Microsoft partners are not surprised by the vendor's decision to hike its prices, with some claiming they have been warning customers about possible price rises since the vote to leave the EU took place.
The vendor announced the prices hikes on its blog, saying that UK cloud enterprise prices will rise 22 per cent from 1 January, with on-premise prices rising 13 per cent. This is due to the decreasing value of sterling, which has fallen 18 per cent from June 2016.
Mike Bacon (pictured right), managing director of Academia, said the rise will have a limited impact on the VAR, mainly because the increases were expected.
"Microsoft have held back for longer than some of the other US vendors," he explained. "It makes no difference to us because we have been telling customers for six to eight weeks to expect prices to increase everywhere. We have been telling them that where they have committed to buy, they should bring it forward if they can."
Andy Trish (pictured below left), managing director of NCI Technologies, echoed the sentiment, but he argued that the price boost was far higher than it needed to be.
"It doesn't surprise me because it happens quite regularly," he said. "I think that the price rises are way over inflation and the Brexit issues. Sterling has fallen 18 per cent for now, but I doubt that when it comes back Microsoft are going to lower their prices.
"I don't understand why they have done it because it is a licence. There is no physical shipment of goods. There is no reason for them to put their prices up in my eyes. If they shipped software and had import charges I would understand it.
"It won't affect my margins too much, but it will probably affect sales. Prices are already very high, so when you put the prices up even higher people are going to look at other alternatives."
Chris McQuade, operations manager at PCS Business Systems, said that the price rises are something we have to get used to "in this time of economic uncertainty".
He added: "I think we are going to have to get used to it. There are lots of prices changing from Brexit. I think anyone would be daft not to expect price rises and changes at the minute. Dell have done it, HP have done it. It is something we are going to have to get used to in this time of economic uncertainty.
"With Microsoft, you either need it or not. When they command 90 per cent of the operating system market, it is what it is. Anybody looking at it would expect the big boys to change their prices. The pound is so weak now that these things need to be done. This is the world we are in. We have created this. We just have to get on with it now."
Microsoft's announcement sees its cloud prices rise nine percentage points more than its on-premise solutions. McQuade said this could be because cloud is a more low-cost model.
"I think it's just one of the casualties of Brexit. But I think it will be a short-term position and will recover when the economy and foreign exchange rates do."
"Cloud is quite a low-cost model so to make a difference you need to increase it quite a bit. It doesn't surprise me that one outstrips the other," he explained.
Jumping the gun?
The 22 per cent price hike is four percentage points more than sterling has dropped since the Brexit vote. Academia's Bacon sees it as a pre-emptive rise to combat any future drop in the value of the pound.
"It is a price correction; they are aligning worldwide pricing. Maybe they just don't want to do it twice if it falls again," he said. "I would hope to see a settlement of exchange rates and a strengthening of the pound. I would also like to see particular software licensing firms absorb any more differences."
Mitchell Feldman, CEO of RedPixie, added that he believes the rise will be short term, and he thinks it will decrease when the foreign exchange recovers.
"I think it's just one of the casualties of Brexit," he explained. "But I think it will be a short-term position and will recover when the economy and foreign exchange rates do. If you want to maintain margins, you've got to adjust accordingly. Should Microsoft bear the responsibility of the foreign exchange or should it be the customer? Am I surprised? No. Every business in the UK economy is going through the same pains."
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