VMware LLC’s cloud strategy is undergoing a significant transformation, marking a shift from its traditional focus on rapid growth to a model centered on profitability and stability.

As the cloud computing landscape continues to evolve, VMware is repositioning itself not as an innovator of cutting-edge technologies, but as a dependable, value-driven provider of enterprise solutions. This strategic pivot, shaped by Broadcom’s ownership, highlights VMware’s emphasis on maintaining its stronghold among top-tier customers, moving away from the relentless pursuit of new innovations to solidify its role as a crucial player in the enterprise market.

ZK Research’s Zeus Kerravala talks about VMware’s cloud strategy.

“You can tell it’s just a different company now,” said Zeus Kerravala (pictured, second from right), founder and principal analyst at ZK Research. “This show was used to highlight new products. If you think about the way the keynotes used to go, there were so many new products announced you couldn’t keep up. Today there was one major one with VCF and a whole bunch of little ones. VMware is no longer a growth company. I don’t think they’ve been a growth company for a while,

Kerravala spoke with theCUBE Research’s John Furrier (left), executive analyst; Dave Vellante (second from left), chief analyst; and Rob Strechay (right), principal analyst, at VMware Explore, during an exclusive broadcast on theCUBE, SiliconANGLE Media’s livestreaming studio. They discussed VMware’s strategic shift under Broadcom’s ownership from a focus on growth and innovation to prioritizing profitability and stability, emphasizing deepening relationships with top customers while facing challenges in keeping pace with cloud innovation.

VMware cloud strategy shifts focus to profitability and on-prem solutions

VMware, once celebrated for its rapid growth and innovation in the cloud space, is undergoing a transformation that reflects the broader industry’s shift toward consolidation and value maximization. Under Broadcom’s stewardship, VMware is evolving into a “cash company,” focusing on increasing profitability rather than expanding its customer base, according to Kerravala.

“They’ve really just become a value company and part of the broader Broadcom suite. Whether you like the strategy or not, it’s worked for Broadcom,” he said. “I think over time what happens is market leadership ebbs and flows. You think of how many companies from 10 years ago that would’ve been top 5,000 aren’t anymore. By then Broadcom will be onto the next thing. This is their playbook.”

One of the significant insights from the recent discussions was VMware’s strategy to replicate essential cloud services on-premises. This approach is designed to offer existing customers a cost-effective alternative to public cloud services, essentially allowing them to get a “substantially equivalent on-prem experience.”

“I mean, he said in the keynote today you basically get AWS on-prem,” Vellante said. “It was interesting,  in the analyst session, [Broadcom Chief Executive Officer Hock Tan] was less forceful about it. He was honest. He said, “OK, we’re going to take the top 30 services in AWS and we’re going to replicate those. We’re not going to do 300, but we’re going to basically create a substantially equivalent on-prem experience to the public cloud. And that’s their entire strategy.”

Despite the clear strategic focus, VMware’s new direction under Broadcom is not without its challenges. The concern is: Does VMware have the ability to keep pace with the rapid innovation happening in the public cloud sector? While Tan is known for his straightforward, no-nonsense approach to business, there are questions about whether this strategy will be enough to maintain VMware’s competitive edge.

“I think we talked about pivoting being bad and things like that,” Strechay said. “I think [Tan’s] not looking to pivot. He’s looking to fine-tune things as they go along. We’ve talked with the partners. One of the interesting things is the partners are actually seeing an uplift in communication, simplicity with the customers.”

Here’s the complete video discussion, part of SiliconANGLE’s and theCUBE Research’s coverage of VMware Explore:

Photo: SiliconANGLE