Top 10 Lessons from Broadcom vs AT&T
When Broadcom acquired VMware, the shockwaves hit every VMware customer – none more publicly than AT&T.
The telecom giant’s 2024 legal battle with Broadcom over VMware support and licensing revealed what could go wrong for customers caught in a vendor’s post-acquisition power play.
AT&T was facing a 1,050% increase in VMware costs, a potential cutoff of critical support, and had to take Broadcom to court just to keep its systems running.
If you’re a VMware customer (whether in IT, procurement, or legal), this case isn’t just tech news – it’s a playbook of what to watch out for and how to defend your organization.
For a complete overview, read our ultimate guide – Broadcom Audit Defense 101: Strategies to Handle Broadcom/VMware/CA/Symantec License Audits.
Why the AT&T case matters:
Broadcom’s takeover of VMware upended many “business-as-usual” assumptions about licensing and support.
AT&T’s dispute highlights extreme vendor tactics from ending perpetual license support to massive price hikes – and how a savvy customer can push back. The lessons below are distilled from that showdown, presented as insider advice.
Each lesson is framed as a Pitfall → Risk → Defensive Strategy, so you can identify where others stumbled and how to protect your company.
Let’s dive into the top 10 lessons VMware customers should take away from the Broadcom vs. AT&T saga.
Lessons Learned from the Broadcom-AT&T Dispute
Lesson 1: Don’t Assume “Perpetual” Licenses Mean Perpetual Support
Pitfall:
Assuming a perpetual VMware license guarantees you can renew support indefinitely under the same terms. AT&T believed its long-term VMware contract ensured ongoing support renewals for legacy software.
Risk:
Vendors can hide behind “End-of-Availability” (EoA) clauses or policy changes to retire products and their support. In Broadcom’s case, it claimed VMware had the right to discontinue certain support “at any time with notice.”
That nullified AT&T’s expected renewal rights. The risk is finding yourself suddenly unable to get critical patches and upgrades, even though you still legally own the licenses – a precarious position for any enterprise.
Defensive Strategy:
Scrutinize your contracts for any clauses about product retirement or support sunsets. Negotiate explicit renewal rights that override vendor EoA policies. For example, insist on language that “Customer may renew support for at least X years for any licensed product, regardless of general availability status.”
If a vendor announces an end-of-life, make sure they commit in writing to either support you through a defined transition period or offer a comparable product/support alternative.
The goal is to eliminate any ambiguity: if you bought a “perpetual” license, you should get the option of perpetual support (at least for a reasonable timeframe) on your terms, not just at the vendor’s whim.
Lesson 2: Beware the Post-Acquisition Price Shock
Pitfall:
Being caught off guard by massive price hikes after a vendor is acquired. It’s easy to assume your renewal costs will follow historical trends (a few percent increase, perhaps) – wrong.
AT&T was staggered by a 1,050% increase proposal for its VMware renewal under Broadcom. This wasn’t a normal inflation bump; it was essentially a forced move to an expensive subscription bundle that AT&T didn’t want.
Risk:
Such extreme uplifts can blow up IT budgets and leave you with no viable way to continue using a mission-critical platform.
A tenfold price jump is effectively a “quit or pay a ransom” ultimatum. If you’re unprepared, you might end up either signing a horrible deal under duress or having unsupported systems because you can’t pay the new freight.
Defensive Strategy:
Anticipate acquisition-driven changes. The moment you hear your vendor is being acquired (especially by a firm with a cost-cutting or monetization-heavy reputation, like Broadcom), assume the pricing model will change – and not in your favor.
Lock in multi-year renewals before the acquisition closes, if possible, to buy time. Negotiate price caps in advance: e.g., “Support fee increases shall not exceed __% annually or __% upon renewal.”
If the vendor is pushing a subscription model, model out the long-term costs vs. your perpetual maintenance – and use that data to negotiate.
Remember, you have leverage before you sign: push for provisions that, if the product line or licensing model changes, you are granted grandfathered rights or at least a reasonable transition period with old pricing.
The key lesson is not to be passive – proactively seek protections so a merger doesn’t suddenly multiply your costs overnight.
Lesson 3: Renewal Rights Are Useless If You Don’t Exercise Them Properly
Pitfall:
Missing a renewal notification or failing to formally exercise your renewal option within the required timeframe. In the AT&T case, Broadcom argued that AT&T “opted not to renew” its support in time, and only changed its mind later when faced with Broadcom’s new terms.
Whether this claim was accurate or not, it highlights a trap: even if you have renewal rights on paper, they mean nothing if you don’t follow the exact process and timeline to invoke them.
Risk:
If you miss a renewal deadline, the vendor can claim you’re now out of contract and force you onto whatever new deal they prefer. In court, Broadcom essentially said, “AT&T knew about our model change for months and still didn’t renew when it could have – so this crisis is of its own making.”
Don’t give your vendor that opening. The risk isn’t just losing the renewal; it’s losing credibility if a dispute arises. A judge might be less sympathetic to your injunction request if it looks like you dragged your feet.
Defensive Strategy:
Diaries and documentation. Track all support contract end dates well in advance to ensure timely renewal. If you have an option to renew for X years, mark the last possible date you must notify the vendor – then notify them far earlier and in writing (with proof).
Follow the contract’s specified method (e.g., some agreements require written notice 30 days before expiration via certified mail to a specific address – follow that exact procedure).
Obtain written confirmation from the vendor that they have received your renewal notice and that the support term has been extended. It’s also wise to save any emails or portal messages where the vendor announces changes (like “we are discontinuing perpetual support”).
Those can serve as evidence if, later, the vendor claims you had “fair warning” – you can show that you responded appropriately.
In short, exercise your rights promptly and document all relevant details. This prevents the “you snooze, you lose” argument from the vendor.
Lesson 4: Understand Your Vendor’s “Retire and Replace” Tactics
Pitfall:
Believing that a vendor will continue offering your current solution just because you want to keep buying it. Broadcom’s strategy with VMware has been to retire old SKUs and push bundles.
They streamlined VMware’s portfolio into a handful of pricey bundles and ended sales of standalone support renewals for legacy perpetual licenses. That means even if you’re waving money to renew your old support, the vendor might say, “Sorry, that product is discontinued – here’s a (more expensive) alternative.”
Risk:
You could be forced into a “bundle or nothing” scenario. AT&T was told to purchase hundreds of millions of dollars in subscription packages (including extra products/services it didn’t need) to maintain support on the software it did use.
The risk is overspending on shelfware or losing support entirely if you refuse the bundle. It’s essentially vendor lock-in via product obsolescence: your options narrow to either accept the new bundle or undertake a costly migration away under time pressure.
Defensive Strategy:
Contractual safeguards and negotiation. Aim to include clauses that protect against forced bundling. For example: “If Vendor discontinues the current support offering, Customer may renew under substantially similar terms for the products in use, without requirement to purchase additional products.”
Also, negotiate “fungible” credit: if a particular software or support level is retired, the contract could stipulate that you receive equivalent value in the new model without a steep increase. In practice, if confronted with a bundle-or-nothing proposal, escalate within the vendor’s organization.
Make it clear you’re willing to pay for what you use, but not to be extorted into extras. Sometimes vendors will quietly offer a custom deal (e.g. a private SKU or discount) to retain a big customer.
Broadcom, despite its hardball approach, has shown flexibility for its largest customers when pushed. The lesson: don’t accept a “take-it-or-leave-it” bundle at face value – push for a middle ground where you’re paying a fair support fee for just what you need.
Lesson 5: Litigation is a Last Resort – But Know How to Leverage It
Pitfall:
Thinking that if worst comes to worst, you can just sue and quickly get what you want. Lawsuits are a tool, yes, but they are slow, public, and can irreparably damage a vendor relationship.
AT&T’s filing of a lawsuit was a nuclear option after negotiations stalled. It sought a preliminary injunction to force Broadcom/VMware to keep providing support. If you assume you’ll automatically get such court relief, that’s a dangerous pitfall.
Risk:
Courts do not rubber-stamp injunctions, especially in commercial disputes. Broadcom argued in court that granting AT&T an injunction would effectively give AT&T the full benefit (support through 2025) without a trial – and that New York courts rarely do that in contract cases.
If the judge had agreed with Broadcom (denying the injunction), AT&T might have been out of support while the lawsuit dragged on – a nightmare scenario.
Additionally, litigation exposes your sensitive information: confidential contract terms and emails can become public. And it’s expensive; even if you’re in the right, it can take months or years to resolve, during which your business might suffer.
Defensive Strategy:
Use legal threats wisely, and early if needed. The best outcome is avoiding court – but to do that, the vendor must believe you are willing to go to court. Don’t be afraid to engage legal counsel early in negotiations if things start to go south. A strongly worded letter citing breach of contract and hinting at an injunction can sometimes move the needle.
In AT&T’s case, once litigation was on the table, Broadcom did agree to temporary concessions (extending support a bit longer, etc., as we’ll discuss next). If you do have to file suit, ensure you have a clear contractual basis (e.g., an explicit renewal clause that the vendor has violated).
Show that you tried all avenues (that helps in court to prove you’re the reasonable party). And as noted, do it before the situation becomes an emergency – waiting until a week before your support ends (as AT&T did) is risky.
In summary: keep litigation as a last resort, but prepare for it in your strategy. The mere ability to seek an injunction can be a powerful leverage point in negotiating with an uncooperative vendor, but you must have your ducks in a row for it to work.
Lesson 6: Secure a Bridge – Don’t Let Support Lapse During Disputes
Pitfall:
Allowing your support contract to expire while you’re still negotiating or fighting the vendor. In a standoff, time can be your enemy – if the clock runs out, you’re in “unsupported” territory. Many companies hesitate to pay anything once a dispute is in motion (“Why should we pay more? It’s not fair!”), But that can backfire if systems break.
Risk:
Losing support means no updates, no security patches, and no help if something goes wrong. For mission-critical infrastructure (think data centers, networks, etc.), this is playing with fire.
You also lose leverage once you’re out of contract; the vendor has zero obligation to assist. In AT&T’s case, imagine the negotiating disadvantage if Broadcom had actually cut off support for those 75,000 VMs – AT&T would be facing outrage from its own users and perhaps regulators. That pressure could force a quick capitulation to vendor demands, undoing any legal progress.
Defensive Strategy:
Always secure an interim support arrangement. This could be as simple as requesting a month-to-month extension while negotiations continue. Broadcom, under pressure, agreed to temporarily extend AT&T’s support (first to October, then later through the settlement period) instead of cutting it off in September.
You may have to pay something for this bridge period – that’s fine. It’s significantly less expensive than a major outage or emergency migration. Put the interim deal in writing and keep it strictly short-term to avoid prejudicing your dispute. If a vendor is unwilling, a court injunction is another path (if you have grounds).
But ideally, both sides should want to avoid a disastrous service cutoff. As a negotiating tactic, raise the issue of continuity early: “Regardless of our differences, let’s agree on a support extension for X months so our users aren’t harmed while we sort this out.”
This keeps the business running and buys you time to either negotiate a resolution or complete a migration if that ends up necessary. Never let the ticking clock be used against you.
Lesson 7: Have a Plan B (and C) – Migration Threats Only Work if Real
Pitfall:
Relying on empty threats to leave the vendor. AT&T signaled it was prepared to migrate off VMware if Broadcom’s terms remained unreasonable.
This was a key part of AT&T’s strategy – essentially saying, “We’d rather invest in moving away than be held hostage.” The pitfall is when companies bluff about leaving but haven’t actually done the homework. Vendors can smell a bluff if you have no concrete plan.
Risk:
If your threat to switch is not credible, it has zero leverage – or worse, it can provoke the vendor to play hardball (since they think you’re stuck anyway). Broadcom countered AT&T by revealing internal emails in which AT&T discussed its migration plans.
Broadcom’s spin: “See, AT&T was planning to leave VMware regardless, so they’re not truly being harmed – this lawsuit is just posturing.” In general, if you warn “We’ll dump your product,” be prepared for the vendor to call that bluff. If you can’t actually do it, you may end up with no bargaining power and a strained relationship.
Defensive Strategy:
Develop a legitimate exit strategy well in advance of when you need it. Even if you hope never to use it, having a Plan B (alternative technology or provider) changes the game. Assess other virtualization platforms or cloud solutions; consider containerization or other approaches that may reduce reliance on VMware.
Start pilot projects or at least feasibility studies. The goal is to be able to say (and show): “We have evaluated alternatives and are prepared to transition X% of workloads by Y date if needed.” In negotiations, don’t bluster angrily – instead, calmly let the vendor know you do have options.
For example: “We prefer to stay with VMware if terms are fair, but our leadership has approved exploration of other platforms given the uncertainty.” This was essentially AT&T’s stance. It likely helped Broadcom negotiate a settlement, as losing a marquee customer (and the negative PR of AT&T publicly walking away) would have hurt Broadcom’s business.
The takeaway: make your threat credible. And if the vendor still doesn’t budge, you’re in a position to actually execute the migration without scrambling. (Side benefit: if you do migrate some systems as a test, you reduce your dependency and gain more leverage in future talks.)
Lesson 8: Choose Your Battleground – Jurisdiction Matters
Pitfall:
Overlooking the importance of jurisdiction and dispute forum in your contracts. When things go south, knowing where and how to pursue a remedy is crucial. AT&T’s contract allowed it to sue in New York state court, which provided a local venue and enabled it to seek a quick injunction.
Some other customers weren’t so lucky – for instance, another large enterprise ended up entangled in a dispute with VMware/Broadcom over licensing issues, with the case being debated over whether it should be heard in the U.S. or Germany.
If your contract mandates arbitration or a distant forum (such as California or another country), you may be limited in an urgent situation.
Risk:
A poor forum can delay or hinder your ability to obtain relief. Imagine if AT&T had to arbitrate this dispute – there’d be no quick injunction, just a slow arbitration process while support could have been cut off.
Or, if AT&T were forced to sue in a foreign court or a vendor-friendly jurisdiction, it might not have even received a temporary hearing before the support expiration.
The risk is losing by default because the odds are stacked against you procedurally. Vendors often have home-court advantage in their standard terms, which works against customers when push comes to shove.
Defensive Strategy:
Negotiate the dispute resolution clause upfront. It may seem boring when you’re signing a deal, but it’s a lifesaver in a crisis. Push for your home turf or at least a neutral, convenient forum. If you’re a large customer, you often have the clout to avoid one-sided clauses.
At minimum, carve out the right to seek injunctive relief in court even if the contract has an arbitration clause (e.g., “Notwithstanding the above, either party may seek temporary or preliminary injunctive relief in [your state] courts for any issue of threatened irreparable harm.”).
In short, set the stage so you can actually fight if needed. AT&T’s ability to file in New York on familiar legal ground was an advantage.
You want the same ability – to get a judge to listen on short notice if the vendor relationship goes off the rails. Don’t wait until a dispute arises to find out you agreed to resolve it in an inconvenient (or vendor-friendly) venue.
Lesson 9: Public Pressure Can Be a Double-Edged Sword
Pitfall:
Keeping the dispute entirely private or, conversely, going scorched-earth in the public eye too soon. AT&T’s approach was very public – it filed a lawsuit that became headline news, highlighting how cutting off VMware support could endanger 911 emergency services and national security.
This clearly put reputational pressure on Broadcom. However, Broadcom responded by accusing AT&T of “sensationalism” and insisted there was no real irreparable harm. So, there’s a balance to strike.
Risk:
If you suffer in silence, the vendor might not feel urgency to compromise – they might assume you’ll eventually cave. On the other hand, if you go public (through press releases, executive quotes criticizing the vendor, etc.), you risk irreparably damaging the relationship.
The vendor may become even more defensive (as Broadcom did, doubling down in legal filings,) and your partnership moving forward could be damaged. Also, airing how dependent your operations are on the vendor can expose you to shareholder or customer anxieties.
Defensive Strategy:
Leverage publicity strategically, not impulsively. First, conduct yourself reasonably in private negotiations. If those fail and the issue is critical (e.g., potential outages, massive cost impacts), then consider raising the stakes.
Sometimes, just informing the vendor that you’re prepared to escalate (e.g., “We will have to notify our regulators/customers about this risk” or “We might involve our industry press contacts”) can push them to be more reasonable.
If you do go public, focus on facts and impacts (as AT&T did by outlining who would be hurt by a cut-off) rather than pure emotion. This helps rally sympathetic stakeholders to your side.
Also, be mindful of keeping doors open for a settlement – don’t make it so adversarial that the vendor won’t return to the table. Ultimately, AT&T’s public pressure, combined with legal action, prompted Broadcom to negotiate a settlement in principle.
The lesson: know the power of your voice – use it when you need to highlight unfair practices, but always with a purpose (to bring about a deal) rather than just to vent.
And once a resolution is reached, both parties will likely want to move forward quietly, as happened here with a private settlement.
Lesson 10: Be Proactive, Not Reactive – The Best Defense is Preparation
Pitfall:
Waiting until you’re in the same tight spot as AT&T to take action. It’s natural to focus on immediate business and assume a major vendor won’t rock the boat too much. But hope is not a strategy.
Many VMware customers were complacent until Broadcom’s new policies hit them. By the time you’re facing a shocking quote or a non-renewal notice, you’re already on the back foot.
Risk:
Without preparation, you could find yourself with no leverage, no plan, and a ticking clock. That often leads to unfavorable outcomes – either signing a terrible contract out of panic or undergoing a rushed migration.
Plus, if the dispute escalates, you might discover too late that you lack evidence or contractual language to back your position. In the worst case, you could suffer downtime or breach your own commitments to customers because you didn’t foresee the vendor’s move.
Defensive Strategy:
Plan your defense well in advance of when you need it. Treat major vendor contracts as living strategies, not just paperwork. If you know a renewal or significant change is coming in 1-2 years, start scenario planning now.
Some proactive steps to consider:
- Review all entitlements and obligations: Know exactly what you’re entitled to (support terms, renewal options) and what your responsibilities are. This helps you spot if the vendor tries to deviate from the contract and ensures you comply (so they can’t counterattack with an audit claim).
- Monitor vendor signals: Broadcom/VMware gave clues early – announcements ending perpetual licenses, bundling products, etc. Stay plugged into vendor communications, earnings calls, and user communities. Early knowledge enables you to act promptly (for example, renewing ahead of a price change or accelerating an alternative technology pilot).
- Build vendor negotiation leverage: This could mean consolidating your spend for volume discounts, or timing purchases to align with the vendor’s fiscal year-end (when they’re desperate for deals). It could also mean maintaining good executive relationships – so you can escalate quickly to someone who can bend a policy. Leverage can even come from collective action, such as informally networking with other customers to share tactics or hiring third-party licensing consultants who are familiar with the vendor’s playbook.
- Establish an exit strategy: As discussed, always have a fallback (alternate vendors, cloud migrations, etc.). Keep it updated; technology moves fast, and what was unthinkable (moving off VMware) might become feasible within a year or two with the right investment.
- Audit readiness: Proactively audit your own usage of the vendor’s software. Close any licensing gray areas or over-deployments now. If you ever get into a showdown, you do not want the vendor turning it into an audit dispute (for example, VMware sued another large customer over alleged unauthorized use in a related case – a distraction you don’t need). Being squeaky clean deprives the vendor of that diversion and keeps the focus on the real issues.
In short, the winners are proactive. They don’t wait for an official notice or a lawsuit threat. They anticipate potential pitfalls (such as a vendor acquisition or strategic shift) and lay the groundwork to handle them effectively.
This way, if a scenario like Broadcom vs. AT&T ever comes to your doorstep, you’ll be ready to handle it calmly from a position of strength, not panic.
Read about Broadcom VMware audits.
Defensive Checklist for VMware Customers
Learning from AT&T’s experience, here’s a quick checklist to fortify your position before renewal or compliance issues escalate:
- ✅ Contract Review: Pull out your VMware/Broadcom contracts and identify clauses on support renewals, price increases, termination, and dispute resolution. Highlight any “Vendor may discontinue support” language and plan to address it.
- ✅ Renewal Timeline: Note all support end dates and renewal option deadlines. Set reminders at 6, 3, and 1 month out. Don’t miss any notice dates – send renewal intent letters early.
- ✅ Document Everything: Keep a log of all communications with the vendor regarding product changes or renewal offers. Save emails, portal announcements, meeting notes – this paper trail could be your evidence if things go legal.
- ✅ Budget for Increase (But Set Limits): Assume your next quote could be substantially higher. Secure budget contingency, but also decide your walk-away price. Know the point at which you’d rather invest in alternatives than overpay for VMware.
- ✅ Alternative Assessment: Regularly evaluate other solutions (cloud services, other hypervisors like Hyper-V/Nutanix, container platforms, etc.). Even if you stick with VMware, understanding alternatives gives you negotiating context and emergency options.
- ✅ Internal Alignment: Brief your leadership about Broadcom’s known tactics and the potential impacts. It’s easier to get support for tough decisions (such as litigation or migration) if executives and stakeholders are not caught off guard.
- ✅ Leverage Opportunities: Talk to your account manager about incentives – for example, “What if we extend our support for 3 years now?” or “What discounts can you offer if we consider subscribing to some products?” Let them know you’re an informed customer.
- ✅ Check License Compliance: Perform an internal audit of your VMware deployments. If you find any usage beyond your licenses, fix it or negotiate proper licenses now. You do not want a compliance dispute overshadowing a renewal fight.
- ✅ Plan for Support Cutoff: In a worst-case scenario, what’s your plan if support truly ended? Identify which systems would be at risk and how you’d mitigate (e.g., accelerating a migration, purchasing third-party support, or last-minute one-time patches). Having this contingency mapped out will reduce panic if the vendor issues an ultimatum.
- ✅ Legal Game Plan: Consult with legal counsel about your contract rights well before they’re needed. Have them draft what-if strategies (for injunction, breach notice, etc.). This way, if you need to act, you won’t be starting from scratch under time pressure.
By running through this checklist periodically, you’ll greatly reduce the chances of being blindsided. It’s all about being one step ahead of the vendor’s next move.
Also read, Broadcom VMware Audits: Connor Consulting, Cease-and-Desist Letters, and How to Respond.
Sample Contract Clauses to Protect Your Interests
To further bulletproof your agreements, consider adding clauses like these in your VMware (or any key software) contracts.
These examples address renewal rights, price caps, and protection against forced migrations – exactly the pain points highlighted by the AT&T case:
- Renewal Rights Clause: “Customer shall have the option, at its sole discretion, to renew support services for each licensed Product for up to __ additional one-year terms (or until a stated date), under the same scope of services. Vendor’s discontinuation of a product or support offering shall not impede Customer’s ability to renew support for any licenses already purchased.”
(This ensures you maintain the right to renew support on legacy products you’re still using, regardless of the vendor’s later business model changes.) - Price Cap/Uplift Limit: “Any increase in fees for support or subscription renewals shall not exceed __% of the prior term’s fees per year. In the event of a broader product licensing model change (e.g., shift to subscription bundles), equivalent support for Customer’s existing licensed usage shall be offered at no more than __% above the last-paid annual amount (prorated as needed).”
(This clause protects you from outrageous hikes by capping annual increases and by limiting how much more you’d pay even if the pricing model changes. It forces the vendor to offer a more reasonable transition cost.) - Product Retirement & Migration Protection: “Vendor will provide at least __ months’ notice before the End-of-Life (EOL) or End-of-Support for any Product used by Customer. If a Product is retired, Vendor shall either (a) continue support for Customer’s installed licenses for a minimum of __ years post-EOL, or (b) offer a replacement product with substantially similar functionality. Any such replacement shall be provided to Customer with a credit for the remaining value of the discontinued Product’s licenses and support, to avoid stranded investment.”
(This clause makes sure the vendor can’t abruptly yank support. If they do retire something, they must either keep supporting you for a while or give you a fair replacement so you’re not forced into a costly repurchase.)
Each organization’s needs vary, so tailor the numbers (for notice period, percentage caps, years of support, etc.) to fit your risk tolerance and negotiating power.
The key is to explicitly address the scenarios of concern: dramatic price increases, product discontinuation, and forced migrations. By baking these protections into your contracts now, you can save yourself huge headaches later.
Read about our Broadcom Audit Defense Service.
