1,050% VMware Price Increase: AT&T Details Broadcom's Proposed Hike

Kenji Nakamura

5 min read

Post on May 13, 2025

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The 1,050% VMware Price Increase: A Detailed Breakdown

The sheer magnitude of the proposed 1,050% VMware price increase is unprecedented. While the exact details of which specific VMware products or services are affected haven't been fully disclosed, reports indicate a substantial hike across multiple licensing tiers. This translates to crippling cost increases for businesses that rely on VMware's virtualization solutions.

For example, a small business currently paying $10,000 annually for VMware licensing could face a bill of $105,000. Larger enterprises with extensive VMware deployments will face proportionally even larger increases, potentially impacting their budgets and operational efficiency significantly. AT&T's public statements highlight this extreme cost burden, painting a concerning picture for businesses nationwide.

• Specific VMware products impacted: While Broadcom has not released a comprehensive list, reports suggest that the increase affects a wide range of VMware products, including vSphere, vSAN, and vRealize.
• Calculation of the price increase for different licensing tiers: The 1,050% increase isn't uniform across all tiers. Lower-tier licenses might see a slightly smaller percentage increase, but the overall impact remains substantial and financially burdensome for all customers. Further details are expected from Broadcom.
• Examples of businesses affected (different industries, sizes): The price increase impacts businesses across various sectors, from telecommunications giants like AT&T to small and medium-sized enterprises (SMEs) relying on VMware for their IT infrastructure.

Broadcom's Acquisition and its Impact on VMware Pricing

Broadcom's acquisition of VMware, finalized in late 2022, has undeniably set the stage for this dramatic VMware price increase. While Broadcom hasn't explicitly stated the price hike was a direct consequence of the acquisition, the timing and magnitude suggest a strong correlation.

Several factors could be contributing to the drastic price increase:

• Increased profit margins: Post-acquisition, Broadcom may be aiming to increase its profit margins by significantly raising VMware's licensing costs.

• Consolidation of resources: The acquisition might lead to streamlined operations and cost reductions for Broadcom, allowing them to raise prices without significantly impacting their own profitability.

• Market dominance: The VMware price increase could solidify Broadcom's market position, potentially squeezing out smaller competitors and reducing the choices available to businesses seeking alternative virtualization solutions.

• Timeline of the Broadcom-VMware acquisition: The acquisition was announced in May 2022 and officially closed in late 2022, with the price increase announcements following shortly after.

• Potential reasons for the price hike: Besides the points above, other potential reasons could include inflation and general increases in software licensing costs, however the magnitude of the increase far surpasses typical industry trends.

• Analysis of potential antitrust concerns: The dramatic price hike has raised significant antitrust concerns, leading to scrutiny from regulatory bodies. Investigations into potential monopolistic practices are likely.

The Fallout: Reactions and Potential Consequences

AT&T's public response to the proposed VMware price increase has been one of considerable concern and likely involves negotiations with Broadcom to mitigate the impact. The company's response highlights the severity of the situation and the potential for widespread disruption across the industry.

The broader industry response has been equally strong, with many businesses expressing alarm at the potential financial burden. The fallout could include:

• Reduced adoption of VMware technologies: Businesses may choose to postpone upgrades or explore alternative virtualization platforms due to the increased cost.

• Increased operational costs: The sudden surge in licensing costs may significantly impact IT budgets and force businesses to make difficult decisions about resource allocation.

• Shift to open-source alternatives: The exorbitant increase could accelerate the adoption of open-source virtualization technologies as a more cost-effective alternative.

• AT&T's public statements and actions: AT&T has publicly voiced its concerns about the price increase, emphasizing the substantial impact it will have on its operations.

• Responses from other major companies using VMware: Other large enterprises using VMware are likely facing similar challenges and are expected to publicly voice their concerns and potentially join forces to negotiate better terms with Broadcom.

• Potential legal challenges and regulatory actions: Antitrust investigations and potential legal challenges from affected businesses are highly possible, especially given the sheer magnitude of the price increase.

• Alternative virtualization solutions that businesses may consider: Companies are actively exploring solutions from competitors like Citrix, Nutanix, and open-source platforms like Proxmox VE.

Exploring Alternative Virtualization Solutions

The 1,050% VMware price increase has ignited a renewed interest in alternative virtualization solutions. Businesses are now actively exploring options to reduce their reliance on VMware and its inflated pricing. Open-source platforms like Proxmox VE offer a cost-effective alternative, while commercial competitors like Citrix and Nutanix provide feature-rich alternatives.

These alternatives come with their own advantages and disadvantages. While open-source solutions might require greater technical expertise to implement and manage, they offer significant cost savings. Commercial alternatives often come with robust support and features, but may still be considerably more affordable than VMware's current pricing structure. A thorough cost-benefit analysis is crucial before switching.

Conclusion

The 1,050% VMware price increase following Broadcom's acquisition is a watershed moment for the virtualization industry. The sheer magnitude of the increase, coupled with AT&T's public outcry, highlights the significant financial burden faced by businesses relying on VMware. This situation raises serious concerns about market dominance, antitrust implications, and the overall cost of enterprise software.

Assess your VMware spending immediately. Explore alternative solutions, such as open-source platforms or commercial competitors. Don't get caught off guard by the VMware price increase. Understand the implications of the Broadcom acquisition on VMware pricing and prepare for potential long-term shifts in the virtualization market. The future of virtualization depends on proactive planning and informed decision-making.