A 1,050% price increase: what the VMware story should teach every business about vendor lock-in

In September 2024, AT&T filed a lawsuit against Broadcom over VMware licensing. Inside the filing was a sworn affidavit from Susan Johnson, an AT&T executive vice president. She described the renewal quote Broadcom had put in front of AT&T: a 1,050% price increase in a single year. She called it 'extreme and certainly not how we expect strategic partners to engage in doing business with AT&T.' AT&T and Broadcom later settled the case confidentially. But the number is now in the public record, and it's the cleanest argument we've seen in years for why owning the critical parts of your software stack matters.

What actually happened

Broadcom closed its roughly 61 billion dollar acquisition of VMware in November 2023. Within a month, on December 11, 2023, it ended perpetual licenses for VMware products, forced every customer onto subscriptions, and collapsed the existing portfolio of around 168 standalone products into four bundles. In April 2025, Broadcom raised the floor again: the minimum license purchase went from 16 cores to 72, a structural hit aimed at smaller customers. None of these changes required customer consent. The original VMware contracts allowed them.

The numbers from real customers

AT&T's 1,050% is the headline figure, but it's not an outlier. Computershare, a global financial services company, said its VMware renewal came in at 10 to 15 times the prior cost — its CTO Kevin O'Connor went on the record and the company is now migrating around 24,000 virtual machines off VMware to a competitor. Beeks Group, a UK financial-cloud provider, moved most of its 20,000 VMs to OpenNebula after a roughly 10x licensing hike. Anexia, an Austrian provider, migrated 12,000 VMs to KVM. CISPE, the trade body for European cloud providers, formally complained to the European Commission that members were facing price increases of between 800% and 1,500%. These aren't startups making noise — they're established companies with serious infrastructure spend.

What the analysts are forecasting

Gartner now forecasts that around 35% of VMware workloads will migrate to alternative platforms by 2028, and that 50% of enterprises will start proof-of-concept evaluations of alternatives by 2026. Forrester projects that VMware's top 2,000 customers will reduce their deployments by an average of 40%, and that roughly 20% of the largest enterprises will leave entirely. The product hasn't suddenly become bad — it remains technically excellent. What changed is the contract.

This isn't really a VMware story

Every CFO who signed a VMware contract in 2021 thought they were buying infrastructure. They were renting it from a company that could change the terms unilaterally. That is the lesson, and it applies to every SaaS, every enterprise platform, every API your business depends on. The vendor that needs your business this year may not need it next year. The contract you signed almost certainly lets them rewrite the pricing on renewal. And the cost of moving — measured in re-platforming time, retraining, lost integrations, and operational risk — is what gives them leverage in the negotiation.

How to think about it as a business owner

The defense isn't to never use SaaS. SaaS is the right call most of the time, and we say so on every project. The defense is to know which parts of your stack you can afford to rent and which parts are too critical to leave in someone else's hands. A useful test: for each major piece of software you depend on, ask what happens if the vendor doubles the price at renewal. If the answer is 'we pay it because we can't move,' you have a lock-in problem — and the time to fix it is before the renewal letter arrives, not after.

• Map your stack. List every SaaS and enterprise tool the business depends on, and rate each one on how much it would cost to switch.
• For the tools that are critical and hard to switch, ask whether the work they do is actually generic — or whether it's a workflow specific enough to your business that a custom replacement would be cheaper over five years.
• Keep your data exportable. If a vendor won't let you export your data in an open format, that's lock-in by design.
• Negotiate renewals 9-12 months early, not the week before. Vendors who know you have time to migrate negotiate differently.
• Build the parts that are your competitive advantage. Rent the parts that aren't.

The argument for custom software, made by Broadcom

We've spent the last year telling clients that custom software is about owning the code, owning the data, and never being told by a vendor that the price has gone up 10x because the new owner needs to hit a margin target. Most clients nod and move on. The Broadcom-VMware story is the first time the argument has been made for us, in a Fortune 50 court filing, in numbers no one can dismiss as theoretical. Software you own can't be repriced overnight. Software you rent can. That's it. That's the whole argument.

Primary source — The Register on the AT&T court filing (Oct 1, 2024): https://www.theregister.com/2024/10/01/att_broadcom_filings_update/

Source — The Register on Computershare's 24,000-VM migration (May 22, 2024): https://www.theregister.com/2024/05/22/computershare_vm_migration_project/

Source — The Register on CISPE's complaint to the European Commission (May 22, 2025): https://www.theregister.com/2025/05/22/euro_cloud_body_ecco_says_broadcom_licensing_unfair/

Source — Gartner forecast on VMware workload migration: https://www.gartner.com/en/documents/5354263