purchased EMC in 2016. VMware will be spun off from Dell in 2021. Nonetheless, VMware retained much of its independence and culture under Dell and EMC.
Employees say Broadcom will not retain the culture it once had, and the company has already begun making job cuts, as Business Insider first reported. BI interviewed five VMware employees and one Broadcom employee. They requested anonymity in order to speak freely, and BI is aware of their identities.
“There’s been uncertainty and doubt that people have thrown out there, especially from competitors,” a staff member said. “In the long run, I believe it is a good deal for VMware, but things have changed.” Uncertainty accompanies change.”
VMware will operate in four divisions under Broadcom, according to an email sent to employees last week by Broadcom CEO Hock Tan. Broadcom is also investigating “strategic alternatives” to VMware’s Carbon Black cybersecurity and End-User Computing units. Employees believe this means the companies will be sold.
“Broadcom has the assets to continue to invest, but I also think Broadcom and Hock will bring a pretty clear focus to the core areas that he believes are critical,” a member of the staff said.
Multiple requests for comment from Broadcom went unanswered.
Competitors swoop in
With Broadcom’s acquisition of VMware, competitors and partners see a significant opportunity to win over VMware customers. Customers had previously expressed concern that Broadcom ownership would stifle innovation and cause a talent exodus, while VMware slowed customer deals, according to BI.
According to one employee, many partners have stopped working with VMware and are instead turning to competitors. For example, they stated that cloud computing services provider Nutanix has “taken a very aggressive role.”
Many VMware customers have already turned to Nutanix for assistance and migration, according to Rajiv Ramaswami, Nutanix CEO and former VMware COO. According to him, the acquisition alters customers’ relationships with VMware.
“It creates concern for customers: Whether they potentially have to pay more for the same sort of things they’ve been getting, what kind of support levels they can get from Broadcom, running mission-critical applications on VMware, and what will happen to the roadmap of innovation,” Ramaswami said in a press release.
Similarly, Bryan Cantrill, co-founder and CTO of Oxide Computer Company, believes the acquisition will benefit his company. He stated that he has heard from VMware customers that they are “extremely concerned” about the acquisition, and that Broadcom is “confirming the worst fears” that customers have about it.
“When Broadcom buys VMware and implies that we’re going to raise prices because we have pricing power over customers, customers say, ‘wait a minute, I’m already spending a lot of money on VMware.'” ‘You’re really making me want to look around,’ said Cantrill. “That’s what we heard from the market.”
“VMware is going to be Broadcom,” he went on to say. “Broadcom is a company that does things differently.” VMware as we knew it is no longer available. Employees and customers are aware of this.”
VMware layoffs
On Monday, Broadcom laid off VMware employees. The exact number is unknown, but according to a WARN notice first reported on by the San Francisco Chronicle, over 1,200 Bay Area employees were affected.
According to an impacted employee, laid-off employees have a 60-day notice period until January 26. Workers reported that remote employees and contractors were more affected, while product and engineering teams were less affected.
Employees in the United States who have been affected have been informed whether they will remain with VMware or not. Depending on local regulations, many employees in other countries are still waiting to hear their fate.
Some contractors and full-time employees in India, for example, have been let go or will be assigned to a transitional role, while employees in Latin America will learn their fates in the first half of December, according to an employee. Many of these employees are even choosing to leave before learning their job status, according to the employee.
“They just decided to leave,” explained the employee. “If they get an offer in another place, they think it’s better to go and take that offer before staying and seeing what’s going to happen here.”
More consolidation is on the way at VMware. Tan stated in a meeting on Tuesday that he will close offices with little business and consolidate sales, finance, and human resources teams.
Employees at VMware had already anticipated significant layoffs prior to the acquisition, as Broadcom has a history of doing so with previous acquisitions such as Symantec and CA Technologies. Employees were informed in September that they would either receive a job offer from Broadcom, a transitional role, or severance pay, according to BI.
Employees in transitional roles will be paid severance after six months, according to one employee.
Broadcom’s job cuts and offers had already begun before the acquisition closed. VMware had also experienced executive and rank-and-file employee attrition.
“VMware took good care of employees, and that doesn’t seem to be the case with Broadcom,” said one of the workers. “It is what it is.”
Culture shock at Broadcom
While VMware maintained much of its independence as a subsidiary of EMC and Dell, employees at Broadcom will face a completely different culture.
Tan said at a meeting Tuesday that he expects employees living within 50 miles to “get your butt” to an office unless they are in a customer-facing role. On Thursday, Broadcom also notified employees of the change via email.
Some employees are concerned about the RTO mandate, and this policy change may result in employee attrition. An employee hired to work remotely stated that if they had to return to the office, they would have to commute in traffic for two hours each way, so they will most likely look for another job.
“They’re letting a lot of knowledge walk out the door because Broadcom is a return-to-the-office kind of place,” a worker at the company said.
Furthermore, Tan stated during an internal town hall meeting on Tuesday that the company does not have employee resource groups for employees who are members of underrepresented groups, nor does it hold company-wide celebrations.
“VMware is extremely inclusive. “They look after their employees,” one employee said. “Based on what the CEO said about the Broadcom culture, it appears that they are very different.” It’s difficult to transition from VMware to Broadcom.”
Tan, according to a current Broadcom employee, “takes a long-term view” and is “frank and forthright about how he runs the business and what he expects of his staff.”
“I suspect that his direct, no-nonsense approach will not appeal to some, and his insistence on in-office working for all staff within 50 miles of an office will not go down well,” said the staff member. They went on to say that one area in which Broadcom “shines” is in awarding stock options to encourage long-term loyalty.
Nonetheless, many VMware employees are pessimistic about the company’s prospects.
“It’s the end of VMware as far as the VMware culture,” one employee said.
Some employees were also dissatisfied with the decision to sell VMware, believing that the transaction was simply a way for shareholders to profit.
“All they did was let the thing go through,” explained another employee. “They made no objections. They never explained why it’s a good idea. There was no discussion of product strategy or how customers would benefit.”
