VMware39s end user computing unit reportedly went to private equity firm

VMware's end-user computing unit reportedly went to private equity firm KKR • The Register

According to a Portal report, VMware's end-user computing business is set to be acquired by private equity firm KKR. According to a report by Portal, $3.8 billion will change hands in the transaction.

If the deal goes through, VMware's desktop virtualization and application publishing assets will be outsourced, Broadcom announced in December 2023. The Registry estimates that sales of its end-user computing products were approximately $1 billion annually.

KKR is already a player in enterprise technology, having acquired Barracuda Networks and Cloudera as well as BMC.

Those who purchase VMware's end-user compute resources (EUC) inherit a customer list that includes many customers in government and highly regulated industries. Such buyers tend to be big users of desktop virtualization, as their security and privacy requirements make desktop PC fleets dangerous to operate.

KKR will also inherit a user base that may be particularly sensitive to Broadcom's shift to selling product bundles and per-core licenses, as its EUC portfolio can easily run without VMware's broader hybrid cloud stack. Nevertheless, Broadcom now only sells software packages that contain a large part of this stack.

Mark Thaver, CEO of consulting firm Founder Licensing Data Solutions, said last week that Broadcom's licensing system will lead to an increase in the price of VMware licenses and that the promised cost neutrality for those switching from perpetual licenses has not materialized.

He also warned that Broadcom's strategy “will likely culminate in software underutilization, resulting in resources being wasted on unused software.”

Thaver therefore advised VMware customers to prepare for negotiations with Broadcom well in advance of the license renewal, recommending “a strategic approach similar to that used in negotiations with Microsoft or Oracle.”

Many organizations have experience negotiating with these vendors – and leaving scars as a result. Thaver's advice will be welcome, therefore, as it provides a starting point for thinking about talks with Broadcom – and a little frightening, since Microsoft and Oracle are known for rarely backing down. In Oracle's case, many customers have learned to fear aggressive licensing reviews.

Negotiations with Broadcom's VMware could get heated: The Register has discovered Accounts license costs and bills increasing 67 times rising from $8 million to $100 million.

For VMware's EUC customers, these price increases could be unbearable – especially as companies like AWS, Alibaba Cloud and Microsoft continue to develop their cloud-hosted desktops. ®