Microsoft to Raise Prices in UK on Slumping Pound

October 22, 2016 @ 4:19 pm

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The prices of some Microsoft enterprise products and services in the U.K. are to rise from the beginning of next year as a result of the continuing decline in the value of the pound, the tech giant has announced.

Microsoft said it would increase the prices of its products and services by as much as 22 percent, starting from January 1, 2017.

The Redmond, Washington-based company revealed in a recent post on its blog that the prices of its business software will increase by 13 percent. Cost of its online cloud services will witness a 22 percent jump.

These increases, which are considered among the consequences of the Brexit vote, are set to impact adversely on thousands of businesses. They also have the potential to cost governments in the U.K. several millions of pounds.

These changes were in line with Microsoft’s policy of assessing local pricing periodically to reflect prevailing situations. The company said the price hikes were needed to ensure that prices in the U.K. are in harmony with those across the region.

Not every piece of consumer software or cloud services offered by Microsoft will directly be affected by the price increase. But all products and services are likely to be affected considering resellers are free to set their own prices.

The increases will be applicable to new purchases. Some customers with existing contracts will be able to enjoy protection from the price hike.

“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,” Microsoft said.

The multinational technology company is a leading business software seller in the U.K., where its office suite of programs such as Word, Excel and PowerPoint is quite popular. Its Azure cloud service is also well accepted there by end users, including the Ministry of Defence.

The announced price hike is expected to counter, to an extent, efforts by the U.K. government to reduce spending on IT products and services. It could hinder the attainment of the goal of cutting down civil service costs significantly.

The Cabinet Office has not disclosed the amount it spends on Microsoft products and services. However, the amount is thought to be about £100 million per year at the minimum, according to the Telegraph.

It is not yet clear what steps the U.K. government would take after invoking Article 50 of the European Union Treaty that will set off the process of the country’s official exit from the regional bloc.

Several multinational companies have moved to lessen the impact of resulting slump in the sterling by raising prices.

Unilever and UK retailer Tesco were recently involved in a “Marmitegate” stand-off that arose from the consumer goods giant’s request for a price increase. Paul Bulcke, chief executive officer of Nestle, stated last week that the company was considering available options, including price hike, to deal with the problem constituted by the slump in the UK currency.

Another American tech giant, Apple, had increased its hardware prices in the country last month, citing decline in the value of sterling.

The price hikes will mainly affect consumers and businesses in the U.K. given resellers have a way of shifting the burden of cost increases.

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