VMware called out after apparently offering this major customer a huge price rise

2 October 2024, 21:39 published

AT&T has accused VMware of proposing a staggering 1,050% price increase under its new Broadcom ownership, leading to a legal dispute between the two companies.

The claim was shared in a legal document filed by AT&T, which alleges Broadcom has not honored a previous contract allowing the telecoms giant to extend its support for VMware software by a further two years.

Confirmation of AT&T’s frustration with Broadcom was shared in a letter from AT&T EVP Susan A. Johnson, addressed to Broadcom CEO Hock Tan, shared by The Register.

AT&T faced with 1,050% VMware price hike

In the letter, Johnson called the proposed price hike extreme and unexpected given the companies’ strategic partnership.

AT&T has also raised concerns about the difficulties in migrating away from VMware, despite investigating alternative solutions for nearly a year. Because VMware is deeply integrated into AT&T’s network operations, a migration would prove costly (to the tune of $40-50 million) and time-consuming.

“AT&T has decided to pursue a legal strategy along with a disciplined plan to invest to migrate away, all of which will quickly become public,” Johnson added

Despite sharing concerns about being treated unfairly and plans to migrate away from VMware, Johnson said the company would be prepared to “engage in any reasonable offers.”

More broadly, AT&T isn’t the only company to complain about the drastic changes that Broadcom has enacted within its acquired VMware business. Not long after the buyout, VMware perpetual licenses were terminated, and customers became increasingly vocal in the months that followed about their dissatisfaction.

Civo recently confirmed that more than half (52%) of VMware customers were looking to migrate as a result of the turmoil.

Several Broadcom execs, including CEO Hock Tan, have spoken out about the changes in a bid to pacify customers, but these have so far been relatively unsuccessful. A company spokesperson told TechRadar Pro in an email:

“Broadcom strongly disagrees with the allegations and is confident we will prevail in the legal process. VMware has been moving to a subscription model, the standard for the software industry, for several years – beginning before the acquisition by Broadcom. Our focus will continue to be providing our customers choice and flexibility while helping them address their most complex technology challenges.”