Broadcom Faces Investor Scrutiny Amidst VMware Product Enhancements and Nutanix Rivalry

Broadcom (AVGO) experienced a 6.16% drop recently. At the annual VMware Explore user conference, the much-anticipated product releases did not bring many surprises but added significant highlights to VMware's product lineup. VMware has heavily invested in simplifying DevOps, aiming to create a singular platform-as-a-service, with VMware Tanzu Platform 10 being a prime example. Broadcom's CEO, Hock Tan, stated that the VMware Cloud Foundation (VCF) platform would play a critical role in future DevOps. Other notable products unveiled at the conference include edge deployments and AI integrations.
These product launches come in the wake of Broadcom's controversial acquisition of VMware. Many businesses and organizations noticed substantial price and fee hikes post-acquisition, although this varied among customers.
Despite the controversies, some organizations may not limit their adoption solely to avoid negative perceptions due to license changes. The conference highlighted ambitious products such as significant enhancements to Tanzu, AI integrations that DevOps can rely on, and private cloud advantages.
Just before the conference, Nutanix’s CEO, Rajiv Ramaswami, who previously held an executive position at VMware, talked about the negative impacts of the Broadcom-VMware merger on customers in a statement. He mentioned concerns around price hikes, support changes, and a lack of innovation.
Nutanix appears to be capitalizing on discontent from former VMware customers, like Treasure Island Hotel & Casino and Computershare, viewing this as a significant long-term advantage.
In competition, Nutanix and VMware both offer computing, networking, storage management automation, and individual hypervisors for building cloud platforms. However, their approaches differ. VMware promotes simpler products like VMware Cloud Foundation and VMware vSphere Foundation to appeal to large enterprises looking for enhanced services and features in a cloud-native environment.
Broadcom has made noteworthy changes to VMware's products and licensing. They no longer offer perpetual license-driven solutions but rather subscription services since December. This shift has led to higher prices for many smaller customers.
According to TechTarget Enterprise Strategy Group analyst Torsten Volk, VMware has lost considerable trust post-acquisition due to the unfortunate license model change, product discontinuations, partner program modifications, and key personnel departures. Consequently, many customers are seeking alternatives, especially for cloud-native applications.
However, customers and partners heavily invested in VMware infrastructure might require substantial work to decouple and upskill to shift platforms. This gives VMware some time to convince stakeholders. Moreover, organizations are exploring alternatives for cloud-native projects and traditional application modernization
In the ongoing competition, the focus will likely be on providing developers and platform engineers with tools and platforms they desire. As Nutanix's CEO expressed, there is an increasing, albeit unpredictable, opportunity to engage potential customers.
Ultimately, Broadcom must double down on its investment in cloud-native product portfolios and other platforms. Broadcom's CEO Tan emphasized the company's commitment to breaking silos and offering a single platform capable of running on private and, as needed, expanding to public clouds, based on their competitive VCF product.