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CrowdStrike CEO: Broadcom-VMware Deal Drawing Worried Customers

Jay Fitzgerald

But VMware’s CEO counters that rivals poaching customers is “common” and “expected” after merger announcements.

CrowdStrike chief executive George Kurtz says his cybersecurity company is fielding inquiries from a number of VMware customers nervous about the pending Broadcom-VMware mega-merger now before regulators.

At The Channel Company’s Best of Breed conference in Atlanta this week, Kurtz, who’s known for calling out rivals and others for their perceived shortcomings, was asked during a panel discussion his thoughts on the giant Broadcom-VMware deal, which would include VMware’s Carbon Black unit that provides cloud-native endpoint security.

Kurtz, whose Austin, Texas-based company is a Carbon Black competitor, said the merger deal is obviously “huge” for the industry, assuming it’s finally approved by federal regulators who are now reviewing the proposed $61 billion transaction.

But he indicated his company is clearly a potential beneficiary of the proposed Broadcom-VMware deal, particularly since many believe the San Jose, Calif.-based Broadcom’s prior acquisition of security firm Symantec didn’t go as well as some customers and partners had hoped.

Saying he doesn’t “mince a lot of words,” Kurtz said many customers seem to be exploring their options following last May’s announcement that Broadcom intended to buy VMware.

“We got a lot of customers that have called us (and) said, ‘Hey, I’m concerned about the Carbon Black acquisition. We lived through the Symantec acquisition. We know what’s going to happen.’ Prices are going to go up, service is going to go down,” Kurtz told hundreds of vendors, channel partners and others attending the Best of Breed conference in Atlanta.

“We’re actively working on replacement deals right now,” said Kurtz, adding such activity represents yet “another opportunity for the partner community.”

After the panel discussion, Kurtz told CRN that customers are clearly on edge about the Broadcom-VMware deal.

“They’re concerned about the acquisition, as most customers are, and they’re looking for alternative solutions,” he said

Asked what customers were most concerned about regarding Broadcom’s takeover of VMware, Kurtz said: “Being looked after. Right? Being looked after.”

It’s not unusual to see such concerns and business activity following a major merger announcement, he said. “Obviously, there’s always a transition period and disruption from a customer perspective.”

Kurtz added: “We’re obviously helping customers. If they have potential challenges with their current vendors, that’s what we’re focused on.”

At a later Best of Breedpanel in Atlanta, VMware CEO Raghu Raghuram dismissed Kurtz’s comments, saying “you wouldn’t be doing your job” if you headed a company like Crowdstrike and didn’t try to take advantage of a merger.

“It’s common,” he said of rivals trying to poach customers from each other. “It’s expected. Nothing surprising.”

In the end, he said customers will end up appreciating how well the Carbon Black technology integrates with Broadcom’s other offerings.

In response to questions from The Channel Company founding partner Robert Faletra and CRN executive editor of news Steven Burke, Raghuram told Best of Breed audience members that any channel partners and customers with questions about the post-merger VMware can contact his company to get answers.

He also noted that VMware has been negotiating renewal contracts with locked-in prices, in case some customers are worried about higher post-merger prices.

Raghuram stoutly defended the merger benefits for both Broadcom and VMWare.

He said that Broadcom, known primarily as a chipmaker, gets a top-notch software company in the deal as it seeks to broaden its offerings. Meanwhile, VMware gets the backing of a deep-pocketed owner who can help his firm increase its R&D and offerings.

In a statement, a Broadcom spokesman said: “The combination of Broadcom and VMware is about giving customers choices and greater flexibility to address their most complex IT infrastructure challenges. Following transaction close, we will enable enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era.”

Ron Dupler, CEO of Greenpages Technology Solutions, a Portsmouth, N.H.-based MSP and consulting firm focused on the cloud and cybersecurity, said a merger as big and important as the Broadcom-VMware deal was bound to attract attention and controversy.

“Anytime a major force in the industry like VMware gets acquired (it) raises fear, uncertainty and doubt about what’s going to change,” said Dupler, whose firm doesn’t partner with VMware or CrowdStrike. “There’s a lot of wait and see going on.”

He added that the future success of the merger ultimately comes down to how Broadcom handles VMware’s technology and services in the long-run.

 

 

Jay Fitzgerald

Jay Fitzgerald is a senior editor covering cybersecurity for CRN. Jay previously freelanced for the Boston Globe, Boston Business Journal, Boston magazine, Banker & Tradesman, MassterList.com, Harvard Business School’s Working Knowledge, the National Bureau of Economic Research and other entities. He can be reached at jfitzgerald@thechannelcompany.com.

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