AT&T On Broadcom's VMware Deal: A 1,050% Price Increase Is Unacceptable

Natalie Brooks

4 min read

Post on May 19, 2025

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Broadcom's acquisition of VMware, while a significant event in the tech industry, has sent shockwaves through the market, particularly amongst existing VMware customers like AT&T. This article will delve into the details of this exorbitant price increase, analyze its justifications (or lack thereof), explore AT&T's potential responses, and discuss the broader implications for the tech industry. We argue that this 1,050% VMware price hike by Broadcom is unacceptable and requires further scrutiny.

The Sheer Magnitude of the Price Increase: A 1,050% Jump

The 1,050% price increase imposed by Broadcom on AT&T for its VMware licensing is simply astounding. This isn't a minor adjustment; it's a seismic shift in cost.

• Financial Impact: Imagine an annual VMware bill of $100,000. After Broadcom's acquisition, that same bill would balloon to over $1,050,000. This represents a catastrophic increase for AT&T, and likely other large enterprises relying on VMware solutions. For companies of this scale, such a price increase dramatically impacts budgeting, strategic planning, and overall profitability.
• Lack of Transparency: The pricing structure behind this dramatic jump lacks transparency. AT&T, and likely other affected clients, have yet to receive a clear and justifiable explanation for this exorbitant increase. This opacity raises concerns about potential unfair business practices.
• Industry-Wide Concern: This price increase isn't just an AT&T problem. It highlights a vulnerability for all large organizations reliant on enterprise software solutions. The potential for similar price gouging after other major acquisitions casts a long shadow over the industry.

Lack of Justification for the VMware Price Increase Post-Acquisition

Broadcom might attempt to justify this drastic price increase by citing factors such as increased development costs, enhanced features, or improved support. However, these justifications are likely insufficient to explain a 1,050% jump.

• Monopolistic Practices: The acquisition itself raises concerns about the potential for monopolistic practices. With Broadcom controlling both VMware's market share and significant portions of the networking hardware market, the possibility of leveraging market dominance to inflate prices cannot be ignored.
• Market Dominance and Competition: Before the acquisition, VMware held a significant market share in the virtualization sector, but the combination with Broadcom's powerful position creates a formidable entity capable of stifling competition. This significantly reduces the bargaining power of existing customers.
• Lack of Evidence: To date, there is a significant lack of compelling evidence to justify this price increase. The sheer magnitude of the price hike, coupled with the absence of clear explanations, points towards something more concerning than legitimate cost increases.

AT&T's Response and Potential Legal Recourse

While AT&T's official public response to this price increase hasn't been fully detailed, the sheer magnitude of the hike suggests they are exploring all available options.

• Potential Legal Action: AT&T may have grounds to pursue legal action against Broadcom, potentially invoking antitrust laws or challenging the contract terms under which the price increase was imposed. This could lead to significant legal battles and regulatory investigations.
• Regulatory Scrutiny: Regulatory bodies are likely to investigate this situation, particularly given the potentially anti-competitive implications. The considerable price increase could attract scrutiny from antitrust agencies globally.
• Industry-Wide Impact: AT&T's response, whatever it may be, will set a precedent for other VMware customers facing similar price hikes. It will impact the future negotiation power of large enterprises when dealing with major software vendors.

The Broader Implications for the Tech Industry

The Broadcom-VMware price hike carries profound implications for the broader tech landscape.

• Precedent for Future Acquisitions: This event could set a dangerous precedent. Other enterprise software vendors may attempt to replicate this strategy, leveraging acquisitions to justify massive price increases for their customers.
• Impact on Innovation: Such drastic price increases could stifle innovation by limiting the adoption of essential software solutions by smaller companies that cannot absorb the increased costs.
• Erosion of Customer Trust: The lack of transparency and the dramatic price increase erode trust between software vendors and their customers, potentially impacting long-term relationships and future contracts.

Conclusion: Addressing the Unacceptable VMware Price Increase from Broadcom

The 1,050% VMware price increase imposed by Broadcom on AT&T is unacceptable. The lack of justification, the potential for monopolistic practices, and the broader implications for the tech industry demand a strong response. This situation underscores the urgent need for greater transparency and accountability in enterprise software pricing.

We urge you to share your thoughts and experiences with similar price increases. If you’ve faced a similarly unjustified price hike from Broadcom or other software vendors post-acquisition, consider contacting regulatory bodies or exploring legal avenues to address the situation. Demand better from Broadcom. This 1050% VMware price increase is unacceptable, and we need to hold them accountable.