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

Hugo van Dijk

4 min read

Post on May 08, 2025

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The Magnitude of the VMware Price Increase

The VMware price hike following the Broadcom acquisition is significant, with reports suggesting increases ranging from 20% to over 100% for certain products. This dramatic cost impact has severe budget implications for businesses of all sizes.

• Reports indicate that licensing costs for VMware vSphere, a core virtualization platform, have increased dramatically. Specific figures are still emerging, but anecdotal evidence points to substantial jumps.
• Pricing for VMware vSAN, the company's software-defined storage solution, has also reportedly seen significant increases, impacting storage costs for many organizations.
• The impact on AT&T's operational budget, a company with a massive IT infrastructure, is likely substantial, although precise figures haven't been publicly released. Smaller companies face even more significant proportional increases.
• This scale of increase affects not only large corporations like AT&T but also smaller businesses that rely on VMware for their virtualization needs. For smaller organizations, these price hikes can represent a substantial portion of their IT budget, potentially forcing difficult choices about maintaining existing systems or adopting new technologies.

The sheer scale of these price increases presents a significant challenge to businesses planning their IT budgets and long-term infrastructure strategies. The potential for budget overruns and the need for cost-cutting measures are real and immediate concerns.

AT&T's Public Response and Concerns

AT&T's public response has been notable, expressing strong disapproval of the VMware price increase. Their concerns highlight potential industry-wide issues stemming from the Broadcom acquisition.

• AT&T publicly criticized the price increase as "unjustified" and "excessive," indicating their belief that the increases are not directly correlated with improvements in product functionality or added value.
• Statements from AT&T executives express concern about the lack of transparency in the pricing changes and the potential impact on their ability to effectively manage IT costs.
• While no legal action has been publicly announced, the intensity of AT&T's response suggests that further action, perhaps in collaboration with other affected companies, is a possibility. This could involve regulatory complaints or even legal challenges.

Broadcom's Response and Justification (if any)

To date, Broadcom's official response to the criticism surrounding the VMware price increase has been limited. Any justification for the significant cost increases remains unclear.

• Broadcom has not yet publicly addressed the specific concerns raised by AT&T or other companies regarding the magnitude of the price hikes.
• While Broadcom may argue that the increases reflect investments in R&D or improvements to VMware products, concrete evidence supporting this claim is currently lacking.
• The lack of a clear and transparent explanation from Broadcom raises questions about their post-acquisition strategy and the implications for VMware customers. This silence fuels concerns about potential anti-competitive practices.

Potential Antitrust Concerns

The sharp price increases following Broadcom's acquisition of VMware have sparked concerns about potential antitrust implications. The increased market concentration resulting from the merger raises serious questions.

• The acquisition significantly increases Broadcom's market power in the virtualization software sector, potentially limiting competition and stifling innovation.
• Regulatory bodies, such as the US Department of Justice and the European Commission, may launch investigations into the price increases to assess whether they constitute anti-competitive behavior.
• The potential for vendor lock-in, where businesses are forced to continue using VMware products despite the increased costs due to a lack of viable alternatives, further fuels these antitrust concerns.

Impact on the Enterprise Software Market

The VMware price increase is likely to have a significant impact on the broader enterprise software market, forcing businesses to re-evaluate their strategies and potentially explore alternative solutions.

• Businesses are now under increased pressure to explore alternative virtualization solutions from competitors like Citrix, Nutanix, or even open-source options.
• The price increase may also influence cloud migration strategies, as businesses weigh the cost of on-premises VMware solutions against cloud-based alternatives.
• The situation could lead to increased vendor lock-in, potentially reducing the bargaining power of businesses and hindering their ability to negotiate favorable pricing terms.

Conclusion

The significant VMware price increase following the Broadcom acquisition represents a serious concern for businesses, especially those heavily reliant on VMware products. AT&T's vocal opposition highlights the magnitude of the issue and underscores the potential for wider industry disruption. The lack of a clear justification from Broadcom, coupled with the potential for antitrust issues, necessitates careful monitoring of this situation. The impact extends beyond individual companies, affecting the competitive landscape of the entire enterprise software market.

The significant VMware price increase serves as a wake-up call. Stay informed about potential regulatory actions and explore alternative virtualization technologies to mitigate risks and ensure budget stability. Keep an eye on developments in the VMware pricing situation and consider diversifying your IT infrastructure to reduce dependence on a single vendor. Proactive planning is crucial to navigating this rapidly evolving landscape.