Good article. but nothing new. The most likely outcome for EUC will be either PE buyout or a spin-off
https://www.techtarget.com/searchvirtualdesktop/opinion/Broadcom-intends-to-divest-VMware-EUC-Whats-next
11 replies (most recent on top)
Customers do not want and cannot handle pain. They want a feasible alternative to Citrix that works and has all of the features of Citrix. Horizon without vSphere loses features. Major features. Wrong direction. And there are better non vSphere options out there today, other than Citrix that do not need pain.
As Tan explained, non-core VMware cloud businesses will be divested over the course of the next year. Specifically, end-user computing and the endpoint cybersecurity unit Carbon Black (which VMware had acquired in 2019) will be sold off in some form or fashion. That explains the lower VMware revenue expectation.
Pedantically, Horizion can run on bare metal. Anything you deploy it on you can install the agent. There was some odd quirk to protocols I thought but this existed in View 3 or something (I used it to remote access into industrial control systems).
I think Citrix you could PVS PXE boot bare metal machines in a similar way if you tried hard enough.
Now vSphere with instant/linked Clones, CBRC, NSX integrations, easy orchestration, out of band customization makes it the best platform in my mind, but anything can be done if you enjoy pain and try hard enough with vRA workflows on provisioning.
Breaking away from being tied to vCenter may open it up to working with other hypervisors or if they are smart, any hypervisor. Imagine Horizon spinning up instant clones on Proxmox. Not sure if that is technically possible but it may be in the future.
There is a misconception about EUC driving vSphere revenue. Horizon has sold historically in large part because of vSphere for Desktops. vSphere for Desktops is heavily discounted. Pennies on the dollar compared to normal Enterprise price. It is not driving revenue, only license counts which do not pay the bills. This discount will go away.
I found this the most interesting and thought-provoking part of this article, since I have not previously considered this possibility:
"Though they’re often thought of, and even sold, together, there is very little integration between Workspace ONE and Horizon. It would add complexity to any transaction, but it’s not outside the realm of possibility to think that a buyer might be interested in one or the other, but not both."
EUC leadership has for some time now consistently been preaching that we are "one EUC". Would be a very interesting scenario if a potential acquirer is only interested in one side of the business. EUC leadership also has been very guarded in disclosing what percentage of business unit revenues are from horizon versus workspace one. I imagine that horizon is significantly larger revenue but wonder if anyone on here can confirm.
"BC and EUC leadership need to move fast in finding that buyer."
AVGO board of directors and the shareholders are eager to pay down the loan debt that was used to acquire VMW, so they're all motivated to unload EUC as soon as possible.
That’s a fair assessment from Gabe.
Of the options, PE or a Spinoff are the most likely. PE is more heavily favored. One potential factor there is interest rates. Many PEs have the cash to make a buy but those that don’t would have to borrow and borrowing is expensive these days.
It also matters who the PE is. Some PE’s are just there to load up debt that they can distribute to stock holders. Then they let the purchased company die. Others genuinely see the market opportunity and invest in it. Hock made a point of saying that he wants to find a good home for EUC and realizes it helps drive revenue from vSphere licensing. But ultimately Hock wants cash to pay down the debt they took on from buying VMware.
Defintely a decent amount on uncertainty. BC and EUC leadership need to move fast in finding that buyer.
Gabe, the author, previously worked in the EUC BU at VMware, that's why he is informed about the product's strengths and weaknesses. This part is of his opinion is important.
"Ultimately, while the news from Broadcom's earnings call and the blog amounts to a bit more clarity on the plans for VMware EUC, everything is still in a holding pattern."
It's this 'holding pattern' that makes our customers continue to seek other options.
You should be happy. You don't have to come to the office every day.
Spin off is better