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Broadcom senior management make positive channel noises

Partners wondering about the attitude of the prospective new owner of VMware to the indirect model will have been reassured by views shared with analysts

Broadcom has been making the right sounds about the channel following its takeover bid for VMware as the firm looks to allay any fears that partners might have about the future.

The $61bn deal to acquire VMware was announced yesterday and in comments made to analysts, senior executives at the chipmaker shared their views on partners.

Thomas Krause, president of Broadcom's Software Group, stressed that the business had a track record with the channel and had learnt a lot through previous acquisitions of vendors that had established partner bases.

“I think there are some things we have learned relative to the CA and Symantec acquisitions in terms of the value of the channel,” Krause told analysts in a call reviewing the firm’s move for VMware and its latest Q2 financial results.

“We want to continue to support that channel. That’s going to allow us to support a lot more revenues in a cost-effective way. So we see a real opportunity to leverage that.”

With VMware added to the software business, that part of Broadcom will now account for about half of the firm’s revenues and will bolster its activities in that space significantly.

“The fact that we’re going to go from $5bn-plus of software revenue to much closer to $20bn is a big deal,” said Krause. “And the fact that we can leverage the combined go-to-market engine at that scale gives us huge economies.”

Krause said there were already existing channel relationships with a large number of customers, adding: “These are large multinationals across all the key verticals, primarily focused in North America and Europe, but also in parts of Asia with a very significant channel partner arrangements.

“I think one thing we’ve learned is there’s an opportunity to embrace the channel, the two-tier distribution model, distribution partners and key value-added resellers. There’s also a big GSI opportunity. We worked significantly with GSIs on our side, so does VMware. And so when I look at that in its totality, given our scale, we can definitely take advantage of the new-found scale between the two companies.”

He added: “Together, Broadcom and VMware cover all major industry verticals and sell to all enterprises globally. And with this transaction, we are focused on serving all customers via a combination of our collective direct sales organisations as well as through our important channel partners.”

Krause was not alone in touching on the role of the channel, with Broadcom president and CEO Hock Tan also using the analyst call to talk about routes to market.

“One of the reasons we became very interested in VMware was because of its world-class team, engineering-centric culture and strong customer and partner relationships,” he said.

The plan is for Broadcom Software Group to rebrand as VMware and, if all goes well, the deal should close in the firm’s fiscal 2023.

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