Cloud

Brexit bombshell: Microsoft raises cloud pricing 22% for UK businesses

Microsoft recently announced a price hike for British customers purchasing enterprise software and cloud services due to the fall of the pound after the Brexit vote. Here's what you need to know.

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Image: iStockphoto/Delpixart

UK enterprises using Microsoft software and cloud services will face a price increase on January 1, 2017, to align the pound with the Euro post-Brexit, Microsoft announced last week.

"From January, British pound prices for on-premises enterprise software will increase by 13% to realign close to euro levels," a press release stated. "Most enterprise cloud prices in British pounds will increase by 22% to realign close to euro levels."

Since the June Brexit vote, the value of the pound has fallen 18%.

Despite the large price increase, Microsoft's enterprise offerings will remain "highly competitive" in the region, the company said. Companies that resell Microsoft products will still have the final say on cost, according to the press release.

"For business customers, these changes will not affect existing orders under annuity volume licensing agreements for products that are subject to price protection," Microsoft stated. "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."

SEE: Video: Top 5 ways Brexit will affect tech (TechRepublic)

Business customers with cloud commitment subscriptions, such as Office 365, will also receive price protection for the duration of their subscription contract—usually a year after the start of the subscription, Microsoft stated in the release.

The company regularly assesses local pricing structures to ensure regional alignment, according to the press release. The UK pricing changes "are similar to the recent harmonisation adjustments to pricing in Norwegian krone and Swiss franc we made in April 2016," Microsoft stated.

Consumer software and cloud service prices will not change, Microsoft said. The company directed customers to contact their account manager or Licensing Solution Provider with any questions or concerns about the upcoming increases.

Microsoft is not the first tech giant to report a decline in profit post-Brexit. As Liam Tung reported on ZDNet, companies including Apple, Dell, and HP have raised prices in the UK due to the pound's slump. In June, telecommunication giant Vodafone said it would consider moving its headquarters out of the UK due to Brexit.

Meanwhile, Amazon is still planning to build new data centers in the UK next year, despite the vote.

SEE: Brexit: Answers to 8 crucial questions for business and technology professionals

Tech companies remain worried about Brexit's impact: Three-quarters of UK tech workers said they believe the business environment may get worse, and more than half said they think it will be more difficult to attract and retain non-UK talent, according to a July survey from Tech City UK.

Brexit will drop UK tech spending between 2% and 5%, bringing it into negative numbers for 2016, according to a report from Gartner. "With the UK's exit, there will likely be an erosion in business confidence and price increases which will impact U.K., Western Europe and worldwide IT spending," John-David Lovelock, research vice president at Gartner, told TechRepublic's Conner Forrest.

The 3 big takeaways for TechRepublic readers

  1. As of January 1, 2017, Microsoft will increase the price of UK enterprise software by 13%, and enterprise cloud services by 22%, in order to realign with Euro pricing after the Brexit vote in June.
  2. Tech companies including Apple, Dell, and HP have also raised prices in the UK due to the rapid decline of the pound.
  3. Consumer software and cloud service pricing will not change.

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About Alison DeNisco Rayome

Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.

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