VMware Costs To Skyrocket: AT&T Reports 1,050% Price Hike From Broadcom

Chloe Fitzgerald

4 min read

Post on Apr 29, 2025

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The Broadcom Acquisition and its Impact on VMware Pricing

Broadcom's acquisition of VMware in 2022 marked a pivotal moment, significantly altering the future of VMware pricing. Broadcom, known for its aggressive acquisition strategy and focus on maximizing shareholder value, has implemented changes impacting existing VMware customers. This shift in ownership has resulted in a more commercially driven approach to pricing, often resulting in higher costs for users. Their business model, prioritizing profitability and market dominance, is directly contributing to the increased VMware costs seen across the board.

• Increased licensing fees: Existing contracts are being renegotiated with significantly higher licensing fees.
• Changes in support contracts: Support agreements have become more expensive, with reduced flexibility and potentially less comprehensive coverage.
• Elimination of discounts and promotions: Previously available discounts and promotional offers have been largely withdrawn, driving up the total cost of ownership.
• New pricing tiers and models: The introduction of new pricing tiers and models often leads to higher costs for customers, particularly those with complex or larger deployments.

AT&T's 1050% VMware Price Hike: A Case Study

AT&T's experience serves as a stark warning to other organizations. Their reported 1050% increase in VMware costs following the Broadcom acquisition is not an isolated incident. The specific details of their contract renegotiations remain confidential, but the sheer magnitude of the price hike underscores the potential financial implications for businesses reliant on VMware technology.

• Specific cost increase figures for different VMware products: While exact figures are unavailable publicly, the reported overall increase indicates substantial hikes across their entire VMware portfolio.
• Impact on AT&T's IT budget: This massive price increase undoubtedly strained AT&T's IT budget, forcing them to re-evaluate their technology strategy.
• AT&T's response to the price hike: While their specific response is undisclosed, it is likely to include cost optimization measures, potential negotiations with Broadcom, and exploration of alternative solutions.

Understanding the Factors Contributing to Rising VMware Costs

While the Broadcom acquisition is a major factor, other elements contribute to the rising tide of VMware costs. These include broader economic forces and the natural evolution of the software itself.

• Inflation and its impact on software pricing: General inflation directly affects software pricing, as development, maintenance, and support costs increase.
• Increased demand for virtualization technologies: The growing adoption of virtualization technologies increases demand, potentially pushing prices upward.
• Development of new VMware features and functionalities: Continuous development and integration of new features and functionalities contribute to increased costs, requiring resources and expertise.
• Rising operational costs for VMware: Maintaining a large and complex software ecosystem necessitates ongoing investment, impacting overall pricing.

Strategies for Mitigating Rising VMware Costs

Facing escalating VMware costs necessitates proactive strategies to control expenses. Organizations can implement several measures to mitigate these rising costs.

• Cloud migration to reduce on-premise licensing costs: Moving workloads to cloud platforms can significantly reduce the need for expensive on-premise VMware licenses.
• VMware license optimization and rightsizing: Careful analysis of current licenses can reveal opportunities for rightsizing and eliminating unnecessary licenses.
• Negotiating with VMware for better pricing: Strong negotiation skills can help secure more favorable pricing terms, potentially reducing overall costs.
• Exploring alternative virtualization solutions (e.g., open-source alternatives): Open-source alternatives offer a potential cost-effective way to reduce reliance on VMware.

Conclusion: Navigating the Rising Tide of VMware Costs

The Broadcom acquisition has undeniably led to a significant increase in VMware costs, as exemplified by AT&T's dramatic 1050% price hike. Understanding the contributing factors – from the acquisition's impact to broader economic pressures and product evolution – is crucial. Businesses need to proactively manage their VMware expenses through optimization, negotiation, and exploring alternative solutions. Analyze your VMware costs today. Optimize your VMware environment. Explore alternative virtualization solutions to control VMware costs. Don't let rising VMware costs cripple your budget.