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Comment by belter | Hacker News Reader

Broadcom must have the most idiotic management from all the large tech companies. Everybody understands you buy a company to recoup the investment, streamline operations and push forward with new markets.

But do you have to increase license prices by three times within the first quarter of an acquisition? Drop all free licenses that allowed for learning of your technologies? Even professionals with years of experience of providing VMWare official training curriculum are being forced to pay for licenses that were free.

All training responsibilities, dropped with no warning on the historical training providers...

What McKinsey Consultant, advised for aliening a customer base of 20 years, within the first quarter of an acquisition?

Google, Azure and AWS Sales reps must be salivating at this opportunity.

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The view of Broadcom is that VMWare has low growth potential and the route to maximum short term financial returns is to extract as much money as possible from the largest customers.

So the strategy is to squeeze the 600 largest customers until they bleed, knowing they are so entrenched they cannot easily migrate. If the next couple of thousand stuck around as well that would be nice, but not essential. The long tail of hundreds of thousands of customers paying a few dollars a month they would gladly be rid of.

How do you know this is their view? I don't have any strong opinion or evidence to argue, but I'm curious if this is conjecture or inference or actual knowledge?

It was basically in their investor presentation on the acquisition lol

I have heard this from Hock Tan's own mouth during a "Coffee Talk" with employees.

Based on your views and insights you have if feels like you are board member of Broadcom.

The last project I was working on at a major telcom before jumping ship was a project to migrate off of VMware onto KVM systems managed by Cloud Stack, they already have a major Open Stack environment but that's only for SDN stuff now.

We're talking over 10,000 ESXi hosts in the current footprint and at least 50% of them will be off VMware by the end of 2026.

If they were smart, the people they would be focusing on squeezing are the mid-sized shops that don't have the in-house skills or top level cost focus to force a migration. The small shops can't afford to stay on vmware, the very large shops will have the in-house skills or contract to the right people to get moved, it's the mid-sized people that are most stuck.

This is literally what Broadcom does - it's just the first time most of the HN crowd has been subjected to it. See: bluecoat acquisition, Symantec acquisition.

Drop any pretense that you want to service any customer outside of the fortune 500. Then increase prices by several hundred percent because you're so imbedded in those fortune 500s, even if they want to run from you it'll take them 5 years and you can make all your money back in that window.

Ah, the good old Computer Associates strategy alive and well in 2024

Perhaps you already know this, others probably do not, but Broadcom acquired CA (computer associates) in 2016. So yes, literally the Computer Associates Strategy. "This IBM mainframe racket seems amazing, how can we replicate it???"

Note: you're all going to be complaining about Redhat in the next 5 years, because IBM knows how to get blood from a stone.

they already killed CentOS which caused plenty of complaints

If you look at its history, Broadcom is a financial acquisition company that operates in technology. I think Tan's position is: these are (mostly) mature technologies and should be horse traded like financial assets.

Got lucky with the LSI Logic design team and Google TPU's. Presently $8 bln/yr I understand. Although such serendipity increases when you're able to buy everything you see. With the exception of Qualcomm.

Let's see how that turns out for them this time. This was last year but buy now is probably 5 in 5...:

"1 in 5 VMware customers plan to jump off its stack next year" - https://www.theregister.com/2023/11/08/vmware_customer_forre...

They want 1 in 5 VMWare customers to jump. If they don't, they'll be forcibly pushed off of the edge. Broadcom's entire growth model is to take an established player that is entrenched in massive corporations, introduce that product to the existing portfolio Broadcom offers that customer, and then jack the price on the lot. If you're not in the Fortune 500, Broadcom doesn't want to talk to you and if they keep your business at all it'll be through digital sales or third party resellers.

I am not a fan of them and didn't like working for them, but their financial results speak for themselves. You can attack the ethics of Tan's leadership certainly, but to call him an idiot ignores the fact that he's doing exactly what his shareholders want. Growing the company at obscene returns.

Unfortunately, an economy is now wholly peopled by shareholders, and the most important shareholders are usually the owners and corporate officers.

Software dev who's worked in both tech and finance. I don't measure things in just shareholder returns.

Nor do I, just saying "idiotic" is the wrong pejorative here. He's doing what he's being paid to do and doing it competently and successfully.

Don't disagree. I regard Tan as a (powerful) local optimization where the counter argument to broader optimizations is that they're riskier. The latter are though more fundamental. New businesses, new processes, new products are one thing. Profit-taking is another. To get new industries you need far-ranging optimizations.

People like to do business with people they like, and the Juniors of today are the future CFO, CEO and CTO's. Also IT people have a very, very long memory, and aiming to become the next Oracle is not an advisable strategy.

Being the optimizer of local minima, is bad business strategy, and smart shareholders should plug for a better optimizer.

And so the line goes up, while the product and everything else goes to shit

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