VMware‘s end-user computing division is set to be acquired by private equity firm KKR in a $3.8 billion deal, according to a recent Reuters report. If the deal goes through, VMware‘s desktop virtualization and application publishing will be outsourced as part of plans announced by Broadcom in December 2023. The estimated sales for end-user computer products are around one billion dollars annually.
KKR has a presence in the enterprise technology sector having acquired Barracuda Networks, Cloudera, and BMC. The acquisition of VMware‘s end-user compute assets will give KKR access to a customer base that includes many public sector and highly regulated industry clients who rely on desktop virtualization for security and data protection. This user base may also be sensitive to Broadcom’s selling strategy of bundled products and per-core licenses, as the EUC portfolio can operate independently from VMware‘s broader hybrid cloud stack.
Mark Thaver, CEO of Founder Licensing Data Solutions, warned that Broadcom’s licensing scheme could result in price increases for VMware licenses and potential software underutilization, leading to wasted resources. Thaver advised VMware customers to prepare for negotiations with Broadcom ahead of license renewals, suggesting a strategic approach similar to negotiations with Microsoft or Oracle, known for their tough stances during negotiations.
Many organizations have experience negotiating with Microsoft and Oracle, and Thaver’s recommendation serves as a helpful starting point for discussions with Broadcom. However, negotiations with Broadcom could be intense, as evidenced by Accounts License costs rising significantly and bills increasing from 8 million to 100 million dollars.
For VMware EUC customers, these price increases could pose challenges, especially with competitors like AWS, Alibaba Cloud, and Microsoft improving their cloud-hosted desktop solutions. The evolving landscape of cloud computing and licensing strategies highlights the importance of strategic negotiations and preparation for VMware customers dealing with the impending acquisition by KKR.
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https://www.theregister.com/AMP/2024/02/26/kkr_vmware_euc_acquisitioj/