This is modus operandi for many acquisitions in the field of proprietary software.
If you have been in the business for a decade or two, you’ve seen this play more than a few times. It’s legal, it’s profitable, so it keeps happening. Even when it destroys valuable products in the end.
Open source software with permissive licensing is the only true guarantee of not getting squeezed.
But you can’t always find suitable FOSS etc. so here we are. It’s a sad situation IMO
Any CTO that hasn't started a migration project 2 years ago right when the acquisition was announced shoukd have been fired. It was written on the wall the prices would hike.
I have talked with several. They were like: Yeah we expect a significant price increase, but our customers will pay that. In oil and gas sector: We can afford that!
We are too (major enterprise). It's a shame. It was a good product. They don't even seem to be interested in sustaining it. Just trying to extract maximum value as quickly as possible before they kill it.
Dumb or not, getting rid of their smaller customers and jacking up prices for their large customers is exactly what Broadcom said their strategy was going to be immediately after they bought VMware. They are in the execution stage now, it shouldn't come as news to anyone at this point.
At 300% or 1000% rates you might make more in a few years it takes customer to move than you spend on acquisition. At that point, well you are still getting paid or you roll it out to someone else again and still recover part of cost if tech is still good enough.
Broadcom follows the private equity playbook: hike prices and reduce expenses. Customers will leave until only the most locked in remain. This extracts value from the business and makes it more capital efficient. Broadcom will continue to extract value until only a husk remains.
I keep thinking I should buy options for AVGO (Broadcom's stock symbol), betting that their stock will drop; however I am surprised they are doing so well, perhaps buoyed by their AI chips business.
However the VMware acquisition will become a millstone around their necks, is my prediction. I am thinking the second or third reported quarter in 2025 will be enough to take the bloom off the rose.
That is by design?Bell was broken up by the government. It didn’t become what it is today without that intervention.
The anti trust policies till the early 80s and seeing a revival currently with Lina khan and the FTC is not to have monopolistic companies.
Bell labs could be funded because of the monopoly of Ma bell . Larger organizations do not efficiently use capital to really innovate.
Bell labs was really great for research, but Ma bell wasn’t all that successful bringing that research as products to market . Same reason why Google couldn’t get GPTs to market like OpenAI could or GM couldn’t make an electric car successful like Tesla did or SpaceX innovating better than ULA, Boeing et al.
We ideally want companies to grow and die, not become rent seeking models that occasionally throw some scraps for research or CSR activities while returning bulk of the value extracted to shareholders without innovating on their products
I started using VMware more than 10 years ago because of the good USB support for license dongles and pki stuff. I am using Windows as a development machine.
I must admit that the license was cheap, it worked, so I didn't took the time to explore alternatives. But for what I understood, my use case doesn't exist anymore. You cannot buy a single pro license anymore. So, the day I upgrade my system, I may be forced to switch to another solution.
I also have a Linux host with Windows VMs running VMWare and KVM/qemu didn't work for me because the VMs don't capture Alt-Tab and other combinations. This is a major annoyance when doing development on the VMs. There were other small things that made me go back to VMware but I can't recall exactly what they were.
I guess you are not logging into the VM using a remote desktop client? But using the the spice client?
One of my favourite alternatives is using Steam Remote Play, you get the low latency, works for games at the cost of much higher bandwidth. But for a home environment this is fine.
I don't know if this is still true of Virtualbox but VMWare Player supports USB devices such as payment processors and others and Virtualbox doesn't (or didn't when I tried it).
I wonder if AT&T could retaliate in some unexpected way. For example could they do something to prevent devices with Broadcom chips from accessing their network or degrade their performance? I think Apple might fall into that though, as they had made some deal with Broadcom...
AT&T probably have quite a lot of broadcom hardware in their own network. Besides, we really do not want that kind of thing happening as a precedent because it destroys the market.
vSphere is, by far, the most mature enterprise datacenter virtualization platform which is why this is so challenging. Orgs are going to have to make do with openShift or Hyper-V etc and a lot of functionality will be lost along the way.
This is modus operandi for many acquisitions in the field of proprietary software.
If you have been in the business for a decade or two, you’ve seen this play more than a few times. It’s legal, it’s profitable, so it keeps happening. Even when it destroys valuable products in the end.
Open source software with permissive licensing is the only true guarantee of not getting squeezed.
But you can’t always find suitable FOSS etc. so here we are. It’s a sad situation IMO
Any CTO that hasn't started a migration project 2 years ago right when the acquisition was announced shoukd have been fired. It was written on the wall the prices would hike.
I have talked with several. They were like: Yeah we expect a significant price increase, but our customers will pay that. In oil and gas sector: We can afford that!
A company I work with is dumping VMware as fast as they can. Direct orders from the c-suite after Broadcom raised the prices by 300%.
We are too (major enterprise). It's a shame. It was a good product. They don't even seem to be interested in sustaining it. Just trying to extract maximum value as quickly as possible before they kill it.
Seems like a dumb idea for Broadcom; they’re going to keep loosing customers to proxmox and others. Why such a hike?
Dumb or not, getting rid of their smaller customers and jacking up prices for their large customers is exactly what Broadcom said their strategy was going to be immediately after they bought VMware. They are in the execution stage now, it shouldn't come as news to anyone at this point.
Is AT&T is an example of a smaller customer?
No one said the strategy was working!
They did the calculations but unfortunately they were not good at math.
Oh but they'll pay for couple of years at least.
Extract as much value as you can from a quickly depreciating asset before you dump it.
Makes so much money.
The thing is, this asset wouldn't have depreciated so much if it weren't for broadcom.
At 300% or 1000% rates you might make more in a few years it takes customer to move than you spend on acquisition. At that point, well you are still getting paid or you roll it out to someone else again and still recover part of cost if tech is still good enough.
Broadcom follows the private equity playbook: hike prices and reduce expenses. Customers will leave until only the most locked in remain. This extracts value from the business and makes it more capital efficient. Broadcom will continue to extract value until only a husk remains.
I did a talk a few months ago about our efforts to move people off VMware onto KVM: https://pretalx.com/devconf-cz-2024/talk/review/WHHHPFLS9RJD... (https://www.youtube.com/watch?v=lE9yxl0h1pg)
Article source (28 points, 4 days ago) https://news.ycombinator.com/item?id=41718139
I keep thinking I should buy options for AVGO (Broadcom's stock symbol), betting that their stock will drop; however I am surprised they are doing so well, perhaps buoyed by their AI chips business.
However the VMware acquisition will become a millstone around their necks, is my prediction. I am thinking the second or third reported quarter in 2025 will be enough to take the bloom off the rose.
How embarrassing. The company that I once owned the prolific Bell Labs is now being arm twisted by a second hand virtualization software peddler.
That is by design?Bell was broken up by the government. It didn’t become what it is today without that intervention.
The anti trust policies till the early 80s and seeing a revival currently with Lina khan and the FTC is not to have monopolistic companies.
Bell labs could be funded because of the monopoly of Ma bell . Larger organizations do not efficiently use capital to really innovate.
Bell labs was really great for research, but Ma bell wasn’t all that successful bringing that research as products to market . Same reason why Google couldn’t get GPTs to market like OpenAI could or GM couldn’t make an electric car successful like Tesla did or SpaceX innovating better than ULA, Boeing et al.
We ideally want companies to grow and die, not become rent seeking models that occasionally throw some scraps for research or CSR activities while returning bulk of the value extracted to shareholders without innovating on their products
As a long term VMware Workstation user with a Linux host, to run Windows VMs, what is the alternative? This is for professional use.
KVM is fine. Virsh or virt-manager to manage it. No issues with compiling kernel modules either.
I wouldn't look at virtualbox. It's a good product but oracle is just as bad a company as broadcom.
Linux to windows on a single (or a handful of) host? Why not just libvirt (KVM and qemu) then?
I started using VMware more than 10 years ago because of the good USB support for license dongles and pki stuff. I am using Windows as a development machine.
I must admit that the license was cheap, it worked, so I didn't took the time to explore alternatives. But for what I understood, my use case doesn't exist anymore. You cannot buy a single pro license anymore. So, the day I upgrade my system, I may be forced to switch to another solution.
I also have a Linux host with Windows VMs running VMWare and KVM/qemu didn't work for me because the VMs don't capture Alt-Tab and other combinations. This is a major annoyance when doing development on the VMs. There were other small things that made me go back to VMware but I can't recall exactly what they were.
I guess you are not logging into the VM using a remote desktop client? But using the the spice client?
One of my favourite alternatives is using Steam Remote Play, you get the low latency, works for games at the cost of much higher bandwidth. But for a home environment this is fine.
For work we're looking at proxmox (https://www.proxmox.com/en/).
KVM works fine for my admittedly limited needs.
Virtualbox or QEMU+KVM
Depends on what you need exactly
Out of curiosity, what specifically does VMware Workstation enable you to do, that Virtualbox doesn't?
I don't know if this is still true of Virtualbox but VMWare Player supports USB devices such as payment processors and others and Virtualbox doesn't (or didn't when I tried it).
I wonder if AT&T could retaliate in some unexpected way. For example could they do something to prevent devices with Broadcom chips from accessing their network or degrade their performance? I think Apple might fall into that though, as they had made some deal with Broadcom...
AT&T probably have quite a lot of broadcom hardware in their own network. Besides, we really do not want that kind of thing happening as a precedent because it destroys the market.
Customer: my internet is slow!
AR&T Service Rep: Ah, That’s because your computer has a Broadcom chip in it.
Customer: How is that possible? I don’t even eat chips!
Yeah great idea.
How is making random customers switch because you slowed down their internet speeds anything but a self-own?
People don't buy devices because they work with AT&T, they buy AT&T to get internet on their device.
VMware has always sucked so this is good news in the long run
vSphere is, by far, the most mature enterprise datacenter virtualization platform which is why this is so challenging. Orgs are going to have to make do with openShift or Hyper-V etc and a lot of functionality will be lost along the way.