Broadcom in Talks to Acquire VMware; Marks Growing Interest in SaaS-Dominated Cloud Computing

Source: vmware.com

Semiconductor company Broadcom is reportedly negotiating a deal to acquire VMware, a cloud computing provider. According to a source familiar with the matter, the agreement is not yet on its way and terms cannot be learned at the moment. However, the acquisition talks can be seen as evidence of Broadcom’s growing interest in the cloud computing market where SaaS plays a huge role.

We reported on how SaaS has been dominating the cloud computing market, especially with the high demand for SaaS healthcare solutions. In fact, healthcare software-as-a-service is projected to reach $152 billion by 2028. Overall, the SaaS market is estimated to reach $208 billion in 2023.

Moreover, Cisco’s Annual Internet Report estimates that by the end of 2022, 75% of the workloads and workstations for cloud computing will be in the form of a SaaS model. The strong demand for SaaS software will certainly spur greater competition that can lead to more investments, innovations, and product improvements among the top cloud computing service providers.

For example, IBM and AWS had recently announced their collaboration to provide flexible options for hybrid cloud. Meanwhile, Google Cloud has released Assured OSS, which strengthens the security and supply chain for open source code for its clients. It has also finally transferred its Google Cloud Istio project to the CNCF, which can accelerate growth for SaaS products.

Based on long-term projections, the cloud computing market is far from reaching its saturation. End-user spending on public cloud services is projected to grow from $410.9 billion in 2021 to $494.7 billion in 2022 and can possibly increase up to $600 billion by the end of 2023. Large companies are also not cutting back on their cloud spending as they gain the benefits such as scalability, accessibility, and security.

VMware is still overshadowed by the top three public cloud platforms namely, Amazon Web Services, Microsoft Azure, and Google Cloud. However, VMware has the potential to become a hybrid cloud leader, thanks to its foundational expertise in providing on-premise data center solutions. With more companies seeing the need to migrate their on-premise tech solutions to the cloud, VMware is in the right position to fill that demand.

VMware is also well-known in the multi-cloud realm and in providing organizations with cross-cloud services. As more organizations increase their demand for storing and analyzing data and securing processes, multi-cloud will be the go-to solution for many users. With these points in mind, we see some very promising business incentives on why a semiconductor company like Broadcom would want to set its eyes on VMware.

Broadcom’s interest in acquiring VMware would place its business deeper into the enterprise software world and secure its slice of the ever-growing cloud computing market. The chipmaker already has two software companies under its business umbrella—CA technologies, which it acquired for $18.9 billion in 2018, and cybersecurity company, Symantec, which it bought for $10.7 billion the following year.

VMware during its early days was known for its virtualization software. It was acquired in 2004 by Dell EMC and has expanded its products to include app development tools, multi-cloud security, networking solutions, and cloud and edge infrastructure.