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Jibang Consulting: after Broadcom's acquisition of VMware, the strength of the software business has greatly increased, and it is estimated that the proportion will reach 40-45%.

2024-04-25 Update From: SLTechnology News&Howtos shulou NAV: SLTechnology News&Howtos > IT Information >

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Shulou(Shulou.com)12/24 Report--

CTOnews.com, December 13 (Xinhua)-- Broadcom announced in November that it had completed its acquisition of cloud computing company VMware for $69 billion in cash and stock.

In a recent blog post, Jibang Consulting said that after completing the acquisition, Broadcom entered the highly competitive cloud market, estimated that the software business accounted for 40-45% of its revenue.

On May 26, 2022, Broadcom announced the acquisition of VMware through a cash and stock transaction valued at $61 billion (CTOnews.com Note: currently about 437.98 billion yuan).

With approval from global regulators, including China, the European Union, the United Kingdom, South Korea and Japan, the acquisition was officially announced on November 22, with a total transaction value of $69 billion (currently about 495.42 billion yuan).

VMWare, which specializes in cloud computing and virtualization software, was spun off from Dell at the end of 2021 and has a customer base of more than 400000. Its main competitors are Nutanix and Cloud Software Group.

The core service of VMware is multi-cloud management, which simplifies the integration of cloud resources from different vendors. It enables customers to manage multiple public clouds on a unified platform.

The VMware platform significantly reduced the time it takes to migrate data to different public clouds, from 45 months to about 2.5 months.

VMware dominates the server virtualization market and is expected to exceed 70 per cent this year.

VMware's strategic plan is to increase the share of sales of subscription and cloud services from 25 per cent in 2021 to 40 per cent in 2025.

VMware's revenue in the second quarter of 2023 was $3.41 billion, almost twice the size of Broadcom's software business, which will account for 40-45 per cent of total revenue.

In May, Tan Hock Eeng, Broadcom's chief executive, said his company was committed to investing $2 billion a year in VMware research and development.

When Broadcom completes the acquisition, its software division will be renamed VMware and plans to switch from permanent software licenses to subscription and SaaS models. Broadcom aims to increase VMware's EBITDA from $4.7 billion in fiscal year 2022 to $8.5 billion within three years.

In addition to Broadcom's entry into the cloud market through VMware, TrendForce Group Consulting also highlights the importance of VMware as an important partner of Nvidia. The expansion of the strategic partnership was announced in August 2023, with the establishment of a private AI Foundation with NVIDIA.

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