VMware Costs To Skyrocket: AT&T Details 1,050% Price Increase From Broadcom

Felix Dubois

4 min read

Post on May 29, 2025

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The Magnitude of the VMware Price Hike

AT&T's experience serves as a stark illustration of the impact of Broadcom's acquisition on VMware pricing. The 1050% increase represents a monumental shift in licensing costs, impacting various VMware products and significantly impacting AT&T's operational budget. While precise details of individual product price increases haven't been publicly released by AT&T beyond the overall 1050% figure, reports suggest a significant impact across their VMware infrastructure. (Further research is required to obtain more precise product-specific data; links to news articles detailing the increase will be added here upon availability).

• Specific VMware products affected: While the exact list remains unclear, reports suggest the increase spans multiple VMware product lines, including vSphere, vSAN, and NSX.
• Breakdown of the increase: The 1050% increase represents an average across AT&T's VMware deployment, with certain products potentially seeing even higher percentage increases.
• Comparison to previous licensing costs: This represents a radical departure from previous VMware pricing models, leaving businesses struggling to absorb such a significant cost jump.
• Impact on AT&T's budget and operations: The substantial increase forced AT&T to reassess its IT budget and explore alternative strategies to manage its VMware infrastructure costs.

Broadcom's Rationale Behind the VMware Price Increase

Several factors likely contribute to Broadcom's decision to significantly increase VMware licensing costs. Broadcom's acquisition of VMware was a multi-billion dollar deal, and they are likely seeking to recoup investment and maximize profits.

• Increased R&D costs: Investment in research and development for future VMware products could be a factor in the price increase.
• Market consolidation strategies: By acquiring VMware, Broadcom aims to consolidate market share and potentially increase pricing power.
• Profit maximization objectives: As a publicly traded company, Broadcom is likely under pressure to maximize shareholder returns.
• Potential for future price increases: The significant price hike raises concerns about the potential for further increases in the future.

Impact on Businesses Using VMware

The rising VMware costs aren't limited to AT&T; they present significant challenges for businesses of all sizes relying on VMware solutions.

• Budget reallocation: Businesses may need to reallocate substantial portions of their IT budgets to accommodate these price increases.
• Potential for migration to alternative solutions: Many companies are exploring alternative virtualization technologies like open-source options or cloud-based alternatives like AWS, Azure, and GCP.
• Impact on IT infrastructure planning: Businesses must reassess their long-term IT infrastructure plans in light of the dramatically increased VMware costs.
• Increased Total Cost of Ownership (TCO): The rise in VMware licensing fees contributes to a significant increase in the Total Cost of Ownership of the VMware infrastructure.

Strategies for Mitigating Rising VMware Costs

Businesses can take proactive steps to manage and reduce their VMware expenses. These strategies involve a combination of negotiation, optimization, and exploration of alternatives.

• Negotiating licensing agreements: Businesses should leverage their negotiating power to secure more favorable licensing terms with Broadcom or VMware.
• Optimizing VMware deployments: Identifying and removing redundant VMs, optimizing resource allocation, and right-sizing virtual machines can significantly reduce licensing costs.
• Exploring open-source alternatives: Open-source virtualization platforms like Proxmox VE and oVirt offer cost-effective alternatives to VMware.
• Cloud migration strategies (AWS, Azure, GCP): Migrating some or all workloads to cloud platforms can offer flexibility and potentially lower costs, particularly for specific workloads.

Conclusion: Navigating the Future of VMware Costs

The dramatic increase in VMware costs following Broadcom's acquisition presents a major challenge for businesses worldwide. The 1050% price hike experienced by AT&T underscores the magnitude of this problem. The implications are far-reaching, potentially impacting IT budgets, infrastructure planning, and the overall operational efficiency of companies relying on VMware. However, by employing strategies like contract renegotiation, optimization, exploration of open-source alternatives, and cloud migration, businesses can mitigate the impact of these rising VMware costs. Don't let rising VMware costs cripple your budget. Take action today by assessing your current licensing and exploring alternative solutions.