Broadcom finally closed on its $69 billion acquisition of VMware, bringing to a close 18 months of intrigue. The deal was arguably the most watched across the industry due to VMware’s embedded position within the cloud, software and networking ecosystem and Broadcom’s past acquisition history.

SDxCentral followed the deal from its inception, including significant coverage this year from different perspectives. Here are chronological highlights from this year’s coverage.

Purnima Padmanabhan began 2023 as the newly installed GM and SVP of VMware Modern Apps and Management and told SDxCentral that VMware employees are “very engaged” in helping the vendor do “what we can do to win.”

Padmanabhan, who headed up cloud management before the promotion, expected to face a good deal of cultural differences in her new role – even though “this was a smaller change compared to the constant Broadcom conversation that employees have,” she said. “But net-net, when you start anchoring conversations based on the customer, and the customer needs, and what we can do to win, I’ve been incredibly pleasantly surprised by how teams have gone so fast.”

The United Kingdom’s Competition and Markets Authority (CMA) regulator initiated an advanced review phase on the deal, which came just a week after the same regulator expressed competitive concerns over the pending mega-acquisition on the data center virtualization market.

The CMA in a statement noted it was moving the review of the acquisition to a “phase 2 investigation,” which came after Broadcom informed the CMA that it would not be providing any “undertakings” following the completion of the initial review process.

“We are concerned this deal could allow Broadcom to cut out competitors from the supply of hardware components to the server market and lead to less innovation at a time when most firms want fast, responsive and affordable IT systems,” CMA Executive Director David Stewart wrote as part of the agency’s initial investigation.

VMware reorganized its Networking and Advanced Security business group following the departure of its ex-senior VP Tom Gillis. The group was split and returned to two separate units. That is, the Carbon Black and NSX businesses operated independently.

The vendor combined the Carbon Black business and the networking and security business group in mid-2022 to form the Networking and Advanced Security business group (NASBG) under Gillis, who left the vendor in late 2022, before quickly popping up at rival Cisco.

Broadcom gained a significant regulatory victory in its quest to acquire VMware, with the European Commission (EC) signing off on the deal in mid-2023.

The EC approval came after it had gained concessions from Broadcom following an “in-depth investigation.” That investigation centered around concerns the deal “would harm competition in the worldwide market for the supply of [fiber channel host-bus adapters],” with a particular focus on Broadcom being able “to foreclose Marvell, the only rival on the market for the supply of FC HBAs, by restricting or degrading the interoperability between VMware’s server virtualization software and Marvell’s hardware.”

“This would hamper Marvell’s ability to compete in a market where Broadcom is dominant, or at least holds a very strong position, ultimately leading to higher prices, lower quality and less innovation for business customers,” the EC expressed.

Industry observers started to predict what VMware might look like post-acquisition, highlighting growing sentiment that Broadcom’s acquisition would indeed close.

Tracy Woo, senior analyst at Forrester Research, said in an interview with SDxCentral that VMware’s cloud-native Tanzu platform and its security focused Carbon Black products could be impacted. She added that VMware had attempted to shield Tanzu through its integration of Tanzu into its Aria multicloud management platform, while she has not heard a lot from VMware customers on its Carbon Black service.

“I’m not the security person, but I also don’t hear a lot about it either,” Woo said. “It’s sort of seen as a tag-on solution, kind of like how Tanzu is.”

Broadcom cast a large shadow over VMware’s Explore event, with many still questioning what VMware might look like if the event has a 2024 edition.

VMware’s management did its best to balance the fact that it was still an ongoing independent entity until Broadcom’s pending acquisition closes. This included CEO Raghu Raghuram reiterating that fact when asked about what might change with VMware’s operations once/if that deal closes.

“Firstly, the acquisition has not closed,” Raghuram said during a question-and-answer session with analysts and reporters following his event opening keynote speech. “The combined company will start functioning after the close of the acquisition. So that would be a better time to address how things are different.”

Raghuram added a bit more flavor later during the session, but mostly deferred to what Broadcom CEO Hock Tan has publicly stated, and also said during a prepared video that played early in Ragharum’s event-opening keynote speech.

“I would refer you to Broadcom and their stated plans, and what Hock Tan has written in public blogs, and you heard a little bit in the video as well,” Raghuram added. “They intend to continue to invest and operate in VMware as a continuation of our current business, reinforcing the multicloud strategy and building upon the multicloud strategy as a singular division within Broadcom, so that’s what they’ve announced.”

Tan took to the stage at the VMware Explore Barcelona event in his latest attempt to sooth potential concerns from VMware customers that his company’s pending acquisition will not follow Broadcom’s historical model.

Tan told attendees during a brief keynote address that he has learned a lot from talking to VMware customers and partners over the past 18 months and stated three “commitments we will make to you, our customers.”

After a slight delay, Broadcom finally closed on the VMware acquisition.

Broadcom noted in a short statement on the closing that it had garnered “legal merger clearance in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom and foreign investment control clearance in all necessary jurisdictions. There is no legal impediment to closing under U.S. merger regulations.”

China’s inclusion on that approval list was significant as that was reported to be the last hurdle from the deal closing. Those reports indicated the Chinese government was holding up the deal due to ongoing geopolitical tension with the United States tied to the U.S. government’s tightening China’s access to semiconductor and network technology.

The smoothing of this potential hurdle comes a week after Chinese President Xi Jinping met with U.S. President Joe Biden for a summit in San Francisco. That visit reportedly included a networking and dinner event with business executives.

Just weeks after closing the deal, Broadcom started slashing jobs across its newly acquired VMware unit. The total number of those cuts might not be known for several months as Broadcom works through the required employment and government filings.

Alex Demeule, an analyst at Technology Business Research (TBR), indicated in a report that those cuts are reportedly in areas of software development and cloud engineering, two areas that could impact future development.

“The fact that R&D-related headcount is being cut early does not paint a favorable picture for Broadcom’s commitment to innovation,” Demeule wrote.

Tan said the company’s integration of VMware will take a year and cost around $1 billion in “transition spending,” but the effort will result in a combined entity that will generate $50 billion in revenue over the next year. VMware’s share of that revenue will also come from a revamped go-to-market strategy.

Tan laid out those plans as part of a Broadcom earning’s call, which was held just two weeks after it closed on its $69 billion purchase of VMware. Those results included an 8% increase in full-year revenues to $35.8 billion, which came in just ahead of expectations.

That revenue did not yet include VMware, which itself generated around $12 billion in revenues over the past year. That revenue stream will look a lot different going forward as Broadcom works through its billion-dollar VMware integration.

“We are now refocusing VMware on its core business of creating private and hybrid cloud environments among large enterprises globally and divesting non-core assets,” Tan told investors of Broadcom’s plans for its new acquisition.

Tan noted that the “core” business includes a focus on VMware’s Cloud Foundation (VCF), which is its full-stack software package targeted at enterprises to virtualize their on-premises data centers.

Those divestitures will include VMware’s Carbon Black security business that it has already unhitched from VMware, and VMware’s End-User Computing (EUC) business. Those two sales are expected to generate $2 billion in proceeds.

“We’ll find good homes for them because there are a lot of very interested parties who are more than happy to take those assets,” Tan told investors.

Once divested, Broadcom expects its VMware-bolstered “infrastructure software” business to produce $20 billion in revenues for its fiscal 2024, which puts it closer to what the vendor’s “semiconductor solutions” business is generating.