Broadcom, AT&T explore settling VMware pricing dispute

October 18

Broadcom and AT&T are in discussions to settle their VMware support licensing dispute outside of the courts.

The companies sent a joint letter Friday from AT&T and Broadcom legal teams informing the New York State Supreme Court, and asked for a delay in proceedings. The companies were originally scheduled to deliver opening remarks to the court Tuesday.

“[Both] parties have been engaging in settlement discussions and believe enough progress has been made to warrant an adjournment,” the letter stated.

Attorneys of both companies asked to move opening remarks to Oct. 22. Broadcom also agreed to provide an additional week of support for AT&T beyond that date if scheduling conflicts arise.

AT&T sued Broadcom in August, claiming a support contract that included a two-year extension of VMware services negotiated prior to Broadcom’s 2023 acquisition was not being honored.

In its place, Broadcom asked the telecom giant to purchase VMware software through its new bundled software subscription model to continue receiving support, according to AT&T court filings. VMware subscription packages require a three-year contract.

After the lawsuit was filed, Broadcom agreed to temporarily extend support services until Oct. 21, according to the letter.

Neither AT&T nor Broadcom replied to TechTarget Editorial requests for comment at press time.

‘Good faith’ gestures

Broadcom acquired VMware in 2023 and has since reduced its catalog of 168 products down to four subscription offerings.

The subscriptions enable customers to create their own private clouds, Broadcom leadership argued, but the move has drawn customer ire and regulatory attention worldwide, such as with the Japan Fair Trade Commission government agency.

AT&T isn’t seeking damages, according to the filing, but the company requested a permanent injunction for Broadcom to honor the original contract of providing support extensions. VMware software enables server virtualization capabilities for on-premises and cloud IT infrastructure hardware, enabling customers to spin up more instances of software by compartmentalizing compute, storage and networking resources within a server.

In the lawsuit, AT&T claims almost 75,000 of its virtual machines run on VMware software, with 22,000 of those connected in some way to public safety offices, both federal and local. AT&T said its customer support centers use the software as well, answering close to 1 million customer requests daily.

“Without Support Services, the operating systems of countless AT&T customers — including the Government and Intelligence Agencies — are just one issue away from failing,” according to the court filing.

Broadcom countered AT&T’s statements in later filings, stating it provided notice and negotiated in good faith leading up to the end-of-service date, but that “AT&T has rejected every proposal despite favorable pricing it has been offered and the situation it has created,” according to a memorandum.

The memo also stated Broadcom’s agreement with AT&T, “contains an unambiguous ‘End of Availability’ provision, which gives VMware the right to retire products and services at any time upon notice.”

Tim McCarthy is a news writer for TechTarget Editorial covering cloud and data storage.

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