Broadcom-VMware: Partners Face ‘Too Many Unknowns’

The behemoth, long drawn-out Broadcom-VMware deal finally will close on Nov. 22.

On Nov. 21, Broadcom said it had “received all regulatory approvals” and would tie up its $61 billion purchase of VMware in a move that adds cloud computing to the chipmaker’s business model.

The Broadcom-VMware deal was slated to close on Oct. 30, 17 months after its announcement. However, China, the last of the antitrust hurdles, delayed its expected blessing. That holdup came after U.S. President Joe Biden implemented tougher controls to make it harder for China to acquire advanced computer chips and the equipment to make them. The resulting lag in approvals from China was widely viewed as retaliation.

Without clarifying what had changed, or when, and without mentioning China, Broadcom on Nov. 21 issued a press release stating that the Broadcom-VMware transaction would close on Nov. 22. 

A translated statement from China's State Administration for Market Regulation, though, shed some light on the country's thinking. Broadcom must concede to some "restrictive conditions," especially around storage adapters, Ethernet network cards, non-public cloud virtualization software and fiber channel adapters.

"The centralized entity has the motivation to eliminate or restrict competition" in those markets, China's SAMR said.

Related:What’s Next for Broadcom-VMware as China Holds Up Clearance?

As such, Broadcom has apparently agreed to remedies, some of which remain confidential between the company and China. Others include removing barriers to customers easily buying and using the aforementioned product lines. Broadcom also must support interoperability measures. All of the conditions last for 10 years.

Broadcom had previously obtained a variety of regulatory rubber stamps — some after pushbacks and investigations — from authorities in countries and regions including Australia, Brazil, Canada, the U.K., the European Union, South Korea and more. The United States’ Federal Trade Commission did not present any opposition to the Broadcom-VMware union, despite initial predictions that it would.

With all that under its belt, Broadcom will be free to bring VMware into its fold. But what that means for channel partners remains somewhat of a mystery.

Broadcom-VMware: What Comes Next for VMware Partners?

Throughout 17 months of procedural delays, Broadcom CEO Hock Tan continued to post blogs and state at industry events that VMware channel partners have a home at his company. Partners have expressed different reactions to those assertions over the intervening months; many remain cautiously optimistic.

Related:What's Next for VMware Employees? Leaked Broadcom Email Shows 3 Options

Techaisle's Anurag Agrawal

Channel Futures contacted a number of partners who previously have talked with us about Broadcom-VMware. However, none wanted to talk as the $61 billion transaction reaches its end — and a new beginning. 

VMware employees, on the other hand, may face a tougher transition than their channel colleagues. Some are finally learning whether Broadcom is extending full-time or transitional job offers, or whether they’re being laid off. It’s been a rough road and a long, stressful wait for many.

As for what comes next, that’s up in the air. Channel Futures spoke with industry analysts — Techaisle's Anurag Agrawal and Omdia’s Roy Illsley) about what partners and their customers might be able to expect now that Broadcom-VMware is a done deal. (Omdia is owned by Informa, Channel Futures' parent company.)

As a hint, one of them says the combination arouses “too many unknowns.”

Omdia's Roy Illsley

In the slideshow above, find out what else Agrawal and Illsley have to say about Broadcom-VMware as the channel (and technology sector overall) has had more time to absorb its implications. They also discuss the feedback they’ve been fielding from partners and enterprises, share what they think Broadcom has in store for VMware’s channel program and more.