Dive Brief:
- AT&T said the specter of a more than tenfold increase in annual VMware costs triggered its decision to pursue legal action against VMware parent company Broadcom, in an August email EVP and GM Susan Johnson sent to Broadcom President and CEO Hock Tan.
- “After a 10-plus year strategic relationship with Broadcom … I am sad to report that we appear to be at an impasse on our VMware deal,” Johnson said in the email, noting AT&T was facing a proposed annual increase of 1,050% in its VMware bill.
- The email was submitted to the New York State Supreme Court Friday as evidence in an AT&T lawsuit for injunctive relief stemming from changes in VMware product licensing announced late last year, after Broadcom finalized its $61 billion acquisition of the virtualization software company in November. Broadcom extended support for AT&T’s VMware deployments until Oct. 21.
Dive Insight:
In addition to the email, AT&T provided the court with affidavits from Johnson and two of the company’s technology executives Friday countering Broadcom’s claims that AT&T had time to find and migrate to a VMware alternative.
“Nothing in my August 19 email to Mr. Tan suggested that migrating away from the VMware software would be easy, quick or inexpensive,” Johnson said in her affidavit. “My understanding is that migrating away from the VMware software would be a time-consuming process — taking years — and would involve significant efforts by AT&T at great expense.”
Broadcom ended the sale of VMware perpetual licenses in favor of a subscription-based model and simplified its software suite down to a pair of bundled offerings in December. VMware customers subsequently reported massive cost increases and many began searching for alternatives solutions, according to Forrester.
“Customers are telling us that it is costing an arm and a leg,” Forrester Principal Analyst Naveen Chhabra said last month during a Forrester conference. “Most of the Forrester clients that I talk to are infuriated.”
Johnson stated in the email that moving the company off VMware would cost between $40 million and $50 million. She also said the investment would have yielded quick returns given the high licensing costs proposed.
“As a result, we are planning to prioritize investment to migrate off of VMware,” Johnson told Tan in the email.
AT&T runs 75,000 VMware virtual machines across approximately 8,600 servers, according to court testimony. It claims terminating support for those deployments would create operational and security risks.
“VMware software is embedded in the products that AT&T purchases from its vendors and uses to keep the network functioning,” AT&T VP of Global Technology Planning Gordon Mansfield said in an affidavit. “Because of this, AT&T cannot make a unilateral decision to end use of the VMware software. Instead, AT&T must work with its vendors to replace the VMware software and develop a different solution.”
AT&T also disputed Broadcom’s claim in a Sept. 20 memorandum that it was using “very old software versions, some of which was already running unsupported due to AT&T’s failure to upgrade.”
Only 3% of AT&T’s servers are currently running older versions of VMware, according to a Friday affidavit by VP of Global Technology and Operations David Brickhaus. Support services for those deployments ended on March 15.
“The vast majority of AT&T's operations rely on the remaining approximately 97% of physical servers using the current VMware software for which defendants are currently providing support services,” Brickhaus said.
