Cox and Charter Merger, Proofpoint's $1B Acquisition, and the Rise of Shadow AI in Education

[00:00:02] It's Friday, May 16th, 2025, and I'm Dave Solt. Four things to know today. Charter's $3.5 billion Cox acquisition may shake S&B telecom stability. Proofpoints buyout of Hornet Security risks alienated MSP partners. HPE launches a bold VMware alternative with major cost savings. And Shadow AI, AI model fragmentation, and growing classroom tension show the urgent need for governance, transparency, and human balance in AI adoption.

[00:00:32] This is the Business of Tech. Charter Communications has announced its acquisition of Cox Communications for $34.5 billion, a move that will unite two of the largest internet service providers in the United States. This merger is expected to require approval from the Federal Communications Commission, as Cox holds various licenses critical for its operations. Cox Communications, a privately held subsidiary of Cox Enterprises,

[00:00:58] serves over 7 million homes and businesses across 18 states, providing services such as digital video, high-speed internet, and home security. Following the merger, the combined entity plans to adopt the Cox Communications name, with Spectrum becoming the consumer-facing brand in the areas served by Cox. Proofpoint has announced its plans to acquire Hornet Security, a specialist in Microsoft 365 solutions, for a substantial $1 billion.

[00:01:24] This acquisition is part of Proofpoint's strategy to enhance its offerings in cybersecurity and expand its portfolio in the growing cloud security market. Hornet Security, known for its Microsoft 365 security and data protection services, reported over $160 million in annual recurring revenue and more than 20% year-over-year growth. According to industry reports, the global cloud security market is expected to reach $12.73 billion by 2027, highlighting the critical need for enhanced security solutions.

[00:01:54] Why do we care? Well, strategically, these moves, one in telecom infrastructure and the other in cloud security, highlight how scale and specialization are defining the future of service delivery. For providers, both deals signal shifts that will impact customer experience, vendor partnerships, and positioning. That said, I want to be more tactical here. For a number of SMBs, Cox or Cox Business is their provider and telecommunications mergers are notable.

[00:02:19] Charter Cox could degrade service, at least in the short term, as network integration and back-office systems are merged. Proofpoint's enterprise-heavy culture may alienate Hornet Security's MSP base, especially if pricing, support models, or portal access change. Channel-first competitors may seize this moment to court disaffected partners. So let's watch this space. Are you ready to get your brand in front of the tech leaders shaping the future of managed services?

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[00:03:38] Arm is rebranding its system-on-a-chip product designs to emphasize power savings for artificial intelligence workloads targeting key markets such as automotive and cloud computing. The company is moving from a component supplier to a platform-first approach, introducing new product families named Neoverse, Neva, Lumex, Xena, and Orbis, which are organized by market.

[00:04:00] In the fourth quarter of its fiscal year 2025, ARM reported total revenue of $1.24 billion, marking a 34% increase year-over-year driven by a surge in licensing and royalty revenue. And Box is strengthening its collaboration with Microsoft by introducing a new artificial intelligence agent that integrates with Microsoft 365 Co-Pilot, enhancing users' ability to analyze documents and automate tasks within the familiar Microsoft applications.

[00:04:26] This new technology aims to make data stored in Box readily accessible for AI applications beyond its own platform. The integration allows users to search, summarize, and act on content directly from Microsoft tools such as Teams, Word, and PowerPoint. Furthermore, Box is launching three additional AI agents focused on intelligent search and data extraction, aiming to streamline knowledge work processes.

[00:04:50] Box reported a revenue of $1.09 billion for the fiscal year ending in January 2025, reflecting a 5% increase from the previous year. Why do we care? Well, Box is positioning to be a smart layer in the Microsoft AI ecosystem, allowing providers to build AI value on top of what clients already use. ARM, meanwhile, is positioning for relevancy in the AI chip market.

[00:05:13] The market-specific chip families, like Neoverse for Cloud and Neva for Automotive, show that ARM is chasing sector-specific AI optimization, especially in high-growth segments like Edge AI and data center inference. Both moves reflect the industry's pivot toward AI everywhere, but the near-term takeaway is this. Focus on the platforms your clients already work in and bring AI to them, not the other way around.

[00:05:44] The company claims that its pricing model can lead to savings of up to 90% on virtual machine license costs compared to the market average, particularly as VMware's pricing faces scrutiny.

[00:06:01] Rajiv Bajwari, Vice President and Chief Product Officer for Private Cloud and Flex Solutions at Gullit Packard Enterprise, emphasized that their pricing structure, based on server sockets rather than cores, provides substantial financial advantages. Additionally, the orchestration platform is reportedly available at 5% lower costs than similar market products, with overall savings projected around 45%, due to reduced licensing costs and centralized management.

[00:06:28] The new offerings are available immediately and include compatibility with competitor hardware, such as Dell and NetApp systems. Why do we care? Well, Hewlett Packard Enterprise is making a calculated strike at the virtualization market precisely when uncertainty around VMware's pricing and strategy is at its peak. The messaging is direct, lower VMware licensing costs, simplified pricing, and broader hardware compatibility.

[00:06:53] For IC service providers, particularly those managing on-premises workloads or private cloud infrastructure, this is a tangible opportunity to reduce costs and regain control of their virtualization roadmaps. At the heart of HPE's pitch is a shift from per-core to per-socket pricing, which directly undercuts VMware's recent direction post-broadcom acquisition. The 90% savings claims, while needing verification, signals potential relief for customers with dense core deployments.

[00:07:21] Combined with Morpheus, combined with Morpheus's orchestration layer and its multi-vendor capability, including Dell and NetApp, HPE is packaging a platform play with clear cost advantages. In a market where VMware is seen as risky or costly, this gives providers a compelling counter-proposal to bring to clients, and may open the door to strategic advisory engagements for workload modernization. Time to ponder some big ideas.

[00:07:48] The new stack dives into how shadow artificial intelligence is emerging as a significant challenge for organizations, highlighting the need for better governance and oversight of AI tools. As teams increasingly adopt AI without official approval, they risk exposing sensitive data and creating compliance nightmares. A recent survey commissioned by Broadcom revealed that nearly half of respondents identified complexity and security concerns as major obstacles to executing a comprehensive AI strategy.

[00:08:15] Shadow AI arises when employees bypass formal channels to access AI resources, indicating a gap between the demand for rapid innovation and the slow response of enterprise systems. The new stack has another one too. The landscape of artificial intelligence shifting as large language models, or LLM, evolve into more specialized versions known as XLMs. This transition is driven by the need for models that cater to specific applications and use cases, offering greater efficiency, security, and functionality.

[00:08:44] As organizations seek to leverage generative AI in diverse environments, the current one-size-fits-all approach is becoming less viable. The marketing is witnessing a fragmentation where models are tailored for particular tasks, such as real-time data processing and enhanced reasoning capabilities. For instance, hybrid data pipelines that combine batch processing with real-time data are emerging as key innovations, allowing models to adapt and improve continuously. And one that's the real impacts of AI.

[00:09:14] A recent article from the New York Times reported that college professors are increasingly using artificial intelligence tools like ChatGPT to assist in creating course materials, leading to discontent among students who feel they are not receiving the human instruction they are paying for. A national survey conducted by Titan Partners revealed that the percentage of higher education instructors frequently using generative AI tools nearly doubled from 18% to 35% in just one year.

[00:09:40] Students such as Ella Stapleton from Northeastern University have raised concerns about the hypocrisy of professors advising against AI usage while relying on it themselves. This trend has sparked complaints and calls for transparency, as students argue they deserve authentic engagement from their instructors rather than automated content. Universities are grappling with the implications of AI in teaching and the need for clear policies on its use. Why do we care?

[00:10:09] Well, here are your questions to ponder. How are we helping clients develop acceptable use policies for generative AI? Could this be a new managed services line, AI governance as a service? Can our clients benefit from domain specific models like legal, healthcare or finance? How are we helping clients strike the right balance between AI efficiency and human engagement? Can we build policies or tools to label AI generated output for transparency?

[00:10:36] And are we thinking about employee experience, not just automation? Thanks for listening. Today is National Mimosa Day as well as National Pizza Party Day. That one sounds like a party. If you haven't yet, check out the episode that dropped on the weekend about approaches to AI chatbot marketing and how to be relevant in an AI world. Srinivash Krishnaswamy, author of a new book on the topic, provides practical insight and guidance on how to prepare and leverage AI chatbots for marketing.

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