In no specific order...
- Not remaining independent part A. EMC2 handcuffed the SDDC abstraction layer by restricting the move to virtualize storage meaning a 2 legged stool. That created headwinds to become a defacto abstraction layer across the hyperscalers.
- Not remaining independent part B. Dell Tech simply used the FCF of the company to fund his LBO efforts of legacy Dell and EMC2. Just as Broadcom will use the FCF of VMware to fund future LBO efforts. It has never been about the tech, but about grabbing cash with MD and HT.
- Not forcing decisions to become a real platform company across infrastructure abstraction, management, and security. Raghu and Co are product guys, not platform people. Same for Pat and Paul before. Product teams were / are never forced to standardize on code base, API's, and platform level services. There is a ton of overlap across products which just wastes engineering cycles and creates ivory towers in BU's. it is empowered and inefficient.
- Management out of their depth and unable/unwilling/unqualified to drive change and focus. The quality of middle and upper management at VMware is below average with many people on staff "doing it for the first time". These people were promoted because they had the connections or were able to "ride the wave" of high results without even knowing what caused them. In short it was too easy for too many and they have little awareness of what it takes to run a maturing business.
- Focus on customer success vs. customer bookings. The culture and incentives are overweight on "sell, ship, and forget". Success and recognition was and is based on that to today. There has been little if any real focus on realized value and customer benefit from their VMware investments as it was always "assumed" if they bought it they wanted it. Once VMware started creating their bundles in 2012 / 2013 without care if the client actually deployed the tech into production and saw value, it created a precedent that bookings outweighed revenues. Comp is still misaligned to this and leaders in the business were successful for stocking orders and bookings as opposed to real client usage and value. That is a huge hurdle to cross if you need / want to transition to saas and subscription where usage and value is the name of the game. Just a legacy leadership incentive matrix at odds with the talk of where the business needs to go.
There are certainly other issues but those are immediate top of mind. As much as BC is likely to strip-mine the IPR and engineering of VMware, there may actually be some benefits from the hatchet job coming in that simplicity and focus on what is needed at the product, commercials, and customer levels should be light years more clear than in this current VMware model. Time will tell but in my view MD is selling because he knows what is needed and didn't want the hassle (legacy?, ability?) of doing it himself, while HT is willing and able. We will all see in the coming months.
Perfectly put, @5acn+1iCC511c. Bumped for more visibility.