Broadcom’s vision for VMware highlights private clouds, private AI

A year ago, VMware’s big annual VMware Explore conference was all about generative AI – specifically, about companies running AI applications within a hybrid cloud infrastructure. This year, attendees heard more about VMware’s partnership with Nvidia to deliver generative AI models and tools – but in the context of a private cloud.

Wasn’t VMware supposed to be the solution for companies looking to run AI both on-prem and in multiple public clouds?

“The future of the enterprise, your enterprises, is private,” said Broadcom president and CEO Hock Tan in the keynote this week. “Private cloud. Private AI. Fueled by your own private data. It’s about staying on-prem and in control. “

Executives from Broadcom – which finalized its acquisition of VMware in November – also shared a particular statistic several times at the conference: 83% of companies planned to bring workloads back from the public cloud over the next 12 months.

Yes, there are reasons why some companies might want to run generative AI on-prem. Security, compliance, cost, and control are just a few scenarios. But, for many use cases, a private instance of a public cloud would be secure enough. Plus, AI inference costs are falling rapidly, driven by competition in the space and by the emergence of competitive open-source alternatives.

While it’s true that some companies are repatriating workloads – moving them back from public clouds to on-prem environments – the 83% repatriation stat doesn’t give the full picture.

The report that was referenced, which was released by Barclays in April, showed that both workloads and IT dollars have been shifting to the public cloud over the past few years and will continue to do so. That’s because companies are seeing reduced operating costs, increased flexibility, and better ease of use, Barclays said. In addition, hyperscalers like AWS and Azure have been offering more compliance, regulatory and security features, Barclays said. According to the company, the total percentage of workloads running in the public cloud has risen from 28% in 2022 to 42% in 2024.

Other researchers are reporting similar trends. A workload repatriation report released by IDC in June found that 80% of companies expect to see some level of repatriation of compute and storage resources in the next 12 months.

But “some” is the operative word. Fewer than 10% of companies had repatriated entire workloads.

And according to a Flexera survey released this past March, 73% of companies have a hybrid cloud strategy, 15% use multiple public clouds, 10% use a single public cloud – and only 3% use solely private clouds. Meanwhile, 63% of companies have accelerated their cloud migration over the past 12 months, with AI being a top driver, according to a Foundry survey released in August.

So, VMware is sailing against the wind here.

Still, at the show, Broadcom emphasized the catalog of private cloud services available through its VMware Cloud Foundation platform, including security, container operations, disaster recovery, edge orchestration, and, of course, private AI.

Focus on VMware Private AI Foundation

VMware Private AI Foundation is a joint development with Nvidia that will enable enterprises to customize models and run generative AI applications on their own infrastructure.

Demand for VMware’s private AI has “far exceeded our early expectations,” said Chris Wolf, global head of AI and advanced services in the VMware Cloud Foundation division at Broadcom.

“Just as their investments in Kubernetes have given enterprises more flexibility and control across their application portfolio, the same can be said for private AI,” he said. “Organizations are looking to make smart investments in AI that drive measurable business value, while also maintaining privacy, flexibility, and control of their data. “

At a meeting with journalists, Wolf expanded on the benefits of this private AI offering for VMware customers. “Bringing the AI model to their data, being able to preserve data privacy, has been a huge gain to them,” Wolf said. “The cost is significantly lower.”

According to Wolf, one customer told him that it cost a fifth as much as that of a public cloud AI service.

“I might do some experimentation and data science in the public cloud, do some fine-tuning or other model development, that’s a fine public cloud use case,” he said. “The inference and the run time, actually running the AI application – which is the majority of AI compute capacity – the economics are far superior on-prem.”

But according to the Foundry survey, 30% of respondents primarily run AI workloads in the public cloud, with another 27% using a hybrid approach. Only 24% use private clouds in data centers.

“Customers are saying, ‘I want to use my data sources of choice. I want to run them where I want,’” Wolf said.

When asked about enterprises who no longer have on-prem data centers, Wolf said: “This is where we partner with providers such as Equinix that can give them that on-demand capacity needs on our platform.”

VMware product and pricing news

VMware’s retreat to a private cloud strategy was also marked by a distinct lack of new products.

There were some announcements around VMware Cloud Foundation 9, a new release of the company’s unified and integrated private cloud platform, but there was no actual release date for the product.

“What we are announcing is the future direction of VMware Cloud Foundation, our roadmap to delivering VMware Cloud Foundation 9,” said Prashanth Shenoy, vice president of product marketing for the VCF division at Broadcom. “We are not providing any timelines at this point for when VCF 9 will be delivered.”

In other bad news for VMware customers, prices have been going up since the Broadcom acquisition.

“We see that large cost increases are inevitable and indeed crucial to VMware by Broadcom’s growth strategy,” wrote IDC analyst Neil Stewart in a report earlier this month. Customers may see cost increases anywhere from 100% to potentially as high as 800% on renewal, he said.

According to a survey released by CloudBolt Software and Wakefield Research this June, 99% expressed concern, and 95% of VMware users said that the Acquisition is disruptive to their IT strategy. As a result, 38% of 300 VMware enterprise customers surveyed said that they plan to move more workloads to the public cloud, 34% plan to migrate to an alternative hypervisor, and 33% plan to move entirely to the public cloud.

A mass exodus isn’t likely to happen immediately, said Kyle Campus, chief technology and product officer at CloudBolt, in the report. Those who could easily migrate to the public cloud have already done so, he said.

“You’re often talking about pieces of infrastructure that have been in place for decades that are sunset and will see out its remaining life span in the data center,” Campus said. “Many are mission critical and have an untold number of bespoke processes and complex dependencies. The reality of moving these things to the public cloud or migrating to a new hypervisor is daunting with unclear ROI, and when faced with the reality, it appears many companies are going to plug their noses and resign with Broadcom – at least for the near-term to buy more time to prepare for alternatives.”

Focus on VMware Private AI Foundation

VMware product and pricing news

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