May 26, 2022
Hello and welcome to Protocol Enterprise! Today: Broadcom makes its VMware intentions official, why chipmakers are racing to master a new transistor design, and this week’s enterprise tech moves.
Cloud security best practices are still a work in progress at most companies, according to new research from Canonical. Only 13.5% of survey respondents believe they’ve “mastered” container-centric cloud security, yet 38% said they consider security the most important consideration when setting up cloud infrastructure.
If Wall Street had to invent a company, it would probably look a lot like Broadcom.
Once known primarily for its semiconductors, Broadcom has become something of a technology hedge fund, adding various potentially promising companies to its portfolio of businesses, as part of CEO Hock Tan’s quest to turn it into a software play. Through multiple billion-dollar acquisitions what has emerged is a conglomerate that is beloved by Wall Street analysts but difficult to look at as a coherent operation with a clear, core business.
While Broadcom’s $61 billion acquisition of VMware will further broaden the chipmaker’s growth prospects beyond semiconductors by giving it more enterprise software clout and recurring revenue, the immediate benefits are less apparent for VMware.
VMware’s acquisition does not come as a total surprise.
Based on its track record following its two other major software acquisitions – CA Technologies in 2018 and Symantec's enterprise security business the following year – Broadcom could target an estimated $5 billion-plus in cost savings to improve VMware’s margins and profitability, according to Bernstein analysts.
Still, VMware played a crucial role in the development of enterprise tech over the last two decades, only to wind up a cash-generating machine for hardware companies time and time again, as this thread on Twitter from AWS’ Jeramiah Dooley so clearly explained.
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A once-in-a-decade shift is underway involving one of the most elemental building blocks of computer chips, and it has the potential to reshuffle the pecking order of chip giants for years to come.
Intel, Samsung and TSMC are racing to achieve a generational leap in transistor technology. This leap must occur to realize anything close to the computing requirements demanded by the ideas behind the metaverse, to produce AI that isn’t a joke, to make truly self-driving cars or even make apps load faster.
This next-generation design is called “gate-all-around.” With new materials, and redesigned manufacturing tools that cost tens of millions each, the new gates accomplish one thing: They more tightly control the flow of electricity received by each transistor. Modern chips can have upwards of 30 billion transistors on a single device, and in some cases tens of billions more. In 2025, Gartner expects chip manufacturers to generate roughly $5 billion in revenue from the new technology, up from nothing last year.
Chip companies must deliver substantially more computing horsepower every year to get to a version of the future that’s been promised by the tech titans. Doing so requires some of the most complex, expensive manufacturing equipment on the planet, and the development of even more creative ways to improve fundamental aspects of chip construction. That means making already atomic-sized features even smaller. This process, loosely described as Moore’s law, has kept the chip industry humming for a half-century, but it’s getting harder.
“The rate at which we're shrinking is for sure slowing down, big time,” Applied Materials Vice President Kevin Moraes said.email | twitter)
Over the past week, executives from Zoom, GitHub, LinkedIn and Nutanix left for new roles. Here’s what else happened with the people of enterprise tech.
Laura Padilla is now VP of Partners at Airtable. Padilla previously led partner and platform sales at Zoom and worked at Nutanix and Box prior to that.
Maneesh Sharma is now COO at LambdaTest. Sharma was previously the general manager for GitHub India and led partner sales at Adobe prior to that.
Ron Sanderson was promoted to CISO of Redpoint Global. Sanderson was previously director of Information Security.
Doug Myers joined ServiceTitan as SVP of Operations. Myers was formerly the VP of Operations at LinkedIn.
Olive Huang is general counsel at ServiceTitan. Huang was previously general counsel for Nutanix.
Lacework confirmed to Protocol that it laid off 20% of its workforce Wednesday, a big setback for the well funded cloud security startup.
Splunk reported a bit of a rebound, topping Wall Street estimates for revenue and reducing its net loss while raising guidance for the upcoming quarter.
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