AT&T reached an undisclosed settlement with Broadcom over VMware support contracts and plans to drop an ongoing lawsuit this week.
On Dec. 13, attorneys for both companies filed a letter to the New York Supreme Court that stated they had "reached a settlement-in-principle." Specifics of the settlement were not made public.
AT&T will likely be the last company to fight Broadcom in court over changes to VMware licenses, said Naveen Chhabra, an analyst at Forrester Research.
I don't think many companies will take the legal route, even though they may have larger deployments or contracts.
Naveen ChhabraAnalyst, Forrester Research
The cost in time and money to hold a legal battle while juggling a transition to other virtualization technologies likely isn't worth the hassle compared with reducing dependency on VMware over time, he said.
"I don't think many companies will take the legal route, even though they may have larger deployments or contracts," Chhabra said.
Legal recap
Following the acquisition of VMware in November 2023, Broadcom shifted the platform's strategy toward consolidation, with the VMware Virtual Cloud Foundation (VCF) software suite as its most expensive but feature-complete option, and selling the platform through a recurring subscription.
Broadcom's focus on enterprise buyers and the elimination of a la carte purchases upset VMware customers, but only AT&T took Broadcom to court. AT&T sued Broadcom on Aug. 29, claiming that support contracts it had negotiated with VMware prior to Broadcom's ownership of the company were not being honored.
Broadcom said it would only continue support if AT&T purchased the new VMware software subscription offerings it introduced. Its attorneys previously argued in court that VMware staff couldn't support products that no longer exist in the catalog.
As part of AT&T's argument, its attorneys said that without support, one issue with the platform could knock out vital computer and communication systems for local and national safety organizations.
Broadcom agreed to temporarily extend support contracts throughout the suit, but still sought for AT&T to move onto the VCF subscription service.
Jonathan Pressment of BakerHostetler, an attorney representing AT&T, said during a court hearing on Oct. 23 that the telecom would be looking to depart the VMware platform, given the change in licenses and costs, but did not have a specific migration deadline.
He said legal action against Broadcom was AT&T's only remaining negotiation tactic.
"Without the threat, there's really no way Broadcom will become more reasonable," Pressment said at the hearing.
Other customers won't attempt to take on VMware as aggressively, Chhabra said. Most IT or business leaders are now aware of what it will cost to remain on VMware, either through contract discussions or professional networking.
"Whether they are up for renewal or not, they have assessed the situation. Through hearsay or industry associations, senior [enterprise] or tech leadership know what [the price will] be like. It's no longer sticker shock," Chhabra said.
Tim McCarthy is a news writer for TechTarget Editorial covering cloud and data storage.
