AT&T claims VMware faces tenfold price increase under Broadcom

Dive Summary:

• AT&T said the prospect of a more than tenfold increase in VMware’s annual costs triggered its decision to take legal action against VMware’s parent company, Broadcom. an august email EVP and GM Susan Johnson sent a message to Broadcom President and CEO Hock Tan.
• “After more than 10 years of strategic relationship with Broadcom… I regret to inform you that we have reached an impasse on our VMware deal,” Johnson said in the email, noting that AT&T was facing a 1,050% annual raise offer. VMware invoice.
• The email was introduced into evidence in the New York State Supreme Court on Friday. AT&T’s injunction lawsuit It stems from changes to VMware product licensing announced late last year after Broadcom completed its $61 billion acquisition of the virtualization software company in November. Broadcom has extended support for AT&T’s VMware deployments until October 21.

Diving Information:

In addition to the email, AT&T also filed affidavits from Johnson and two of the company’s technology executives on Friday. Disputes Broadcom’s claims AT&T had time to find a VMware alternative and switch to it.

“There was nothing in the email I sent to Mr. Tan on August 19 to suggest that migrating from VMware software would be easy, fast or cheap.” Johnson said in his statement:. “My understanding is that migrating from VMware software will be a time-consuming process (taking years) and will require significant effort from AT&T at great expense.”

Broadcom ends sales of VMware perpetual licenses and simplifies its software suite in favor of a subscription-based model A double package offer in December. VMware customers later reported major cost increases According to Forrester, many have begun to look for alternative solutions.

“Customers are telling us it costs an arm and a leg,” Forrester Principal Analyst Naveen Chhabra said at a Forrester conference last month. “Most Forrester customers I spoke to were outraged.”

Johnson stated in the email that spinning the company off of VMware would cost between $40 million and $50 million. He also said the investment would yield quick returns considering the proposed master’s degree costs.

“As a result, we plan to prioritize investment for the transition from VMware,” Johnson told Tan in the email.

AT&T runs 75,000 VMware virtual machines on approximately 8,600 servers, according to court testimony. It claims that discontinuing support for these distributions would create operational and security risks.

“VMware software is built into the products that AT&T purchases from its vendors and uses to maintain the operation of the network,” said Gordon Mansfield, AT&T Vice President of Global Technology Planning. he said in a statement. “Therefore, AT&T cannot make a unilateral decision to discontinue use of VMware software. Instead, AT&T must work with its suppliers to replace VMware software and develop a different solution.”

AT&T also disputed Broadcom’s claim. 20 September memorandum He said he was using “very old versions of software, some of which were already running unsupported due to AT&T’s lack of upgrades.”

Only 3% of AT&T servers are currently running older versions of VMware. friday statement By David Brickhaus, Vice President, Global Technology and Operations. Support services for these deployments ended on March 15.

“The vast majority of AT&T’s operations rely on the remaining approximately 97% of physical servers using existing VMware software for which the defendants currently provide support services,” Brickhaus said.