Broadcom VMware Acquisition Boosts Prices 1000%

Recent reports reveal that VMware customers have faced dramatic price hikes following Broadcom's acquisition of VMware at the end of last year. Some clients are now paying up to ten times more for the same services.

One major VMware enterprise customer reported a staggering 175% increase in prices, expressing frustration over the necessity to "prepay and plan ahead," given the difficulties in switching to alternative services. This customer described the experience as feeling like "extortion."

Since acquiring VMware, Broadcom has implemented several changes to enhance profitability, including bundling VMware products to streamline its portfolio. This strategy may force customers to pay for additional products even if they do not use all of them.

Broadcom also shifted from a perpetual licensing model to a subscription-based system in December, providing customers with ongoing support and access to the latest software updates. This transition aims to generate more stable, recurring revenue for Broadcom.

Furthermore, Broadcom is focusing its efforts on the top 2,000 most profitable VMware clients, which may result in reduced support for smaller organizations and non-profits.

Rick Vanover, VP of Product Strategy at Veeam, highlighted that transitioning from VMware to alternative solutions is not a quick process and requires a "comprehensive review." Additionally, training employees on new technologies adds to the complexity.

Dave Russell, Senior VP and Strategy Chief at Veeam, reported a 300% increase in the cost of VMware products used by his company, consistent with other reports of substantial price increases.

Craig Hinkley, CEO of cloud management firm CloudBolt, noted that his clients have observed VMware price increases ranging from 140% to 600%, with some reporting tenfold hikes. The variation in price increases is influenced by specific agreements with Broadcom and the products utilized.

A CloudBolt survey conducted in May with 300 IT decision-makers revealed that 73% anticipate a price increase of at least 100% following Broadcom's acquisition of VMware. Additionally, 95% of respondents believe the acquisition will have a disruptive effect on their IT strategies.