On theCUBE Pod: Views on VMware’s remarkable journey and on Broadcom’s takeover

UPDATED 12:31 EDT / AUGUST 28 2023

VIDEO EXCLUSIVE by Ryan Stevens

Each week on theCUBE podcast, industry analysts John Furrier and Dave Vellante extract the signal from the noise, and this week, they did it live on location at VMware Explore 2023.

It was a chance to analyze VMware Inc.’s strategies as it closes out the biggest chapter in company history, according to Furrier (pictured, left).

“VMware, a tech titan, an iconic brand, closes its chapter of its storied historic run as a iconic, legendary Silicon Valley tech brand, inventing virtualization, changing the game [and] reinventing enterprise computing,” Furrier said on the latest episode of theCUBE Podcast. “They will be on the Mount Rushmore of tech companies, in my opinion.”

Broadcom Inc.’s planned acquisition of VMware is of pivotal importance in this discussion. Broadcom is likely to cut about $5 billion of fat off the company and focus the business units on 18-month business plans out of the gate, according to Furrier.

Broadcom is going to remake the company, and VMware is poised to go to a new level, according to Furrier. It follows a long period of innovation in the company, noted Vellante (right).

“They had product-led growth early on where they were consolidating servers in the data center and saving tons and tons of money,” Vellante said. “It was actually amazing at the time — first time I ever saw virtualization in action. It was just incredible. And so that gave it a big, big boost.”

When it comes to the Broadcom acquisition, Furrier expects that the core business would remain intact. The infrastructure cloud business, for instance, is the bread and butter, he added. Just like it has done with all of its other acquisitions, Broadcom will have to deliver, according to Vellante. That means that it will identify where there’s value to create cash.

“I have said that Carbon Black could be one of those assets. I mean, they could get probably several billion dollars for Carbon Black,” Vellante said. “So that’s one I would watch.”

Also this week, startup Hugging Face Inc., which operates a platform for hosting open-source artificial intelligence projects, announced financing. Big names are part of that financing, including Amazon.com Inc., Google LLC and IBM Corp. That’s incredible and a great success, which points to the confidence and enthusiasm for artificial intelligence right now, according to Furrier.

“This is a gift horse. AI just fell on the lap of the world. And the companies that are seizing it are doing well,” he said. “The ones that understand, that are doing extremely well, the ones that are mastering it quickly are going to be the winners. The ones that are pooh-poohing it are going to be out of business. I’m telling you, this is important.”

With Hugging Face’s recent valuation in mind, Vellante and Furrier turned their focus to the latest in AI. The technology is like a “clean sheet of paper,” in the view of Furrier, because it is building new brands, assets and companies.

VMware gets it, because it’s being smart about saying that it will bring AI into everything, according to Furrier. Hock Tan, CEO of Broadcom, has said that he looks at AI as just another workload, Vellante noted.

“It’s not like something that necessarily is going to get monetized directly, although it is going to provide a platform for more sales of the core. And I think that’s going to be the key,” Vellante said. “I don’t see VMware being an AI company per se. I see them being as infrastructure to support AI workloads. So, I think it is a rising tide that lifts all boats.”

The other big thing to consider is the company’s multicloud strategy, according to Vellante. VMware is betting that multicloud is new incremental growth, and Tanzu was a key part of that.

Meanwhile, the other thing that happened this week was senior executives at VMware endorsing supercloud, according to Furrier. Though it won’t be put in literature, they have mentioned it on theCUBE multiple times, he said.

“Tanzu is the glue there,” Vellante added. “But we’re going to have to see adoption, or that may be on the chopping block.”

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