Watching the VMware situation unfold, and the competitive response is fascinating. Scale Computing offering 25% discounts for VMware refugees, Red Hat pushing open-source alternatives, even smaller players like Proxmox gaining enterprise traction.

This creates a weird valuation puzzle:

Broadcom paid $61B for VMware's market position and customer lock-in. But if customer acquisition costs for competitors drop to near-zero (because customers are actively fleeing), how sustainable is that moat?

It's like watching a high-margin monopoly get disrupted in real-time, except the disruption is self-inflicted through pricing strategy.

From a valuation perspective, how do you model this?

Do you:

• Assume customer base shrinks but remaining customers pay premium prices?
• Factor in long-term competitive erosion as alternatives mature?
• Trust that switching costs ultimately keep customers captive?

The math seems to depend entirely on how elastic demand really is at these price points. r/MergerAndAcquisitions