Thread regarding VMware layoffs

Current fallout is due to some new developments or just the old projections now becoming a reality?

@ 2fle+1oRdJYJ4 I’m in one of the impacted groups and can confirm that unfortunately this is true. Both teams you’ve mentioned - plus VCPP. A handful of SEs will remain but all specialist AEs will go.

@2oeb+1oRdJYJ4
AE and SE roles.
All Vmc and cmbu.

This is what I’ve heard. Be great for a ae/ae to confirm or deny this. Hopefully deny.

@2nfk+1oRdJYJ4 Which roles ? (Like all of the company everyone not in R&D is at risk) and which VMC ? (VMC on AWS is doing pretty well now as an example)

Hearing rumours AEs/SEs for cmbu (aria suite) and VMC ( avs, Vmc on aws) are being told unofficially their roles will go. Anyone confirm?

Is VMC a BU? I thought its a team in the NSX BU.

From BC history with other acquisitions, 'if' they see potential they give the group/BU 6 months to turn themselves around and meet expectations, if they cannot it's a leadership change with more cuts, finally if still not results they will cut the business completely.

@1inh+1oRdJYJ4 Agreed, nice analysis. What do you think of the R&D roles in VMC specific to their department (GCVE, AVS, VMC-X) from your reading of the public statements ? Do you think the less profitable ones will get the boot straight away or they all will be merged into one and then to be reassed every quarter for profitability ?

@1lvt+1oRdJYJ4

Obviously just speculation, but would guess they are 'vmc architects' no more and general architects if customer facing and survive the cuts. Won't be specialising in just VMC/hyperscalers

https://assets.publishing.service.gov.uk/media/64ac174ab504f7000ccdb88e/Issues_Statement_Response.pdf

Read section 4.27. This is Broadcom's redacted statement to the EU back in May.

Big bold headline under 4.27 (a) reads:
"VMware would not recoup losses if workloads migrate to the cloud."

" It would be illogical for VMware’s customers to respond to foreclosure by moving
from one VMware product to another. In any event, VMware Cloud (VMC)
captures [?]. Customers perceive VMC as [?] and a temporary solution
while transitioning to public cloud. One customer noted that: [?]. Another
noted, [?]. Moreover VMC has consistently underperformed, failing to
meet projections even after the company adjusted its forecasts downward.
Strategy documents from 2019 forecasted that VMC would achieve $[?]in
annual bookings in FY2022. This forecast was adjusted downwards in
VMware’s FY2020 corporate long-range plan, which predicted VMC would
book a more conservative $[?] revenue in FY2022. In fact, VMC achieved
only $[?] in bookings in FY2022, substantially missing both
projections. Recognizing this underperformance, [?]. Even then, VMC
continued to miss its revised quarterly and annual bookings projections, leading
VMware to lower even further VMC’s projections in the FY2023 AOP by
[?]%. Separately, the Phase 1 Decision also fails to account for the fact that
Broadcom customers use less Broadcom hardware when they switch to the
public cloud, such that the Combined Entity would also not be able to recoup
losses through additional hardware sales."

Section 2.10 reads:

"Broadcom will invest an additional $1 billion per year to build deployment support
capabilities. Broadcom plans to double VMware’s professional services capabilities
from $1 billion to $2 billion per year and to offer professional services to VMware’s
customers [?]. Broadcom plans to train and certify up to [?] external professionals
over three years at Global Systems Integrators (GSIs), such as [?], to enable them to
provide enterprises with the necessary expertise to [?]. GSIs would also highlight and
promote better ways for enterprises to deploy and embed workloads in a private cloud
based at their on-premises datacentres (or hosted off premises) instead of moving
workloads to the public cloud."

Another document from the UK posted in July sheds additional light on this via the provisional findings: https://assets.publishing.service.gov.uk/media/64b7f4e22059dc000d5d25de/Provisional_Findings.pdf

Section 7.140:

"The critical switching rates above do not account for the possibility that
customers switching away from VMware’s vSphere software (as well as
VMware’s associated software) may move existing workloads to the public
cloud. VMware could retain some of these sales if these customers maintain
the use of VMware’s software (such as its multi-cloud offering VMC), thus
potentially reducing the profit loss for the Merged Entity. The Parties
submitted that accounting for recapture by VMC has a negligible impact on
the critical switching rates. This is because evidence from VMware’s internal
documents shows that VMC recaptures only [?] of vSphere churn to the
public cloud ([?]% of all lost vSphere workloads).

7. 141 In addition, the Parties submitted that VMC had a variable cost margin of -

[?]% in Q2 FY2023, [?]. However, they also submitted analysis showing
limited sensitivity of the estimated critical switching rates to the possibility of
recapture by VMC even if margins for VMC are assumed to be much higher
than vSphere."

In the final EU document report/finds, section 2.14 says the following: https://assets.publishing.service.gov.uk/media/64e3388dbc2b52000da003c2/A._final_report.pdf

"Broadcom told us that while VMware had the [?] in virtualisation of physical
servers in data centres, VMware Private Cloud (including vSphere, vSAN,
NSX and Management) had been ‘[?]’, and that VMware had instead been
losing enterprise workloads to ‘giant well-funded’ CSPs (eg AWS, Azure and
Google Cloud), which had much greater scale than VMware. Broadcom told
us that under its plans for VMware, VMware would expand into virtualising the
entire data centre and helping enterprises to run private cloud applications by
using virtualisation technology that would drive efficiencies in the data centre
through a ‘hardware-neutral’ approach. Broadcom added that it would also
pursue a ‘multi cloud’ offering, whereby enterprises running VMware
workloads on premises could easily migrate existing workloads to any public
cloud and back again – empowering customer choice and flexibility and
mitigating cloud lock-in."

For links to these documents and all of the publicly accessible PDF reports above, go to: https://www.gov.uk/cma-cases/broadcom-slash-vmware-merger-inquiry.

I'm not an artist. Drawing conclusions on VMC's future - don't ask me. I think it's premature. Exciting times.

@1aus+1oRdJYJ4 Very insightful and thanks for that.

So VMC and hyperscale sales specialists will be no more. Wonder how this affects the specialist SAs? Any thoughts on that?

Will be an interesting few months for the Bmc business to see where it eventually lands.

VMC-A and VMC-E will be spun off to a third-party.

Does the group make money? Yes, is it profitable? No.
Engineering effort for VMC is huge compared to the other hyperscale businesses such as GCVE, AVS. The level of integration and support required compared to these is on another level, (barely anything for the other two) as they are really self managed or managed by a third party contracted to google and MS.

Now think about what has already happened to the engineering group in VMC, moved under CIBG, field is 'yet' to follow, so take your guidance from there... If it survives it will be part of the core business and forget specialists.

One thing that does align 'partially' with BC business model is that license/software is sold via third party (AWS) along with VMware. At a guess it will be cut back significantly in terms of integration, support, roadmap and allow AWS to run it as they see fit as long as they are buying licenses/software. AWS do make good coin from VMC in terms of egress charges and compute (HW). Also there are contractual agreements between AWS and VMware on support for the service, these need to be honoured for the remainder of the term whatever that is.

The 'VMC' model has branched out to MSP/Cloud hosting providers (Equanix, etc) it's not all about aws

VMC Sales specialists have been told that they will not have a role in Broadcom, not sure if they will end of life or sell off VMC but certainly it’s the end for the sales specialists.

VMC is being shopped around. AWS is the likely next owner, but crystal ball isn’t fully clear yet.

Is it a cash cow that can easily be milked by BC? If not, you'll have your answer soon

I have been thinking about BC's relationship with Google, and wondering if Google Cloud could start to become the preferred partner.

I don’t think BC will want to keep this business going forward, but as always it’s on speculation at this point. VMware engineering and sales for this BU is not insignificant. Does it make VMware significant money? If not it will be dissolved or sold off. With VMC on AWS there are long term contracts which need to be honoured. So one needs to keep the lights on or workloads migrated to another platform like EC2 or other platform.

As the below poster mentions, all the efforts are on hold now, the last update for those efforts pages are from November-ish. But I have a question though, what about sustaining the current integrations and service agreements for current VMC on X ? Customers have contracts for years, who is to support them, in this case if to be laid of transition is more likely (as it requires handover) or direct lay off ?

That seems likely. I’ve been told my BU is putting all VMV-related integrations/efforts on hold until the acquisition closes. Seems like the writing is in the wall.

It’s probably the most over capitalised BU at VMW, some reductions to field and eng are likely at the very minimum