I am sure that you all saw the announcement made today about Broadcom acquiring VMware. As a business technology industry analyst covering both of these companies, I should probably dive into the market impact, synergies, opportunities for delivering new and unique services, technology alignment, etc. There is no need for that, as Michael Dell already did it for me.
“Michael Dell, Chairman of the VMware Board, said, “Together with Broadcom, VMware will be even better positioned to deliver valuable, innovative solutions to even more of the world’s largest enterprises. This is a landmark moment for VMware and provides our shareholders and employees with the opportunity to participate in meaningful upside.”
Nothing about customers, opportunities, growth? Analyzing this acquisition is more of a job for Securities analysts and investor relations, not a business technology research firm. My analysis fits into a single sentence.
You can’t solve problems that organizations are facing today by using tools that were designed to address something else.
A few interesting stats from DEJ’s research
- A 4.1x faster replacement rate of solutions for managing creation and delivery of digital services as compared to 2017
- In 2021, 57% of organizations purchased solutions that didn’t even exist (or were not generally available) in 2019
- 41% of organizations have been experiencing the same challenge (to various degrees) for 3 years or more
- Organizations are 3.8x more likely to use “impact on business outcomes” as compared to “range of capabilities” as a selection criteria when evaluating vendors
And three lessons learned:
Vendors that built solutions for solving problem of today can grow really fast
Business and technology requirements are changing so quickly and most of the vendors that built their solutions 10-15 years ago are now too big to blow everything up and build new solutions. Marketers can do a phenomenal job of “putting a lipstick on a pig”, but that approach can only take them so far
This is the age of outliers
Most of the vendors that are bringing true innovation and effectively solving key problems don’t squarely fit into any well defined technology category. This makes a ton of sense, because they built a solution to solve problems, not an enhanced version of what is already available
Outcomes over categories
Using a different, more effective approach to solving problem always comes with the same challenge – positioning. What category or acronym should you associate yourself with, without spending a ton of money to create a new one? In the current state of the market, technology vendors should do what users are asking them. Tell them which business outcomes they impact and how. The best positioning and differentiation strategy is clearly connecting the dots between vendors’ value proposition and measurable business outcomes.