AT&T Reveals Extreme Price Increase For VMware Following Broadcom's Acquisition

Felix Dubois

5 min read

Post on May 15, 2025

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The Magnitude of AT&T's VMware Price Increase

AT&T's price hike for VMware licensing represents a substantial cost escalation for its customers. While the exact percentage increase varies depending on the specific VMware products and services, and the customer's contract details, reports suggest increases ranging from a significant double-digit percentage to even higher figures for some enterprise clients. This translates into a substantial financial burden for businesses already navigating a complex and competitive market.

• Percentage increase in VMware licensing costs: Reports indicate increases ranging from 15% to over 30%, depending on the contract and services used. Specific numbers remain largely undisclosed by AT&T, adding to the uncertainty and frustration among customers.
• Impact on different customer segments: Small and medium-sized businesses (SMBs) are particularly vulnerable, as the increased costs could represent a larger portion of their IT budget compared to large enterprises. Large enterprises, while potentially more resilient, still face considerable expense increases that can impact project budgets and strategic planning.
• Examples of specific price increases for different VMware products/services: Unfortunately, precise data on specific VMware product price changes remains limited. AT&T has not publicly released detailed breakdowns of the increases across its VMware offerings. However, anecdotal evidence suggests significant increases across the board, including vSphere, vSAN, and vCenter.
• Comparison to previous price increases: While historical data on previous AT&T VMware price increases isn't readily available, this jump is widely considered to be unusually steep and has sparked considerable concern amongst customers.

Reasons Behind the Price Increase

Several factors likely contributed to AT&T's decision to significantly increase VMware pricing. The most prominent is undoubtedly Broadcom's acquisition of VMware. This market consolidation gives Broadcom considerable leverage in setting prices, potentially leading to increased licensing costs for its partners, including AT&T.

• Impact of Broadcom's acquisition on VMware's pricing structure: Broadcom's acquisition immediately raised concerns about potential price hikes for VMware products and services. The increased market power allows Broadcom to command higher prices.
• Potential increase in VMware's operating costs: Increased operating costs, such as research and development, infrastructure upgrades, and personnel expenses, could also contribute to the price increase. However, this factor alone seems insufficient to explain the magnitude of the increase.
• Changes in the competitive landscape influencing pricing decisions: The overall competitive landscape of cloud computing and virtualization services also plays a role. While VMware holds a strong market position, increased competition from other providers could indirectly influence pricing strategies.
• Supply chain disruptions and their influence on costs: Although less likely a primary driver, ongoing supply chain disruptions could marginally contribute to increased costs for VMware, indirectly affecting AT&T's pricing decisions.

Impact on AT&T Customers

The price increase presents numerous challenges for AT&T's customers. Many businesses may face difficult choices regarding their IT budgets and strategic planning.

• Potential budget cuts and resource reallocation: Businesses may need to cut costs elsewhere or reallocate resources to accommodate the increased VMware expenses. This could impact other critical IT projects or initiatives.
• Risk of service disruptions due to inability to afford VMware services: Some smaller businesses might find themselves unable to afford the increased costs, forcing them to potentially downgrade services or explore alternative virtualization solutions, potentially disrupting business operations.
• Impact on IT project timelines and overall business strategy: Unexpected cost increases can significantly disrupt IT project timelines and necessitate revisions to overall business strategies. Long-term planning becomes considerably more complex and challenging.
• Potential need to explore alternative virtualization solutions: Businesses might be forced to reconsider their reliance on VMware and explore alternative virtualization technologies, incurring additional costs and effort associated with migration and training.

Exploring Alternatives to AT&T's VMware Offering

Facing this significant price increase, many AT&T customers are exploring alternative virtualization solutions. These options include:

• Other cloud providers: Companies like AWS, Microsoft Azure, and Google Cloud Platform offer competitive virtualization solutions with potentially more favorable pricing structures.
• Open-source solutions: Open-source virtualization platforms like Proxmox VE and oVirt provide cost-effective alternatives, although they might require more technical expertise to manage.
• Cost-effective alternatives: Several other virtualization platforms offer competitive features and pricing, presenting viable alternatives to VMware.

The Broader Implications for the Enterprise Software Market

AT&T's VMware price hike has broader implications for the enterprise software market. It signals a potential trend of increased pricing across the industry, particularly as market consolidation continues.

• Market trends: This event highlights a broader trend of increasing software prices and potential concerns about vendor lock-in.
• Industry consolidation: Further industry consolidation could lead to similar price increases in other segments of the enterprise software market.
• Software pricing: The incident prompts discussions about the transparency and fairness of software pricing models, especially in the context of acquisitions.
• Enterprise spending: Enterprises might need to reconsider their IT spending strategies, anticipating similar price increases from other vendors.
• Future outlook: The long-term impact on enterprise spending and technology adoption remains to be seen, but this instance underscores the need for careful planning and flexibility.

Conclusion

AT&T's significant price increase for VMware services following Broadcom's acquisition highlights the considerable challenges businesses face in the ever-evolving enterprise software market. The impact on AT&T customers is substantial, requiring careful budget adjustments and consideration of alternative solutions. This event underscores the importance of understanding your VMware contracts and exploring cost-effective alternatives. Don't let the AT&T VMware price hike cripple your budget – plan ahead! Understand the impact of the AT&T VMware price increase on your business and explore cost-effective alternatives to AT&T's VMware offering today.