Let’s be real: this story features two corporate giants that don’t exactly inspire warm feelings.
AT&T and Broadcom are squaring off in a legal battle over AT&T’s claim that Broadcom is squeezing them for more money to support VMware, which Broadcom now owns. AT&T’s claims are based on a version of widows and orphans (firefighters and first responders) that they cover. Broadcom’s response? Essentially, “You’ve got other options, so tough luck.” Meanwhile, Japan is investigating Broadcom, particularly its VMware unit, for suspicion of undertaking illegal tie-in sales. Honestly, is anyone shocked? Big corporations have a long history of acting like the rules are more of a suggestion than a requirement.
This saga began with Broadcom’s acquisition of VMware. If you’ve been watching, it fits Broadcom’s well-established playbook—the same one that’s made it a darling of Wall Street, driving its stock price up by 520% in just five years. Their method? Slashing staff, cutting back on technology investments, streamlining sales channels, and locking customers into long-term agreements at steep price hikes—upwards of 300% (and as high as 2,000%) in most cases.
Why AT&T is pushing back against Broadcom’s subscription model
In AT&T’s case, Broadcom wants to move them from a cheap software support agreement, tied to a long-paid-for license, to a subscription type (much like SaaS, or software as a service) model. This shift will undoubtedly balloon AT&T’s costs (and Broadcom’s profits), as SaaS subscriptions have become the go-to cash cow for tech giants like Autodesk, Adobe, Microsoft, and Salesforce. Wall Street loves it—because the more recurring revenue, the better.
Broadcom’s playbook: Maximize profits, minimize customer options
Broadcom’s brilliance, if you want to call it that, is that VMware is a core technology that is hard to replace, especially at scale. And they know it, so to date myself, and quote Gomer Pyle: “Surprise, surprise, surprise.” Again, there is a touch of irony here, and showing my age again -there used to be a bumper sticker with the AT&T logo and the words, “We don’t care, we don’t have to.” Scale and market dominance seemingly outweigh the need or desire to care for one’s customers.
The result? Broadcom shareholders are thrilled, their customers—not so much. But here’s the silver lining: this kind of disruption can be just what organizations need to reconsider their technology strategy. When a core supplier blows a hole in your budget and looks poised to keep doing so for years, it forces a reassessment.
Finding a way out: Alternatives like HyperCloud and VM Squared
The good news is that situations like this spawn competition. Service providers are developing support options, and tech companies like SoftIron have newer, better hardware and software offerings. Enter alternatives like SoftIron’s HyperCloud and VM Squared. HyperCloud offers a genuinely holistic private cloud solution, available on the customer’s terms, not the vendor’s. VM Squared takes it a step further, delivering a virtualization platform built on modern technology, giving enterprises a real choice. Unlike the giants, these newer players are still hungry, providing better service, newer tech, and flexible terms.
And because of the way we offer our products and services, a decade down the line, you won’t be lying awake at night trying to figure out what to cut just to keep the lights on.
So, what’s the play here? Keep paying to keep the line the pockets of large, self-focused companies with bloated pricing models with older technology, or make the switch to innovative solutions that work with your needs, not against them. It’s time to rethink who’s really adding value—and who’s just cashing in.
