Dive Brief:
- Broadcom and AT&T reached a settlement-in-principle to their legal dispute over VMware licensing and support services, the two parties informed the New York State Supreme Court on Thursday.
- The telecommunications giant filed suit against Broadcom for breach of contract and sought injunctive relief to extend licensing support for its VMware deployments on Aug. 29. The two parties informed the court they were making progress toward a settlement last month.
- The terms of the settlement were not disclosed. The two parties requested the court grant them until Dec. 13 to finalize their agreement. Broadcom and AT&T did not respond to requests for comment prior to publication.
Dive Insight:
Broadcom’s acquisition of VMware sent ominous ripples across the enterprise IT ecosphere. For many customers, the product and licensing changes meant a major shift in procurement processes and an increase in cost.
Broadcom acquired VMware for $61 billion one year ago and quickly announced an end to perpetual licenses in favor of a subscription-based model for the virtualization software suite. Broadcom simplified the VMware portfolio, bundling hundreds of separate components into four large product packages.
AT&T said its VMware costs were set to spike by 1,050%. Executives claimed the company was being asked to pay a king’s ransom for unwanted subscriptions or face losing vital licensing support for 75,000 virtual machines running across approximately 8,600 servers.
Broadcom announced the changes in December, shortly after the acquisition closed. The chipmaker said in a Sept. 20 memorandum to the court that AT&T had fair warning of the changes but opted out of support services by neglecting to renew its licensing deals.
Broadcom also produced an Aug. 19 email AT&T EVP and GM Susan Johnson sent to Broadcom President and CEO Hock Tan in which she discussed migrating away from VMware.
“AT&T has decided to pursue a legal strategy along with a disciplined plan to invest to migrate away, all of which will quickly become public,” Johnson wrote. “I truly wish we had another option.”
The presiding judge asked the two parties to resolve the dispute or come to an agreement over the “proper duration of the preliminary injunction” by Nov. 22.
In a Thursday letter to the court, Broadcom and AT&T said they needed more time to put an agreement in writing.
The court acquiesced to the extension in a letter responding to the request on Thursday.
