Broadcom CEO Hock Tan is attempting to reduce concerns that his company’s pending acquisition of VMware will crater that firm’s innovative and customer spirit, concerns raised by analysts and competing executives. This was a notion that overhung the recent VMware Explore 2022 event in San Francisco.

In a blog post, Tan noted that in recent visits to Broadcom customers, multicloud, cloud-native applications, and pricing have been the three topics “top of mind for customers as it relates to the VMware-Broadcom transaction.”

“Ultimately, what I’ve stressed to them has been straightforward: our customers are and will remain the most important part of our business,” Tan wrote.

Multicloud and Cloud Native

The executive explained that Broadcom is aligned with customer priorities to invest in and support innovation at VMware in regards to its multicloud and cloud-native portfolio.

For multicloud, Tan noted that customers have adopted this mindset as a way to support legacy systems while embracing new technologies. This also allows for the ability to strengthen resiliency and manage costs.

That new technology focus is also evident in the growing momentum around cloud native. This is based around the Kubernetes ecosystem that allows organizations to more easily move workloads between cloud and on-premises environments.

VMware’s push in this realm is through its rapidly expanding Tanzu platform. The vendor has been updating this platform to provide greater support and federation across VMware’s own products and those of competitors.

“Many customers and partners are asking me how I see the VMware Tanzu portfolio and Broadcom’s future commitment to the Tanzu business,” Tan wrote. “My answer to them is that I see Tanzu as a strategic part of the VMware software portfolio and it will remain that way as we move forward within Broadcom.”

Broadcom Cost Concerns Have Rivals Excited

Broadcom’s biggest challenge could be in terms of pricing expectations. Analysts have been warning about this issue since the $69 billion deal was announced.

Tan explained that Broadcom is well versed in increasing product innovation that provides greater value to customers. This then leads to customers increasing their spend with the vendor, which is a model he said will continue at VMware.

“VMware develops technology for the future and addresses a growing market,” Tan wrote. “The Broadcom business case for this transaction is premised on focusing on the business model, increasing R&D, and executing so that customers see the value of the full portfolio of innovative product offerings — not on increasing prices. Following the close of the transaction, we will invest in and innovate VMware’s products so we can sell even more of them and grow the VMware business within enterprises, deepening and expanding the footprint instead of potentially raising prices.”

This concern was top of mind for analysts when the deal was announced.

“For acquired companies, a Broadcom acquisition sparks fear of price hikes, diminished support, and stunted innovation,” Forrester Senior Analyst Tracy Woo bluntly stated in a report. “At a time when VMware customers need to re-establish confidence in the company’s strategy and innovation plans after beloved ex-CEO Pat Gelsinger’s departure, this would be a notable departure from that course.”

Woo cited Broadcom’s past acquisition “playbook” as a cautious path forward should the deal be completed. She specifically noted Broadcom’s $18.9 billion purchase of CA Technologies in late 2018, and its subsequent acquisition of Symantec for $10.7 billion in 2019.

“Following these purchases, CA and Symantec customers saw massive price hikes, worsening support, and stalled development,” Woo wrote. “Symantec redirected its focus to its biggest resellers and customers. The company largely abandoned its customer base of 100,000 to prioritize its top 2,000.”

This potential also has VMware’s competition salivating.

Nutanix CEO Rajiv Ramaswami recently said that VMware customers running mission-critical applications were proactively reaching out to Nutanix due to concerns over potential price changes, customer and partner support, and roadmap implications.

“They’re looking at contingency plans and they’re looking at exploring alternatives,” Ramaswami said during Nutanix’s most recent earnings call. “There is definitely a higher level of engagement from VMware customers as a result of what’s going on out there, and they’re more open to discussions with us. We’re also seeing more talent out there looking — from VMware looking for new career opportunities.”

VMware CEO Raghu Raghuram stressed calm during that vendor's recent Explore 2022 event. During a question-and-answer session with reporters and analysts, Raghuram said the vendor remains committed to its customers and resellers on long-term product roadmaps, explaining that those channel ecosystems remain critical to its success and that its customers are used to dealing with large vendor acquisitions.

The executive also acknowledged that there was initial employee concerns over the deal, but that has lessened as its workforce have been shown the roadmap.