What’s up with… Broadcom and VMware, OpenAI (again), smartphone sector

• Broadcom completes the $61bn acquisition of VMware 
• OpenAI is set to reinstate Sam Altman as CEO and revamp the board
• Good news for the smartphone sector

In today’s industry news roundup: VMware is now part of the Broadcom empire; the OpenAI CEO seat is getting even hotter; there are further positive signs from the smartphone sector; and much more!

Networking chip giant Broadcom has finally completed its $61bn acquisition of VMware – officially announced in May 2022 – having received “legal merger clearance in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and foreign investment control clearance in all necessary jurisdictions,” the companies noted. Hock Tan, Broadcom’s president and CEO, stated: “We are excited to welcome VMware to Broadcom and bring together our engineering-first, innovation-centric teams as we take another important step forward in building the world’s leading infrastructure technology company… Broadcom’s focus moving forward is to enable enterprise customers to create and modernise their private and hybrid cloud environments. At the core, Broadcom will invest in VMware Cloud Foundation, the software stack that serves as the foundation of private and hybrid clouds. Incremental to Broadcom’s investment in VMware Cloud Foundation, VMware will offer a rich catalogue of services to modernise and optimise cloud and edge environments, including VMware Tanzu to help accelerate deployment of applications, as well as application networking (load balancing) and advanced security services, and VMware software-defined edge for telco and enterprise edges.” Tan elaborated on these points in this extensive blog. The telecom operator community will be pleased to hear that, as many of them are teaming up with VMware as part of their efforts to cloud-enable their networks and operations so they can become digital service providers (DSPs). One of the reasons that VMware is a prime partner is because of its track record as a market leader that breaks new ground, according to Patrick Kelly, principal analyst at Appledore Research. He noted there has been a lot of focus on the “expected headcount reductions, which is a playbook Broadcom has used in the past,” but added that this is different to Broadcom’s previous acquisition of Computer Associates, which “was past its prime when Broadcom acquired it. It served to generate cash but no growth. VMWare is a much different business.” Kelly explained: “What is often overlooked is the high-value capabilities VMware brings to the broader Broadcom business. VMware continues to innovate. It has enormous penetration into more than 3,000 large and medium sized businesses globally, is a leading supplier to telecom operators, and leads by a wide margin in the distributed cloud infrastructure market. VMware will contribute nearly $14bn in revenue and $3.8bn in free cash flow to Broadcom in its first year,” stated the Appledore analyst.

It has been an interesting week at the San Francisco-based headquarters of Microsoft-backed OpenAI, which is on course for its third CEO change in five days… For those who have been cut off from the tech world for the past week, Sam Altman was sacked as the CEO of the ChatGPT developer last Friday, offered a job to head up a new AI team at Microsoft on Sunday, and then, in the latest dramatic twist, handed the chance to be reinstated as CEO by the OpenAI board on Tuesday. (For a breakdown of the weekend’s events, see this previous coverage of the toings and froings.) In the latest twist, OpenAI posted on X (FKA Twitter): We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo. We are collaborating to figure out the details.” (Note that there is an agreement in principle – very little has been definitive during these past few days. Also note that the board comprises just three people and only one, D’Angelo, was on the board that sacked Altman last week.) That Altman appears to be returning to his OpenAI throne suggests that the company’s 770-or-so staff, which had en masse threatened to walk out and join Microsoft unless Altman was reinstated and the board revamped, had won the day. People power, eh? Altman also took to X to post (without the support of a shift key): “i love openai, and everything i’ve done over the past few days has been in service of keeping this team and its mission together. when i decided to join msft on sun evening, it was clear that was the best path for me and the team. with the new board and w satya’s support, i’m looking forward to returning to openai, and building on our strong partnership with msft.” Satya being Microsoft CEO Satya Nadella, who posted: “We are encouraged by the changes to the OpenAI board. We believe this is a first essential step on a path to more stable, well-informed, and effective governance. Sam, Greg, and I have talked and agreed they have a key role to play along with the OAI leadership team in ensuring OAI continues to thrive and build on its mission. We look forward to building on our strong partnership and delivering the value of this next generation of AI to our customers and partners.” Greg, by the way, is OpenAI co-founder Greg Brockman, who was relieved of his duties as the company’s chairman at the same time that Altman was sacked last Friday: Brockman was set to join Altman at Microsoft but he is now going back to OpenAI too. ”Returning to OpenAI & getting back to coding tonight,” he shared. So if Altman is returning, what about the current CEO, Emmett Shear (who, by the way, was installed to replace Mira Murati, who spent two days in the CEO chair after Altman was ousted)? For someone who was handed a high-profile job at one of the hottest AI companies on the planet on Sunday and then told he is surplus to requirements on Tuesday, he’s putting on a brave face and taking some of the credit for bringing Altman back. “I am deeply pleased by this result, after ~72 very intense hours of work. Coming into OpenAI, I wasn’t sure what the right path would be. This was the pathway that maximised safety alongside doing right by all stakeholders involved. I’m glad to have been a part of the solution,” he posted. Did you get all of that? Is everyone now ready to down tools in San Francisco and enjoy Thanksgiving without worrying that the turkey carving knife might be used to stab an AI executive in the back? This script looks somewhat unfinished… especially as no one has yet provided a definite statement as to why Altman was sacked in the first place! 

The global smartphone market performed well in October, marking its first year-on-year growth on a monthly basis since 2021, according to preliminary figures from Counterpoint Research. In its analysis that tracked monthly sales of smartphones, the research house estimated that sell-through volumes were up 5% year on year in October, the first increase since 2021, which has broken a streak of 27 consecutive months of year-on-year declines. It was also the highest number of monthly smartphone sales since January 2022. The growth was driven by recovery in emerging markets across the Middle East and Africa, Huawei’s comeback in China, and the festive period in India, which “punched far above its weight to account for the largest share of monthly global gains”. On the other end of the spectrum were developed markets, which were slower to recover. Given this upward trend, Counterpoint Research expects the market to book growth for the final quarter of the year, depicting a path to “gradual recovery” in the coming quarters. Find out more.

BT and Telstra Broadcast Services (TBS) have agreed to use each other’s global media networks (GMNs), which they say will provide customers with a “greater global reach” to unified operations across key Asia Pacific regions, including India, Malaysia, Hong Kong. The move, according to Chet Patel, MD for service and portfolio businesses at BT, will simplify its portfolio. “Our GMN is among the best in the world, and so is Telstra’s. We know that operating a global network requires substantial investment to provide the services customers need. Now, to help more customers harness the benefits of cloud-first broadcasting all over the world, we have decided to join forces with another major player in the market and combine our strengths, scale and expertise,” he added. BT will make use of Telstra’s GMN, which spans Australia, Europe and the US, helping the UK telco to close “some of the gaps we have today” and, in turn, BT’s network will do the same for Telstra. BT’s new strategy, according to Patel, is about focusing on “creating a smaller, scalable portfolio built around customers’ outcomes – and we’ll partner with others, where it makes sense, to deliver these”. In a separate statement, Australian operator Telstra noted that the deal with BT represents an initial five-year strategic alliance and will increase the global footprint of TBS by 50%, while expanding its customer base to more than 170 broadcast and media organisations globally.

Greek national operator OTE, which is part of the Deutsche Telekom empire, has signed a memorandum of understanding (MoU) with Quantum Projects Group concerning the sale of OTE’s subsidiary Telekom Romania Mobile, the country’s fourth-largest mobile operator with some 3.9 million customers. Quantum Projects Group is a company controlled by Adrian Tomșa, the owner of Romanian media group Clever Media. No financial details were shared: OTE noted it has filed for approval with the Romanian authorities and will make any “necessary announcements to the investor community if and when relevant.” OTE previously sold its majority stake in Telekom Romania’s fixed line network business to Orange for €268m. 

Telefónica is still working towards the potential sale of a large minority stake (up to 49%) in its Tech division, which provides a range of digital, cloud and cybersecurity services to enterprise customers, and has had the unit valued at up to €3.1bn by investment banks, according to a report from El Confidencial. In the third quarter of this year, Telefónica Tech reported year-on-year revenue growth of 14.4% to €442m, while the telco’s overall sales were flat year on year.   

Here’s an interesting press release from Verizon, for a couple of reasons. First, it shows just how much data flies around cellular networks during major sporting events: The US operator says 79.3 Tbytes of data, “the equivalent of streaming a feature-length movie almost 22,000 times”, was carried over its 5G network during “the big motorsports event in Las Vegas” last weekend (we’ll come to this non-specific and initially puzzling reference in a second…). In addition, the operator “created a network slice and enabled race car driver Lando Norris, social media influencer Tanner Foust and other content creators to livestream about the festivities using a Verizon beta application called Mobile Creator Studio. Lando Norris used the creator application to livestream HD video on a Verizon 5G mobile device while he gave a tour of the McLaren garage. Tanner Foust leveraged the same application to livestream while walking the streets of Las Vegas.” All interesting stuff but, like me, you might be wondering why Verizon refers to a “big motorsports event” and festivities and other terms instead of simply saying this all took place during the Las Vegas Formula 1 Grand Prix. Well, it likely has something to do with the fact that its rival, T-Mobile US was an official sponsor of the race. This is what the corporate world has come to, sadly.  

- The staff, TelecomTV