Price hikes anger Microsoft hosters

Microsoft partners dismayed by new SPLA product pricing

Rob Lovell: Price increase will impact on service providers already squeezed by downturn

Hosting providers have expressed dismay over Microsoft’s proposed price hike for some of its Service Provider Licensing Agree­ment (SPLA) products.

Partners must purchase licences through the SPLA programme from specialist resellers for products that they intend to host on a commercial basis.

Licence prices tend to be revised by Microsoft on an annual basis and come into force at the beginning of each calendar year.

For the coming January, Microsoft looks set to hike the price of its Enterprise and Standard edition SQL products by 10 and 18 per cent respectively.

The decision has angered certain members of the software giant’s hosting com­munity who have taken umbrage at the proposed price increase.

One hosting provider, who asked to remain anonymous, described the price hike as “disproportionate”.

“The products will be exactly the same next year as they are this year,” he said. “I am not sure what they are basing the decision to in­crease the prices on.”

Another said the price increase will apply to his company’s existing customer contracts, which means hosting providers will have to decide whether or not to renegotiate deals to allow for the new price.

“We do not want to risk upsetting our customers, so we will probably end up
letting our margins take the hit, but it is not something we are happy about doing,” he said.

Isidro Zoroza, director worldwide licensing and pricing at Microsoft, hit back at claims the price rises being introduced were unjustified.

"We released a new version of the SQL product earlier this year, but held off on increasing the price until January because that is when we introduce new pricing for our SPLA products every year," Zoroza explained.

"So, between December and January, it might appear that we are charging more for the same product. If you look back further, you will see that that is not the case and it is a newer product."

Despite this, Rob Lovell, chief executive of Micro­soft competitor Think­Grid, said the price rises could have devastating effects on the channel.

“This will not only have a huge impact on reven­ue but also on the basic survival of service pro­viders that are already squeezed by the economic downturn,” he added.