Broadcom: VMWare Acquisition & Cloud Transition

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We have a clear trend towards the public cloud and the hyperscalers. However, you mentioned it takes years for very large companies to transition. Is it fair to say, from Broadcom's perspective, that it might take 15 more years for these large companies to move on-premises, and that's sufficient to extract cash flow from VMware? Do we not care much about VMware's competitiveness in the public cloud space?

Yes, that's a fair statement. The measures publicly visible, like reductions in force and layoffs, indicate the strategy is similar to the mainframe business. It's about leveraging the long tail of virtualization. Many customers and workloads may never transition to the public cloud due to the need for proximity, especially with the rise of artificial intelligence.

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We have a clear trend towards the public cloud and the hyperscalers. However, you mentioned it takes years for very large companies to transition. Is it fair to say, from Broadcom's perspective, that it might take 15 more years for these large companies to move on-premises, and that's sufficient to extract cash flow from VMware? Do we not care much about VMware's competitiveness in the public cloud space?

AI workloads require proximity for building large language models and applications. This trend supports the thesis of the deal. Legacy workloads will continue needing virtualization, and new AI applications face challenges in hyperscaler environments due to proximity, security, and compliance concerns. Many customers might prefer keeping intellectual property within their own infrastructure, supporting the continuation of private cloud solutions like VMware, Broadcom, and vSphere.

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