Microsoft LARs caught cold by giant price spike

Vendor confirms UK volume pricing will jump by 29 per cent from 1 July - far higher than most expected

Microsoft partners have been winded by the vendor's decision to hike volume pricing by an average of a whopping 29 per cent from 1 July.

News that the software giant was to align pricing with the euro first broke in February, leading to speculation that prices would rise by between five and 25 per cent. At the time, some Microsoft partners questioned the timing of the move, arguing it could have a dire impact on UK plc.

But Microsoft confirmed on a call this morning to its large account resellers (LARs) that UK prices would spike by a massive 29 per cent in two months' time – much more than most anticipated.

Quite apart from the shock of the increase, the relatively short notice will give corporate customers little time to assess their estates and place an order in time for the 1 July deadline, LARs have warned.

The changes affect only corporate and government contracts, while the price of Open Education licences will remain frozen. For instance, the price of a Select/Select Plus licence will rise by 24.6 per cent on 1 July, with the price of an EA/EAS and Direct EA licence spiking by 26.7 per cent. The price of SPLA and ISV licences will both increase by 33.4 per cent.

Mike Chambers, managing director of LAR Comparex, described the move as the LAR channel's equivalent to quantitative easing.

"This will come at the expense of the customer. We are in a double-dip recession and many organisations are squeezed," he said.

Chambers added: "June is a very busy month for Microsoft already, so to ensure orders proceed, we really need information from the customer to us by the first week of June, or the end of May. This gives large organisations a very short period of time to decide how much and what direction to invest in Microsoft technology."

Richard Lamacraft, Microsoft specialist at LAR Softcat, said it is critical that customers review their options for buying and renewing licences to avoid being hit.

"The 29 per cent average price increase may take some by surprise, but it is just the net effect of a number of years' exchange rate fluctuations," Lamacraft said. "Microsoft adjusts its pricing less often than other vendors, which is why people will notice this increase."

Microsoft also used this morning's call to reveal it is in the process of renegotiating the discount it hands to government clients through the Public Sector Agreement (PSA).

That discount is based on the price of its Select and Enterprise Agreements and Chambers said the government would do well to secure a larger discount in lieu of July's price rise.

Lamacraft acknowledged that it would make sense for only some customers to buy products before 1 July, as some would have agreements to lock in prices for three years, while others would need to take no action.

But he added: "In any case, it is better to explore the options than to risk making a costly mistake. That is why we are inviting our customers to call us and talk it through."