Microsoft plans to increase the prices it charges British businesses by up to 22% to account for the slump in the value of the pound following the EU referendum result.
The new prices, which will come into effect in January 2017, see the amounts expected for locally hosted software increase by 13%, while ‘most’ cloud-hosted services will increase by the full 22%, the company said in a statement.
To understand more about the announced increases and how this will effect UK businesses, we caught up with Giles Phelps, Managing Director at Net Support UK.
Net Support UK: Why is Microsoft implementing these planned price increases now?
Giles Phelps: On the back of the UK’s vote to exit the European Union, we’ve seen the value of the pound fall about 20% in the last few months.
This is where many of the prices changes, UK businesses are starting to experience, have come from.
There is a tendency among US-based cloud firms to bill overseas users in US dollars, before converting the price back to local currency. So, a stronger dollar will naturally see prices increase for UK businesses.
Although Microsoft has announced this news now, planned price changes in the UK are not just restricted to Microsoft.
Other US-based tech companies and vendors have either already increased, or announced similar planned price changes, including Amazon Web Services and Google. So we’ve already seen a number of significant increases in cost for many services and products. Including hardware.
The price increases Microsoft have announced won’t be taking affect until January next year, giving businesses some time to plan ahead for any impact.
Net Support UK: What do these price changes mean for UK businesses?
Giles Phelps: Increased costs to businesses is never favourable, but these price changes may present some opportunities for businesses.
Now might be a good time for businesses to reflect on how they use their existing technologies. Identifying the exact service levels they are currently billed for and ensuring they are maximising what they already have.
It could be the case, that businesses may find their existing services adequate to reach their digital transformation KPIs, without further investment.
And while the cost of using some off-premise services is likely to rise, at least in the short term, increasing use of cloud and automation technologies will keep businesses overall IT spend down in the long term.
Plus, cost increases from many of the US-based cloud providers may mean that price won’t be a choice factor any more. So many businesses will benefit from being able to choose the services that best suit their digital ambitions.
Net Support UK: What do customers need to know about Microsoft’s price increase and how will it affect their business?
Giles Phelps: Theses changes will affect all businesses either directly or indirectly. It’s likely that these increased costs may have to passed in their own products and services.
A 20% increase in overhead costs will have a significant knock on affect in any business.
Many of our customers would have already seen increased prices of hardware, software and services.
But with our strategic partnership with vendors, I would like to think that we can negotiated hard, to minimise the impact of these.
For our Microsoft customers, we are updating them as and when we get more information. We are working working in close partnership with our customers to make sure they are getting the most out of our technology.
Want to know more about the Microsoft price increase? Talk to one of our experts on 029 200 22 333 or send us an email