Exclusive: HPE set to raise UK prices again in December - partners

Channel whispers suggest the vendor's UK prices could rise again on 1 December

HPE could be poised to raise UK prices again at the start of December following the latest slump in the value of the pound, according to channel whispers.

Multiple partners have told CRN they have heard that prices may be rising on 1 December 2016, although they added that no formal communication has yet been issued.

One partner, who wished to remain anonymous, said: "There is certainly a price rise coming out of HPE around networking. It has been intimated that some of our pricing for deals will have to rise and that something is coming there from HPE, not HP inc. But we would expect it to be across the board, unfortunately."

Another partner confirmed they had heard suggestions of price rises from HPE, but said they had been told the price rises would be "across the board" rather than just concerning networking products.

The value of the pound has slumped several times since the Brexit vote, falling from $1.49 in June to $1.30 at the beginning of October. At the end of October £1 was worth $1.22, rising slightly to $1.23 today, a 17.4 per cent decrease in total since June.

Clive Longbottom, founder of analyst Quocirca (pictured), said the news of a possible HPE price increase "doesn't surprise" him, since HPE raised its prices so soon after Brexit that it "got the timing wrong and the pricing wrong".

"HPE were one of the first ones to put their prices up and they went up by around 10 per cent in July. I would be surprised if [the initial rise] didn't happen at the same time as HP inc because there is still a huge linkage between them. I would be surprised if it isn't a case of both companies deciding to do it at the same time," he said.

"They got the timing wrong and the pricing wrong, so we can expect them to go up by around 10 per cent. When you look at Microsoft rising their prices by 22 per cent, [HPE] were going to have to put up their prices again. This is no longer a small dip in the value of the pound; this is essentially a devaluation of the pound. It is a long-term issue, and no company exporting into the UK can afford to keep their prices lower."

When approached for comment HPE said: "HPE, like any other international company, adjusts prices based on exchanges rates and currency fluctuations. After careful consideration of the business impact of a strong dollar against the pound sterling, we may decide to make adjustments to our pricing."

HPE wasn't the only vendor which implemented a UK price rise shortly after the Brexit vote, with Dell raising prices across the portfolio by eight or nine per cent in July. Lenovo raised its UK prices by 10 per cent on 1 August, and Asus told customers to expect retail prices to rise by around nine per cent in October.

Most recently, Apple announced that prices are rising 20 per cent for UK customers. Microsoft also increased its prices for enterprise cloud services by 22 per cent and its on-premise enterprise software by 13 per cent, due to come into force on 1 January.

Speaking about the recent price rises, Robert May, managing director of VAR Ramsac, said he thought that some vendors are using Brexit as an excuse to push up prices.

"Some of that I think is genuine," he said. "Some of it is purely down to the strength of the pound. But some of it I think is Brexit labelling and it is an excuse to push up prices. If you look at the economics, it makes sense -- the pound is doing what it is doing so some of it is unavoidable - but some of it is an excuse.

"I don't think the channel can absorb the rises. Margins dictate that it isn't possible. I think in some ways it is helping the channel in that it is making clients make decisions more quickly. Where we have had notification from vendors that prices are rising, we have been able to tell clients that as of this date the supplier is putting up their prices. I think there have been quite a lot of projects that have got the push ahead sooner in order to save on the price increases. I think end users are accepting that the prices are going up as well. So from that point of view I think it helps the channel."

Martin Hellawell, CEO of Softcat, added that every vendor has had to raise its prices to remain profitable, and that customers understand that prices have to go up.

"Every vendor has to [raise prices]; it is not their fault that currencies change. To remain profitable, organisations they have got to raise their prices. Customers understand the reasons why vendors have to do that. Generally speaking we are advising customers, where they can, to try to bring projects forward due to all the price rises we have already seen," he explained.

Howard Hall, managing director of HP partner DTP Group, reiterated that sentiment, adding that the VAR has had to absorb some of the price rises when it involves managed services and project work.

"We believe that everyone is struggling with the dollar-to-pound rate. We have been absorbing some of the price rises with the projects because of the time it takes to give the customers notice. We work predominantly with project work, and projects are still going forward. We aren't seeing customers make sacrifices yet but it may be something that does happen," he said.