AT&T has settled with Broadcom over VMware support contracts and plans to drop a lawsuit this week. On December 13, lawyers for both sides informed the New York Supreme Court that they had reached a “settlement-in-principle,” but they didn’t disclose any details.
Analyst Naveen Chhabra from Forrester Research believes this marks the end of court battles with Broadcom regarding VMware licenses. He thinks the costs and time involved in a legal dispute, alongside the shift to new virtualization technologies, just don’t make sense for most companies. “I don’t think many companies will go the legal route, even if they have larger setups,” he said.
Broadcom’s strategy changed after acquiring VMware in November 2023. They aimed to consolidate offerings, focusing on the VMware Virtual Cloud Foundation (VCF) as the premium option, but this shift frustrated many VMware users. AT&T was the only company to take legal action. They sued Broadcom on August 29, arguing that the support contracts negotiated before Broadcom’s acquisition weren’t honored.
Broadcom responded by saying AT&T would have to purchase new software subscriptions to receive support. In court, Broadcom’s lawyers stated that VMware employees couldn’t support products that were no longer available. AT&T’s lawyers argued that losing support could jeopardize critical systems for safety organizations.
During the lawsuit, Broadcom agreed to extend support temporarily but still encouraged AT&T to switch to the VCF subscription service. AT&T’s attorney, Jonathan Pressment, mentioned at a court hearing on October 23 that the company was considering moving away from VMware due to the new licensing terms and costs, but no specific timeline was in place. He emphasized that the lawsuit was their final bargaining chip, saying, “Without the threat, there’s really no way Broadcom will become more reasonable.”
Chhabra noted that other customers are unlikely to confront Broadcom as boldly as AT&T did. Many have already calculated what it will cost to stay with VMware through discussions or industry connections. “Whether they are up for renewal or not, they have assessed the situation,” he added. Tim McCarthy, a news writer for TechTarget Editorial, covers cloud and data storage issues.