VMware Costs To Soar 1,050%: AT&T Highlights Broadcom's Extreme Price Increase

Kenji Nakamura

4 min read

Post on May 20, 2025

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The Broadcom Acquisition and its Impact on VMware Pricing

Broadcom's acquisition of VMware in 2022 sent shockwaves through the IT industry. This massive merger, valued at over $61 billion, has raised serious concerns about the future of VMware pricing and the broader virtualization market. Broadcom has a history of significantly increasing prices after acquiring companies, a trend that unfortunately appears to be continuing with VMware. This raises concerns about potential monopolistic practices and reduced competition, ultimately harming consumers.

• Increased licensing fees for existing VMware products: Businesses are already reporting substantial increases on their renewal contracts for core products like vSphere, vSAN, and NSX.
• Higher costs for new licenses and upgrades: The price hikes extend to new licenses and upgrades, making it significantly more expensive for businesses to adopt new technologies or expand their existing infrastructure.
• Potential for reduced innovation due to lack of competition: With reduced competition, there's a risk that innovation within the VMware ecosystem will slow down, as Broadcom prioritizes profit maximization over product development.

AT&T's Experience: A 1050% Increase in VMware Costs

AT&T, a major telecommunications company, has publicly revealed a staggering 1050% increase in its VMware licensing costs. This real-world example powerfully illustrates the magnitude of the price hikes. The financial impact on AT&T, and other similarly sized organizations, is substantial. This significant increase forces a reassessment of IT budgets and strategic planning.

• Specific examples of VMware products affected by price hikes: While precise details are not publicly available for all products, reports suggest that core VMware vSphere and related products have seen the most dramatic increases.
• Quantifiable impact on AT&T's bottom line: The sheer scale of the 1050% increase translates to millions of dollars in additional costs for AT&T annually.
• AT&T's potential responses to the price increase: AT&T is likely exploring various options, including renegotiating contracts, seeking alternative virtualization solutions, and potentially migrating workloads to the cloud to reduce its reliance on on-premise VMware licensing.

The Ripple Effect: Impact on Smaller Businesses

The impact of these price increases extends far beyond large enterprises like AT&T. Smaller businesses that rely on VMware solutions face significant challenges. The increased VMware costs could force them to:

• Challenges for smaller businesses to absorb the increased costs: For smaller organizations, these substantial increases can severely strain budgets, potentially impacting their ability to invest in other crucial areas.
• Potential for reduced competitiveness due to higher IT expenses: Higher IT expenses can put smaller businesses at a competitive disadvantage, particularly against larger companies with greater financial resources.
• Increased interest in open-source virtualization solutions: The sharp price increase is pushing many smaller companies to explore open-source alternatives like Proxmox VE and oVirt, which offer comparable functionality at a significantly lower cost.

Strategies for Managing Rising VMware Costs

Facing these unprecedented price hikes, businesses need proactive strategies to manage rising VMware costs. Here are some key approaches:

• Negotiating with VMware/Broadcom for better pricing: While challenging, attempting to negotiate with Broadcom for more favorable pricing terms is a worthwhile endeavor, especially for large enterprise clients with significant spending power.
• Exploring open-source alternatives like Proxmox or oVirt: Open-source solutions offer a viable path to significantly reduce costs, although they may require additional technical expertise.
• Optimizing VMware deployments for cost efficiency: Careful analysis of VMware deployments can identify areas for optimization, helping to reduce the number of licenses required and ultimately lowering costs.
• Cloud migration strategies to potentially reduce on-premise licensing costs: Migrating workloads to cloud providers like AWS, Azure, or GCP can reduce the reliance on on-premise VMware licenses, potentially offering cost savings in the long run.

Conclusion: Navigating the New Landscape of VMware Costs

Broadcom's acquisition of VMware has undeniably led to substantial price increases, significantly impacting businesses of all sizes. AT&T's experience serves as a stark warning of the potential financial consequences. Proactive planning and strategic decision-making are crucial for navigating this new reality. Don't get caught off guard by soaring VMware costs. Take action today to perform a VMware cost analysis, explore your options, and implement a VMware licensing optimization strategy to protect your bottom line and ensure long-term cost management of your VMware environment.