AT&T Raises Alarm Over Extreme VMware Price Hike After Broadcom Acquisition

Viktoria Ivanova

4 min read

Post on May 26, 2025

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The Scale of the VMware Price Hike

AT&T hasn't publicly disclosed the exact percentage increase they're facing, but reports suggest some customers are experiencing price jumps exceeding 20%, and in some cases, even higher. This dramatic VMware price increase isn't isolated to a single product; it's impacting a broad range of VMware offerings.

• Significant increase in licensing fees for vSphere: The core virtualization platform is seeing substantial cost increases, impacting the foundation of many businesses' IT infrastructures.
• Price jumps for VMware Cloud on AWS: Businesses utilizing hybrid cloud solutions are also experiencing steep price increases, adding to the overall cloud computing costs.
• Increased costs for support and maintenance contracts: The already significant expense of maintaining VMware environments is escalating, potentially putting a strain on IT budgets.

The potential financial burden is considerable, particularly for smaller companies with limited IT budgets. This unexpected cost increase could force difficult choices, such as delaying upgrades, reducing services, or even hindering growth. While precise data on the average price increase across all customers is unavailable, anecdotal evidence from various sources paints a consistent picture of a significant financial impact.

Broadcom's Role in the VMware Price Hike

Broadcom's $61 billion acquisition of VMware in 2023 is at the heart of this controversy. While Broadcom has not directly stated that the price increases are a result of the acquisition, the timing is highly suggestive. Their motives could be multifaceted:

• Increased acquisition costs: The enormous cost of the acquisition may be driving the need to increase profitability quickly through price hikes.
• Strategies to maximize profits post-acquisition: Increasing prices after an acquisition is a common tactic to quickly improve profit margins.
• Consolidation of services leading to price adjustments: The merging of VMware's services with Broadcom's existing portfolio might lead to restructuring and subsequent price adjustments.

The long-term impact of Broadcom's ownership on VMware's pricing strategy remains uncertain. Antitrust concerns are emerging, with some regulators potentially investigating the acquisition and subsequent price increases for potential anti-competitive practices.

AT&T's Response and Industry Reaction

AT&T's public statement expressing concern over the substantial VMware price hike has ignited a wider discussion within the industry. The telecommunications giant's vocal opposition signals a potential turning point, encouraging other affected businesses to speak out. The industry's response is varied but generally reflects a shared sense of unease:

• Concerns about vendor lock-in: Many businesses rely heavily on VMware, making it difficult to switch vendors due to extensive integration and potential compatibility issues.
• Exploration of alternative virtualization solutions: The price hike is prompting companies to explore open-source alternatives like Proxmox VE, OpenStack, or other commercial solutions like Citrix XenServer or Microsoft Hyper-V.
• Calls for greater transparency from VMware and Broadcom: Businesses are demanding more clarity regarding the pricing adjustments and a justification for the magnitude of the increases.

The potential for class-action lawsuits or other legal actions remains a possibility, depending on further investigation and the response of regulatory bodies.

Strategies for Businesses Facing the VMware Price Hike

Businesses facing this unexpected cost increase need to proactively develop strategies to mitigate its impact. The following approaches can help:

• Negotiate contracts with VMware: Attempting to negotiate lower prices or more favorable contract terms is crucial, especially for long-term customers.
• Explore alternative virtualization technologies: Investigating open-source alternatives or other commercial options can provide a cost-effective solution.
• Optimize VMware deployments to reduce licensing costs: Analyzing current deployments to identify areas for efficiency and cost reduction can help minimize expenses.
• Budgeting and financial planning adjustments: Adjusting IT budgets and long-term financial plans to accommodate the increased costs is vital for future stability.

The VMware price hike necessitates a shift in long-term IT budgeting and planning. Businesses must factor in potential price increases when forecasting future IT spending.

Conclusion

Broadcom's acquisition of VMware has resulted in a substantial VMware price hike, causing significant concern among businesses, notably AT&T. The sharp increases raise serious questions about antitrust implications and the future of VMware's pricing model. Businesses must proactively address these increased costs to avoid crippling their IT budgets. Don't let the unexpected VMware price hike cripple your IT budget. Explore alternative strategies and solutions to mitigate the impact of this significant cost increase. Research alternative virtualization options and prepare for future negotiations to effectively manage your VMware costs. Stay informed about the latest developments in the VMware price hike situation.