Broadcom Sunsets VMware SD-WAN Products
As part of its ongoing integration of VMware, Broadcom announced that multiple releases of the VMware VeloCloud SD-WAN 5.x series are entering End of Support Life (EOSL). This move is a classic post-acquisition strategy to rationalize product lines, manage lifecycle costs, and accelerate customer upgrades to newer platforms.
The acquisition of VMware by Broadcom, which closed in November 2023, was one of the largest technology deals ever, valued at approximately $61 billion in cash and stock, plus the assumption of $8 billion in debt. This move was a major step in Broadcom's strategy to bolster its infrastructure software business, shifting its focus beyond semiconductors. Immediately following the acquisition, Broadcom implemented a sweeping overhaul of VMware's business model. This included terminating perpetual software licenses and moving all products, including the flagship VMware Cloud Foundation (VCF), to a subscription-only model, a move aimed at creating more predictable revenue streams. The strategy also involved a dramatic simplification of VMware's extensive product catalog, which was reduced from nearly 170 different offerings to a handful of core bundles. This aggressive portfolio rationalization is designed to focus on high-value enterprise customers and streamline operations. From a financial perspective, the strategy has shown early signs of success for Broadcom. The company reported a significant increase in VMware's profitability, with adjusted operating margins reportedly hitting 70% post-acquisition, a substantial jump from VMware's standalone figure of just under 29% in August 2023. This aggressive integration has not been without friction. Many customers have reported drastic price increases, with some seeing costs jump by over 100%, leading to public disputes and forcing clients to re-evaluate their reliance on VMware's ecosystem. The VeloCloud SD-WAN unit itself was the result of a prior acquisition, when VMware bought the SD-WAN pioneer for an estimated $449-$499 million in 2017 to extend its networking virtualization into the branch and edge. In February 2024, post-Broadcom acquisition, VMware had even announced a return to the popular VeloCloud brand name for its SD-WAN and SASE security products. Beyond product lifecycle management, Broadcom is actively reshaping its new software division through divestitures. In early 2024, it sold VMware's End-User Computing (EUC) division to private equity firm KKR for approximately $4 billion, narrowing its focus on core cloud infrastructure.
