The VMware Tax Is Real: Your 2026 Renewal Playbook

Altanora, September 2026

       In September 2024, AT&T told a federal court that Broadcom had proposed a renewal increase of more than 1,050 percent for the VMware support contract keeping its network running. “We appear to be at an impasse on our VMware deal,” one AT&T executive wrote to Broadcom’s CEO. The case is still working its way through the courts.

That’s an extreme case, and it made headlines precisely because it’s extreme. But talk to almost any IT Director who’s been through a VMware renewal since Broadcom closed its acquisition, and “extreme” isn’t really the word for what they’re describing. It’s not a lawsuit-sized shock. It’s something steadier and more structural, and it’s the reason so many teams have started calling it the VMware tax.

Here’s what’s actually driving it, what the data says about how organizations are responding, and what to do before your own renewal notice lands.

What Actually Changed. It’s Not Just “Prices Went Up”.

It’s tempting to treat this as a simple price hike, but the mechanics matter, because they determine whether your specific environment gets hit hard or barely notices.

• Perpetual licenses are gone. Broadcom stopped selling perpetual VMware licenses in 2024. Existing perpetual licenses still run, but without support, and there’s no path back to that model. The move to subscription is permanent, not a one-time inconvenience.
• Thousands of products became a handful of bundles. More than 8,000 individual SKUs collapsed into a short list of packages, chief among them VMware Cloud Foundation. Products that used to be optional line items (NSX, vSAN, the Aria operations suite) are now baked into the bundle whether you use them or not.
• There’s a 16-core-per-processor minimum. Licensing is billed against a minimum of 16 cores per physical processor. An older or smaller server with, say, two 8-core sockets gets billed as if it were running double its actual core count, a mechanical cost driver that has nothing to do with how much you’re actually using.
• Most contracts carry an annual uplift on top. Once the new subscription baseline is set, many renewal contracts add a compounding annual increase (commonly in the high single digits to low teens percent) on top of that already-higher number, every year, unless it’s specifically capped in negotiation.

The Numbers, Without the Drama

It’s easy to find a scary headline about VMware pricing. It’s harder to find a grounded, current picture of how organizations are actually experiencing it. The most complete recent data comes from a CloudBolt survey of 302 IT decision-makers at North American companies with 1,000+ employees, fielded in January 2026:

Source: CloudBolt, “The Mass Exodus That Never Was,” February 2026.

The nuance in that last number matters. Costs are absolutely up for the large majority of organizations, and the mechanics above explain why , but a runaway, universal 100%+ price shock isn’t the median experience. What is common is the steady structural pressure: bundle costs that don’t map to actual usage, a core-count floor that penalizes older hardware, and a compounding uplift clause working in the background every renewal cycle. That’s arguably a harder problem to notice and budget for than one big scary number, because it doesn’t show up all at once.

It’s also no longer just a customer-vendor dispute. In 2026, a coalition of European cloud providers (CISPE) filed a formal antitrust complaint with the European Commission over Broadcom’s VMware partner-program changes, with reporting around the complaint citing price increases above 1,000% in some cases tied to bundling and minimum-commitment terms. Regulators are now looking at the same mechanics IT teams have been living with for two years.

Your Renewal Isn’t Paperwork Anymore. It’s a Negotiation

VMware renewals used to be close to a rubber stamp: confirm the count, sign, move on. The packaging and pricing changes above have turned that into a real negotiation with real leverage on the table, for whoever shows up prepared.

One advisory firm’s analysis of roughly 35–50 Broadcom VMware transitions found that organizations who went in prepared (decomposing the bundle against what they actually deploy, checking their real core counts against the 16-core minimum before the quote arrived, and having a genuine priced alternative in hand) held their final increase to roughly 40–60% of the opening ask. Notably, that leverage showed up even for organizations that never intended to actually leave VMware: simply having a credible, priced walk-away option changed the conversation.

The organizations getting the worst outcomes aren’t the ones with the most complex environments. They’re the ones who treated the renewal notice as the start of the process instead of the deadline for finishing it.

Three Paths Forward

Once you’ve done the homework above, most organizations land on one of three strategies. None of them is automatically “right.” It depends on your environment, your timeline, and how much re-architecture risk you’re willing to take on.

• Stay and optimize. Trim shelfware, right-size to actual usage, and negotiate the bundle down to what you actually run. The fastest path, but it caps your savings at whatever the negotiation yields.
• Migrate off VMware entirely. A real option, but a heavy one: once you count application dependencies, disaster-recovery redesign, retraining, and revalidation, this typically runs 18–24 months for a mid-sized estate. Worth it for some organizations; a multi-year project for most.
• Keep VMware, change who carries it. Move to a fully managed, hosted VMware environment (same applications, same VMware stack your team already knows, no re-platforming), but the licensing, capacity planning, and renewal exposure shift to a provider who’s already built for this. It’s the option that changes the cost equation without changing what your applications run on.

Before Your Renewal Notice Lands

Whichever path fits, the organizations that come out ahead all do the same handful of things well before the renewal conversation starts:

• Get a real inventory: what you’re actually licensed for versus what you’re actually running. Most of the recoverable cost hides in that gap.
• Model your real core counts against the 16-core-per-processor minimum before you see a quote, not after. It’s the single most mechanical, most predictable driver of an inflated number.
• Start the conversation six to nine months out, not six weeks. Leverage takes time to build.
• Get one real, priced alternative on the table, even if you don’t plan to use it. A credible walk-away is what turns a renewal into a negotiation.

Where to Start

If you want a starting number before you start the conversation, we built a short calculator that estimates the gap between a typical VMware/Broadcom renewal and a fully managed, hosted alternative from a few basics about your environment. No sales call is required to get the estimate.

Try the VMware Renewal Cost Calculator →

If your renewal is already on the calendar and you want a second set of eyes on it before you’re back at the negotiating table, we’re glad to help.

Book a Renewal Assessment →

Sources

• Simon Sharwood, “AT&T claims VMware offered it a 1,050 percent price rise,” The Register, Oct. 1, 2024
• CloudBolt, “New CloudBolt Research: 86% of Companies Actively Reducing their VMware Footprint” (“The Mass Exodus That Never Was”), Feb. 17, 2026
• Reuters / CISPE, antitrust complaint to the European Commission over Broadcom VMware partner-program changes, March 19, 2026
• Redress Compliance, “Broadcom VMware Pricing Report 2026” (analysis of 35–50 Broadcom VMware transitions, 2024–2025)
• IT Vortex, “The VMware Crossroads in 2026: Rising Costs, Partner Changes, and Smarter Infrastructure Choices,” March 23, 2026 (updated June 18, 2026)