Broadcom’s swash-buckling offer to acquire VMware for all the money received a wave of dull responses from analysts that questioned Broadcom’s ability to support VMware’s battle across the virtualization and cloud space.

“Despite stock share increases, this isn’t welcome news for VMware customers,” Forrester Senior Analyst Tracy Woo bluntly stated in a report. “For acquired companies, a Broadcom acquisition sparks fear of price hikes, diminished support, and stunted innovation. 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.”

Broadcom’s ill-handling of those two deals were cited by numerous industry analysts as being a significant concern to both Broadcom’s need to re-invent itself and VMware’s future.

“In my conversations with them they do realize that they need to end up getting their arms around this and making it right,” Dennis Smith, VP and analyst at Gartner, said in an interview with SDxCentral. “So am I encouraged? I think the first step in dealing with a problem is understanding that you have a problem. And I think they kind of know that, but the question is are they able to actually handle it?”

Broadcom President and CEO Hock Tan explained to investors in a subsequent call on the deal that his company plans to invest in what will be a significant part of Broadcom’s business.

“With the addition of VMware, our software business will now represent close to half of our total pro-forma revenue, with approximately $20 billion of software revenue for fiscal [2021],” Tan said. “With this type of scale and continuing commitment to R&D and innovation, we will be able to significantly invest and fund new innovative solutions that will support our customer base to now dive deeper into the VMware market opportunity and products.”

Despite the proclamations, Smith said the burden will be on Broadcom to show that it has learned from its past mistakes. A task even more important considering how much Broadcom will be paying for VMware and how important this deal will be for Broadcom and VMware’s future.

“The bottom line is really the ‘e’ word: execution. How do they execute on it,” Smith said. “I think the table is set, there's a potential here for them to reset. But again, they're gonna really have to be 1,000-times better than they have been with CA and with Symantec.”

Is Broadcom's Past Bad for VMware?

David Bicknell, principal analyst at GlobalData, said those Broadcom integration concerns are likely to spill over into VMware internally.

“VMware should take heed of Symantec and CA Technologies’ experiences following their acquisition by Broadcom. CA Technologies reportedly saw a 40% reduction in U.S. headcount and employee termination costs were also high at Symantec,” Bicknell wrote.

Broadcom has sold off business units of companies it has acquired. This includes selling off Symantec’s Cyber Security Services unit to Accenture for an undisclosed amount in 2020, which reportedly impacted around 300 jobs. Broadcom also slashed jobs following its 2017 purchase of Brocade.

Broadcom’s integration plans will also see the chip giant cover its current Software Group under the VMware umbrella. Rajesh Muru, principal technology analyst at GlobalData, wrote in a report that this plan could create “software portfolio overlap” and cause market confusion.

That uncertainty could be an advantage for VMware’s rivals that have been looking for ways to take a bite out of the virtualization giant’s strong hold of the enterprise market. Gartner noted that VMware controlled 72% of the global virtualization infrastructure software market.

One of those potential rivals is IBM, which spent what now looks like a paltry $34 billion to acquire Red Hat in 2019. Red Hat has since continued to aggressively target enterprises with its Enterprise Linux (RHEL) and OpenShift cloud native products. VMware has been able to counter that move by building out its own virtual machine (VM)-based cloud native platforms through its Tanzu offering.

“A combined Broadcom and VMware could create a behemoth that holistically tackles any workload modernization challenge. Thereby delivering the greater goal for many enterprise customers: to embrace cloud native without over-dependency on any cloud provider. Will it? Given its track record, it does not seem likely. Ultimately, if you’re a VMware-shop you’ve got to make the call in the near future,” Woo wrote.

Similar confusion could spread across VMware’s security offerings that have been on the back of its Carbon Black acquisition, and will now have to work with integrating the Symantec brand.

“VMware currently has a strong reputation for its cybersecurity capability in safeguarding endpoints, workloads, and containers. Broadcom’s best shot at making this deal work is to let profitable VMware be VMware,” Bicknell added.