Dell is one of the first US IT vendors to implement price rises following the Brexit-fuelled slump in the pound's value.
On Friday, Dell increased UK prices across its portfolio by eight or nine per cent, according to its partners. Rupert Mills, director of Dell partner Krome, told CRN that Dell hedges quarterly anyway, but brought forward its latest round following the severe dip after the UK voted to leave the EU last week.
At 10pm on Thursday 23 July – when EU referendum polling stations closed – one pound was worth $1.49. That fell sharply to $1.33 when the Brexit result first emerged, and today (5 July 11am) a pound is worth $1.32 – down 11 per cent from its pre-Brexit value.
Straight after the Brexit vote, Canalys warned that US vendors will begin hiking the prices of their products and warned this could see the UK IT market shrink by as much as 15 per cent next year as a result of customers becoming more cautious.
Mills stressed that Dell is not alone in increasing its prices, adding that about half of the vendors his firm works with have done, or plan to, do the same.
"[Dell] hedge everything against the dollar and they normally hedge quarterly," he told CRN. "We're due a re-hedge in August, but they brought that forward and did it in July. I believe it's about an eight or nine per cent increase across everything.
"It's not just Dell – it's happened with a few. We're seeing disties increasing pricing on a variety of them – anyone who hedges against the dollar. About 50 per cent [of our vendors]."
"After prices go up, if your margins hold steady then there's no impact on you."
Mills said his firm is not at a competitive disadvantage because all UK resellers are in the same boat, but warned that doubt may now be cast on some customer projects.
"The biggest problem we had was going to customers and saying any pricing they've got is going to change as of Friday," he said. "We had three or four days to say 'if you want it at that price, you've got to order by Thursday'. I think the whole market is reacting in the same way, so everyone is getting less bang for their buck – literally – because the dollar rate is worse now.
"I suspect it will mean clients will look again at their budgets. If they had a £100,000 budget and now the project will cost you £110,000, then it's a question of if that project will happen, or will it be put off until they get additional budget?"
Another Dell partner, who wished to remain anonymous, said that so long as margins hold strong, price increases are not too much of a problem, and can even be an opportunity.
"It can be a short-term opportunity because if you know a vendor is going to put up prices, you can encourage customers to buy now before they go up, and that pulls orders forward, which is always good," said the source.
"After prices go up, if your margins hold steady then there's no impact on you. Customers have the same budget so they buy in terms of volume less, but in terms of value, the same.
"If you believe there will be less business out there because of people being nervous about investment, due to Brexit, then conditions become more competitive. There's less business and more people going after it. That drives down margin, so it is difficult to maintain those margin levels. But if you can, it makes little difference."
In a statement, Dell said:
"Dell's priority is always to provide great value to our customers and partners. We carefully consider price moves for our customers and partners, and have worked diligently over the past several months to postpone any increases pending the outcome of the EU referendum.
"In line with the rest of the industry, our component costs are priced in US dollars, and unfortunately, the recent strengthening of the US dollar versus the euro and other currencies in the EMEA region, following the UK's decision to leave the European Union, will have a direct impact on the price we sell to our EMEA customers and partners.
"We understand that this is an uncertain time for many British businesses and we will continue to work closely with our customers and partners to provide great value products and services."
While Dell has confirmed the direct impact the currency fluctuations will have on pricing, other vendors are still considering their positions.
In a statement sent to CRN, HP Inc - which sells printers and PCs - said it is "carefully assessing the Brexit situation" but stressed it is business as usual, while HPE - which sells servers and storage - said it adjusts prices based on exchange rates "like any other international company" and always communicates these with partners and customers.
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