AT&T Sounds Alarm On Broadcom's Extreme VMware Price Increase

Hugo van Dijk

5 min read

Post on May 16, 2025

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Keywords: AT&T, Broadcom, VMware, price increase, VMware price hike, enterprise software, cloud computing, licensing costs, IT budget, acquisition, merger

The recent acquisition of VMware by Broadcom has sent shockwaves through the enterprise technology sector, with AT&T leading the chorus of concerns over dramatic VMware price increases. This significant hike in licensing costs presents a major challenge for businesses relying on VMware solutions, potentially impacting IT budgets, cloud adoption strategies, and the broader competitive landscape. This article delves into the details of this alarming situation and its potential ramifications.

The Extent of Broadcom's VMware Price Increase

Broadcom's acquisition of VMware has resulted in substantial price increases for VMware licensing, sparking outrage amongst existing customers. While exact figures haven't been publicly disclosed for all products, reports indicate percentage increases in the double digits, and even some triple digits for certain products or service levels, across the board. This represents a drastic shift from previous VMware pricing strategies.

• Significant increase in vSphere licensing: vSphere, the cornerstone of VMware's virtualization platform, has seen particularly steep price hikes, making it significantly more expensive for businesses to maintain their existing infrastructure.

• Price jumps for vSAN and other key VMware components: Other critical components like vSAN (VMware Virtual SAN), used for storage virtualization, and other key VMware products have also experienced substantial price increases, adding further strain on IT budgets.

• Impact on existing contracts and renewal costs: Businesses with existing VMware contracts are facing significantly higher renewal costs, forcing them to re-evaluate their IT spending and potentially explore alternative solutions.

• Comparison with previous VMware pricing before the acquisition: Before the acquisition, VMware pricing, while not inexpensive, was generally considered predictable and competitive within the virtualization market. The current price increases are unprecedented and represent a major departure from past practices.

AT&T's Public Concerns and Their Implications

AT&T, a major user of VMware technologies, has publicly voiced its concerns over these dramatic price hikes. While specific quotes might not be readily available publicly yet, the company's concerns reflect the worries of many large enterprises. The impact on AT&T, and similar organizations, is potentially massive.

• AT&T's reliance on VMware technologies: AT&T, like many large telecommunication companies, relies heavily on VMware's virtualization technologies for its critical infrastructure.

• Potential budgetary strain due to increased licensing costs: The price increases represent a significant budgetary burden for AT&T, potentially forcing them to reallocate resources and potentially delay or cancel other IT initiatives.

• Potential impact on AT&T's cloud strategy: These increased costs could influence AT&T's cloud migration plans, potentially delaying or altering their cloud adoption strategy.

• Concerns raised about the future of VMware pricing under Broadcom: The sharp price increases raise serious concerns about the long-term pricing strategy for VMware products under Broadcom's ownership, creating uncertainty for businesses relying on these technologies.

Broader Industry Impact and Reactions

AT&T's concerns are not isolated. Many other major enterprise users of VMware are expressing similar anxieties about the substantial price increases. The ripple effect across various industries is potentially significant.

• Concerns from other telcos and large corporations: Other telecommunication companies and large corporations heavily invested in VMware are facing similar challenges.

• Potential for increased cloud computing costs across the board: These price increases could contribute to a broader increase in cloud computing costs, affecting businesses of all sizes.

• Impact on smaller businesses reliant on VMware solutions: Smaller businesses that rely on VMware solutions may find these price increases particularly difficult to absorb, potentially forcing them to seek out less expensive – or potentially less reliable – alternatives.

• Potential shifts towards open-source alternatives: The dramatic price hikes are pushing some organizations to explore open-source virtualization alternatives as a way to mitigate rising costs.

Potential Antitrust Concerns and Regulatory Scrutiny

The dramatic VMware price increase has raised concerns about potential anti-competitive behavior and may attract regulatory scrutiny.

• Arguments for anti-competitive behavior: Critics argue that the substantial price increases following Broadcom's acquisition could be considered anti-competitive, limiting choices and harming innovation in the enterprise software market.

• Potential for government intervention: Government antitrust agencies in various jurisdictions may launch investigations into Broadcom's pricing practices.

• Precedents of antitrust cases related to mergers and acquisitions: There are several precedents of antitrust cases stemming from mergers and acquisitions that have resulted in significant fines or forced divestitures.

• Impact of regulatory scrutiny on Broadcom's future pricing strategies: The potential for regulatory scrutiny could significantly impact Broadcom's future pricing strategies for VMware products.

Conclusion

AT&T's alarm over Broadcom's drastic VMware price increase highlights a significant concern for businesses reliant on VMware technologies. The substantial price hikes impact not only IT budgets but also cloud adoption strategies and the overall competitive landscape. The potential for antitrust investigations and regulatory scrutiny adds another layer of uncertainty. Stay informed on the evolving situation regarding the Broadcom VMware price increase and its impact on your organization. Monitor news and regulatory developments for updates on this significant change in enterprise software pricing. Consider exploring alternative virtualization solutions and budget planning strategies to mitigate potential cost increases from VMware licensing costs.