Artificial intelligence, private cloud and sovereign computing are reshaping the enterprise landscape at breakneck speed. Companies are no longer just experimenting; they’re being pushed to adopt architectures that balance innovation with governance and risk.

The conversation around VMware LLC under Broadcom Inc. fits squarely into this moment. More than a year after the acquisition closed, the new leadership has introduced sweeping changes in business model, pricing, private cloud strategy and focus. What was once a sprawling ecosystem is now being streamlined for enterprise-scale impact, according to theCUBE Research’s John Furrier (pictured, right).

TheCUBE’s Rebecca Knight and John Furrier discuss private cloud at VMware Explore.

“There’s so much going on in the industry: AI, private AI, sovereign cloud [and] sovereign AI,” Furrier said. “At the chip level, you’re seeing … so many are reimagining every app that we use will be infused by AI. That’s going to put a lot of pressure on the enterprises. VMware is in the middle of the action, It’s going to be interesting to see how the show plays out and how the keynotes land tomorrow.”

Furrier spoke with theCUBE’s Rebecca Knight (left) at VMware Explore, during an exclusive broadcast on theCUBE, SiliconANGLE Media’s livestreaming studio. They discussed Broadcom’s business model, VMware’s product direction, the evolving customer experience and what’s next for the ecosystem. (*Disclosure below.).

Broadcom bets on subscription simplicity

Broadcom’s approach to VMware has been unapologetically direct: Simplify offerings, double down on enterprise customers and squeeze out inefficiencies. The result has been dramatic growth, with revenue estimates nearly tripling from VMware’s pre-acquisition days, according to Furrier.

“Remember when in 2023, the big controversy was, ‘Will the deal even be closed?’” he said. “We’re now about a year in or more [and] a lot’s changed.. First of all, the business model Broadcom has implemented is genius. If you look at the earnings from Broadcom, VMware has doubled, in my squinting through the estimates; they don’t break it out. I estimate they’re probably going to be closer to $20 billion in revenue just from VMware.”

The shift hasn’t been without controversy. Higher prices and reduced sales and marketing resources have left some customers uneasy, yet the simplified subscription model and focus on top-tier enterprises have fueled Broadcom’s momentum, according to Furrier. This strategy is also laying the foundation for how VMware positions itself as the go-to private cloud provider for enterprises navigating AI-driven change.

“I think VMware’s leaning into the ones that want to be leaning into VMware,” he said. “I think Hock Tan’s philosophy is, ‘Look, we’ve got to clean up this business.’ He basically looked at it and said, ‘Why aren’t we making more money?’ He did the old business thing … he’s like, ‘Why should I have a sales department?’ … Double prices, go to subscription, revenue’s off the charts, earnings are great, shareholders are happy. I think there’s a lot of hate out there because he basically said, if you don’t want it, leave.’”

Ecosystem shifts highlight VMware’s private cloud strategy

VMware’s transition is not just about pricing and products; it’s also reshaping the ecosystem around it. The days of massive developer parties and market development funds have given way to leaner, more intentional partnerships, according to Furrier.

“What that tells you is it’s distributed computing and private cloud, those vendors are endorsing the fact that if VMware’s going to keep a big part of their install base and Broadcom has the chips, it’s going to be a force to be reckoned with,” he added.

For customers, this shift means VMware is betting on private cloud as a central pillar of its value proposition, according to Knight. While some have resisted higher costs and reduced flexibility, demand for stable platforms such as VCF 9.0 demonstrates a pragmatic choice for enterprises facing complex migrations.

“Broadcom is really pushing VCF 9.0 as this answer. As you said, is it revolutionary, is it going to change everything?” she said. “No, but it does what it says, as advertised. It works, it’s a good product, and customers seem to be responding to that, and there is a good customer demand.”

Here’s the complete video interview, part of SiliconANGLE’s and theCUBE’s coverage of VMware Explore:

(* Disclosure: TheCUBE is a paid media partner for VMware Explore. The sponsors of theCUBE’s event coverage do not have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE