### AT&T vs. Broadcom: The Clash Over VMware Support and Perpetual Licenses
In a critical legal showdown, telecommunications powerhouse AT&T and semiconductor and infrastructure software firm Broadcom are entrenched in a conflict regarding the future of VMware support services. The dispute revolves around Broadcom’s refusal to renew support for AT&T’s perpetual VMware licenses, which AT&T argues breaches their contractual obligations. This legal skirmish highlights the wider industry transition from perpetual software licenses to subscription-based approaches, a shift that has left numerous clients, including AT&T, wrestling with the consequences.
#### The Heart of the Conflict
Central to the lawsuit is AT&T’s assertion that Broadcom is violating a contract by declining to issue a one-year renewal for support services associated with VMware’s perpetually licensed software. AT&T claims that its contract, which predates Broadcom’s acquisition of VMware, grants it three one-year renewals of support for its perpetual licenses. Currently, the telecom behemoth is seeking to activate the second of these renewals.
AT&T heavily depends on VMware tools, managing 75,000 virtual machines (VMs) spread across roughly 8,600 servers. These VMs are essential for critical customer services and operational efficacy, making ongoing support a crucial issue for AT&T. The corporation has brought its case to the Supreme Court of the State of New York, looking for an injunction to prevent Broadcom from ceasing VMware support services and requesting additional relief as warranted.
#### Broadcom’s Counterargument: The Move to Subscription Models
Broadcom, which took over VMware in November 2023, has adopted a robust position in its defense. The firm maintains that VMware was already shifting from perpetual licenses to a subscription model before the acquisition, a change that AT&T should have foreseen. Broadcom argues that AT&T had sufficient time to adjust to this shift and could have transitioned to a different provider or adopted a subscription format.
In its legal documents, Broadcom points out an “End of Availability” clause in the agreement, allowing VMware the right to phase out products and services at any time with notice. Broadcom also emphasizes that AT&T chose not to purchase the support services it is now attempting to enforce, despite knowing about the forthcoming transition in business models.
Broadcom’s filing dismisses AT&T’s claims of “bullying tactics” and “price gouging” as exaggerated distractions aimed at diverting the court’s attention from the main issue. According to Broadcom, the straightforward reality is that AT&T did not take the necessary steps to lessen the effects of the transition, despite having considerable time to do so.
#### AT&T’s Worries: Public Safety and National Security at Stake
AT&T’s lawsuit underscores the possible ramifications of losing VMware support, especially concerning public safety and national security. The company contends that 22,000 of its VMware VMs are utilized to support services for millions of first responders, including police, firefighters, paramedics, and emergency personnel. Furthermore, AT&T argues that communications for the Office of the President could be at risk without ongoing VMware support.
Broadcom, however, argues that AT&T has alternative options and that any damage caused by the loss of support could be compensated through monetary damages. The company asserts that AT&T could have averted the situation by entering into a subscription-based agreement or shifting to another solution. Broadcom also challenges the legitimacy of AT&T’s request for a mandatory injunction, stating that such injunctions are typically granted only in exceptional circumstances, which it claims do not apply here.
#### The Wider Industry Landscape: The Decline of Perpetual Licenses
The conflict between AT&T and Broadcom reflects a larger movement in the software sector: the transition from perpetual licenses to subscription-based models. Perpetual licenses permit customers to utilize software indefinitely, with optional support services available for an extra fee. Conversely, subscription models mandate that customers pay recurring fees for access to software and support, often bundled with supplementary products and services.
Broadcom’s choice to terminate VMware perpetual license sales shortly after its acquisition has sparked discontent among many customers. The company has also instituted other significant changes, such as directly engaging with VMware’s largest clients instead of collaborating with channel partners and increasing prices through product bundling and raised CPU core requirements. These actions have prompted some clients to reconsider their association with VMware, despite the difficulties and costs tied to migrating away from the platform.
#### Customer Discontent and the Search for Alternatives
Broadcom’s assertive business strategies have not gone unnoticed. The company’s reputation for restructuring acquired firms and enacting sweeping changes has raised alarms among VMware customers and partners. Many organizations, AT&T included, are now investigating alternatives to VMware, although the extensive integration of VMware products into many IT infrastructures makes migration a complicated and costly endeavor.
Third-party support providers, like Spinnaker Support, are striving to take advantage of the uncertainty surrounding VMware’s prospects. These companies
