The many downsides of ‘Brexit’, the UK’s departure from the European Union, now include Microsoft’s UK customers. Retail Office 365 customer may be next.
The company has announced that British sales of “enterprise software and cloud services” will go up in price from January 2017.
The increases will be between 13% for on-premises enterprise software and 22% for enterprise cloud services.
Pound has dropped 18% since the Brexit referendum. Of course, Microsoft isn’t increasing prices because of the large drop in Sterling. Oh no, heaven forbid! According to Microsoft, the prices rises are “to harmonise prices for enterprise software and cloud services within the EU/EFTA region“. Who does Microsoft think they are fooling? Certainly not the business customers affected by the price rise.
These price changes only apply to enterprise customers for new licences or when current annual plans come up for renewal.
In the short term, the announcement is a way for Microsoft to encourage organizations to renew or buy before the price rise.
Nothing in this announcement changes the prices for Office 365 to consumers or small businesses.
For the moment, the Sterling prices remain the same. But for how long?
Microsoft is now selling Office 365 ‘subscriptions’ in the UK at a loss compared to US. In other words, Microsoft is earning less for selling Office 365 in the UK than they were six months ago, in US dollar terms. The same applies to the ‘perpetual license’ Office 2016 purchases.
That’s why the UK enterprise prices are being ‘adjusted’, to maintain the same revenue stream back to head office.
Usually, Microsoft doesn’t change the consumer prices of Office between versions of Office. They’ve accepted the exchange rate situation good or bad. But that was before the switch to annual ‘subscriptions’. In addition, large currency movements like UK is suffering are rare.
But this is an exceptional situation so, perhaps, Microsoft will ‘adjust’ the consumer prices for Office in the UK? Shortly after Microsoft’s announcement, Apple raised it’s UK prices on devices and laptops.
Press duped again
The mainstream press has misunderstood Microsoft’s carefully worded statement and inferred things that aren’t there.
The price increase will apply to existing customers once their current annual arrangement runs out. The ‘price protection’ only applies to the current, usually, annual plans paid monthly. The monthly payments will increase once the annual contract is up for renewal.
Microsoft has NOT said that Office for consumers won’t get a price increase. They’ve only said that ‘This pricing change will not apply to consumer software or consumer cloud services’. That doesn’t exclude the chance of a separate price increase later.