How Broadcom’s VMware Price Hike Could Affect Your Business: Lessons from AT&T’s Lawsuit

At first glance, the AT&T-Broadcom lawsuit appears to be just another legal battle between tech giants. But dig deeper, and you’ll find a story that has played out in corporate IT operations worldwide since the November 2023 VMware acquisition: VMware price increases so high they could be considered shocking, prohibitively difficult and expensive migration options, and the countless companies caught in-between, suddenly forced to choose which option is more survivable.

AT&T alleges potential VMware price increases of 1,050% in legal filings and public statements connected to the suit. The figure isn’t far out of line with other VMware customer complaints that allege increases of between 500% and 1,200%.

With Broadcom’s history of cutthroat profit optimization practices, current VMware customers need to plan for possible VMware price increase whether their individual virtualization costs have gone up already or not.

Can Your Company Afford a Profit-Optimized VMware?

Industry observers like Seeking Alpha have long noted Broadcom’s affinity for “venture capital-esque” strategies that favor extracting revenue from current customers over drawing in new accounts. Unfortunately, the Palo Alto megacorporation’s changes to VMware seem to follow the same pattern.

Prior to the acquisition, most of VMware’s approximately 8,000 products could be purchased à la carte. Under Broadcom, applications have been bundled into one of four core offerings, according to CIO Dive, or culled outright, with surviving products moving to a subscription-based pricing model.

At the same time it announced these measures, Broadcom also outlined its plan to stop offering and renewing support for VMware perpetually licensed products.

To keep OEM support for their important virtualization products, most perpetually licensed customers with existing support agreements felt they needed to trade in the perpetual licenses they had already purchased for subscription-based alternatives. Compared to what they paid for ongoing support alone, the new pricing scheme is a significant price increase for many customers.

Preparing for a VMware Price Increase

Whether you have active plans to move away from the platform or not, you’re probably at least a little concerned about a potential VMware cost increase and the operational impact it could have on your business.

Here are four points to keep in mind as you adjust your virtualization strategy.

1. Understand exactly what moving to a VMware bundle could mean for your company. In many cases, surrendering your perpetual licenses and moving to one of Broadcom’s bundles might look like a path of least resistance, or, at least, the easiest transition. But once you give your licenses up, you will hand a lot more control over future pricing details to VMware, which, as the AT&T lawsuit shows, could also mean opening the door to significant costs.
2. If you can’t afford a VMware price increase, you have options. There are other alternatives besides VMware maintenance and support. For example, you can keep OEM support for certain critical virtualization products and have an independent provider maintain the rest, or have an independent partner manage your entire virtualized estate. As you consider new VMware licensing strategies, take time to explore independent support options that keep your perpetually licensed products supported for as long as your company needs.
3. You can keep some of your licenses with VMware and move the rest. It is possible to have VMware retain support of certain workloads and move the rest to a new platform that is fully or partially supported by an independent provider. Hybrid VMware licensing has become increasingly popular with existing VMware customers that need more time to hammer out their long-term plans with the platform without overcommitting to the new licensing model.
4. Have a plan in place before the notice comes. Organizing a virtualization software migration can take months and comes with significant costs. Even if you aren’t certain a VMware cost increase is in your future, it’s important to know exactly how your company will react if one does occur. Waiting until your costs have already gone up is a guarantee that the process will be more difficult and expensive than it needs to.

Get Your Virtual Ducks in a Row

AT&T is probably the largest company to express serious concerns about VMware’s profit optimization, but it’s far from the only one. Thousands of customers are now questioning whether the platform will suit their long-term planning and IT budgets.

If your company is one of them, taking time to develop your plan now can save you from major sticker shock. Take a good look at the current virtualization landscape, study the best long-term choices for your business, and don’t be afraid to call in an independent VMWare maintenance, licensing, and support expert if it all seems overwhelming. For most companies weighing endless virtualization options, a little clarity can go a long way.

Skip the VMware sticker shock. Talk to a licensing and technical expert today.