AT&T and Broadcom may settle VMware support case

AT&T and Broadcom appear to be close to settling their legal dispute over the provision of support services for VMware software.

A letter from the two mega-firms dated October 11, and revealed on Tuesday by the New York Supreme Court, opens by revealing that "the parties have been engaging in settlement discussions and believe enough progress has been made to warrant an adjournment of the October 15, 2024 oral argument."

The parties requested that oral argument be postponed until October 22, or to another date the court finds more suitable. The court granted the postponement and Broadcom has agreed to continue providing support for VMware software for another week.

Support is at the heart of the dispute between the two: AT&T claimed it had a deal with pre-acquisition VMware to acquire another two years of support services for software it acquired under a perpetual license. Broadcom has stopped selling standalone support services after contracts expire, instead bundling support with subscriptions to its VMware Cloud Foundation private cloud stack.

AT&T claimed Broadcom breached contract and was bullying it into buying Cloud Foundation at a price 1050 percent above its previous bills, and suggested it had started planning for a quick, cheap, and easy migration to a VMware alternative.

Broadcom disagreed it had bullied the carrier, suggested that AT&T's virtual estate was a mess, and argued that the telco giant should have known that VMware - like the rest of the enterprise software industry - is moving to subscriptions.

And that's where the case landed as of late September.

Last Friday, plenty of new filings appeared - most of them redacted documents describing AT&T's contracts with VMware.

One of those filings - an affidavit from Randall Gressett, vice president of Americas strategic sales whose territory covers the eastern continental United States, Canada and the telco market - makes for interesting reading.

"We recently gave AT&T an offer to purchase a five-year VCF subscription at a price that is well below market, and that is as favorable if not even more favorable than offers made to similarly situated customers," the affidavit states.

That's notable, because The Register has heard rumors Broadcom is discounting to overcome objections to its new licensing. Every other VMware user whose support deals are coming to an end now knows Broadcom is willing to talk.

But the affidavit also admits that, even with Broadcom's discount offer, AT&T will pay more.

"Any new VCF deal, no matter how reasonable or beneficial or valuable to AT&T, will be more expensive than its old one because it is up-to-date and much more comprehensive," the document states, justifying the increase on the grounds that "The five-year VCF subscription proposal offers significant value and new technology, while also cleaning up AT&T's messy at-risk environment, bringing everything under one umbrella."

Plenty of VMware users will have messy environments that, like AT&T's, mix multiple versions of Virtzilla's wares - some of which have reached end of life. Broadcom has generally emphasized its cuts to software license prices, without discussing total cost of ownership. This affidavit puts the cost increases calculated by analysts on the record as a reality. ®