In a strategic move, Broadcom completed its acquisition of VMware, combining its deep portfolio of networking semiconductors with VMware’s leading position in networking virtualization software and services.
VMware, which was founded in 1998 and is based in Palo Alto, California, pioneered the development of virtualization technology, which allows multiple operating systems to run on a single physical server, thereby improving efficiency, scalability, and resource utilization in computing environments. VMware’s revenue for the fiscal year 2022 was approximately $12.851 billion, marking a 9.21% increase from the previous year.
Hock Tan, President and Chief Executive Officer of Broadcom, writes: “While an important moment for Broadcom, it’s also an exciting milestone for our customers around the world. And as I said when we first announced the acquisition, we can now come together and have the scale to help global enterprises address their complex IT infrastructure challenges by enabling private and hybrid cloud environments and helping them deploy an ‘apps anywhere’ strategy. Our goal is to help customers optimize their private, hybrid and multi-cloud environments, allowing them to run applications and services anywhere.”
The deal was first announced on 22-May-2022 as a cash-and-stock transaction that values VMware at approximately $61 billion, based on the closing price of Broadcom common stock on May 25, 2022. In addition, Broadcom was to assume $8 billion of VMware net debt. The deal had the support of VMware’s Board of Directors, along with Michael Dell and Silver Lake, which own 40.2% and 10% of VMware shares outstanding.
What happens next
Broadcom is committed to VMware Cloud Foundation as the software stack that serves as the foundation of private and hybrid clouds.
The vision is to convert the typically heterogeneous enterprise IT infrastructure into a virtualized and containerized environment, enabling private and hybrid clouds. VMware will offer a rich catalog of services on top of VMware Cloud Foundation to modernize and optimize cloud environments, including the following.
- Application networking and security – the focus is to deliver lateral protection that can be implemented in a simpler and more agile manner for VMware virtualized infrastructure. Emerging AI/GenAI techniques are leveraged to counter the evolving threat landscape.
- Modern applications – VMware Tanzu is designed to accelerate application development, delivery and management on any cloud – on VMware Cloud Foundation as well as across all major hyperscalers. Specifically optimized for app-dev frameworks such as Spring, the leading enterprise Java application framework, Tanzu drives significant developer productivity while enabling platform teams to enforce application standards, maintain security and compliance and track app performance.
- Software-enabled innovations from data center to the edge – Private and hybrid cloud ambitions are gaining velocity just as modular, platform-based technologies enable agility. This is true in the data center and also becoming true at the Software-Defined Edge.
There are no plans to tie VMware software to run specifically on Broadcom silicon, according to media interviews with Hock Tan.
Significant Milestones for VMware
- 1998 : VMware founded by Diane Greene (president and CEO), Mendel Rosenblum (Chief Scientist), Scott Devine, Ellen Wang, and Edouard Bugnion.
- 1999 : VMware introduced its first product, VMware Workstation, and entered the server market in 2001 with VMware GSX Server and VMware ESX Server.
- 2003-2004 : The company launched VMware Virtual Center, vMotion, and Virtual SMP technology and introduced 64-bit support.
- 2004 : EMC Corporation acquired VMware for $625 million. This was followed by VMware going public in 2007, with EMC selling 15% of its shares.
- 2008 : VMware collaborated with Cisco Systems, leading to the creation of the Cisco Nexus 1000V, a distributed virtual software switch.
- 2011 : Introduction of Cloud Foundry, an open-source platform-as-a-service system, and transfer of Mozy backup service from EMC to VMware.
- 2012-2013 : Pat Gelsinger was appointed CEO, and VMware spun off Pivotal Software with investment from General Electric.
- 2013 : Launch of vCloud Hybrid Service and acquisition of Desktone.
- 2016 : Dell’s acquisition of EMC, leading to significant changes within VMware, including restructuring and executive departures.
- 2017 : VMware was ranked 3rd in the list of highest-paying companies in the U.S. and sold vCloud Air to French cloud service provider OVH.
- 2021 : Pat Gelsinger left VMware to join Intel; VMware announced Raghu Raghuram as the new CEO and spun off from Dell.
- 2022 : Broadcom announced its intention to acquire VMware, a transaction valued at approximately $61 billion, including debt assumption.
Significant milestones for Broadcom
Broadcom, originally known as HP Associates, was established in 1961 as a semiconductor products division of Hewlett-Packard. The division became part of Agilent Technologies in 1999, which was later acquired by KKR and Silver Lake Partners in 2005 to form Avago Technologies.
- 1961 : Establishment as HP Associates, a semiconductor division of Hewlett-Packard.
- 1999 : Became part of Agilent Technologies spinoff from Hewlett-Packard.
- 2005 : Formation of Avago Technologies by KKR and Silver Lake Partners, acquiring Agilent’s Semiconductor Products Group.
- 2006 : Hock Tan appointed CEO of Avago Technologies
- 2009 : Avago Technologies went public on NASDAQ.
- 2013 : Acquisition of CyOptics for $400 million to expand fiber optics portfolio.
- 2013 : Avago Technologies acquired LSI Corporation for $6.6 billion.
- 2014 : Sale of SSD controller business to Seagate Technology.
- 2015 : Avago acquired Broadcom Corporation for $37 billion, renaming the combined company Broadcom Ltd. The original Broadcom, which was based in Irvine, California, was founded in 1991 by Henry Samueli and Henry T. Nicholas III , two professors from UCLA. It grew to about 10,000 employees worldwide, with more than 10,700 U.S. and 3,700 foreign patents. 2014 revenue was $8.43 billion. In 2014, Broadcom exited the cellular baseband business.
- 2018 : Acquisition of CA Technologies for $18.9 billion, moving into infrastructure software.
- 2019 : Acquisition of Symantec’s enterprise security business for $10.7 billion.