Microsoft has announced it will be increasing its prices for customers buying its enterprise software and cloud services in British pounds by up to 22% from January to “harmonise” within the EU and EFTA (European Free Trade Association) regions.
The company said on-premise enterprise software will increase by 13% to align closer to the Euro, while “most” enterprise cloud prices will rise by almost a quarter, adding that after the adjustment customers will “still find our cloud offerings highly competitive.”
For existing customers, Microsoft said the changes will not affect them. “These changes will not affect existing orders under annuity volume licensing agreements for products that are subject to price protection,” the company wrote. “For example, customers with Enterprise Agreements have price protection on previously ordered enterprise software and cloud services, and will not experience a price change during the term of their agreement.
“Similarly, business customers with cloud commitment subscriptions such as Office 365 also receive price protection during their subscription term, which is normally 12 months from the start of paid subscription,” it added.
Microsoft said it assessed its prices “periodically”, noting the move was not especially different to adjustments in pricing made for Norwegian krone and Swiss franc in April 2016 – again using the word “harmonisation”.
Yet the inferences are clear; the value of the pound has dipped considerably post-Brexit. On June 23, the day of the referendum, it was 1.4819 US dollars to the pound. At the time of publication, it is hovering at 1.22312, representing a 17.5% downturn. In a piece published yesterday, the Financial Times noted the move was to “reflect the plunging pound.”
In July, analyst firm IDC warned that its coming analyses on the European cloud infrastructure market may be downscaled following the Brexit vote, adding that it expects a “challenging transition” ahead for the UK. Taylor Rhodes, CEO of managed cloud services provider Rackspace, cited Gartner’s similarly gloomy post-Brexit forecast for IT spending growth when speaking to analysts in August, following a move by the company to sell one of its ‘non-core’ business units.
It’s not all bad news, however. Writing for this publication in August, Louis Columbus discussed how Brexit can accelerate public cloud adoption, while focusing on Amazon Web Services (AWS). “The continual pressure on CIOs to reduce the high hardware and software maintenance costs is accelerating thanks to Brexit,” he wrote. “Because no one can quantify with precision just how Brexit will impact European economies, CEOs, and senior management teams want to minimise downside risk now.”