The precipitous drop in the value of the pound caused by Brexit has led to rocketing prices for Microsoft's cloud and on-premise business services in the UK.
From the start of next year, Microsoft's enterprise software will be 13 percent more expensive, while enterprise cloud services will be hiked by 22 percent, the company has warned.
The Redmond-based tech giant tried to put it gently to British customers by stating that it planned "to harmonise prices for enterprise software and cloud services within the EU/EFTA region."
Since Britain narrowly voted to leave the European Union in late June, the pound has fallen around 15 percent against the euro—from a high of €1.31 per pound on June 23 to around €1.12 today. Against the dollar, the pound is down by a shade more than 18 percent, falling from $1.49 per pound to $1.22.
Microsoft spokesperson Sergejs Cuhrajs explained the rationale behind the price hike, which apparently won't affect existing biz customers for the remainder of their subscriptions. He said in a blog post:
We periodically assess the impact of local pricing of our products and services to ensure there is reasonable alignment across the region and this change is an outcome of this assessment. These changes are similar to the recent harmonisation adjustments to pricing in Norwegian krone and Swiss franc we made in April 2016.
For business customers, these changes will not affect existing orders under annuity volume licensing agreements for products that are subject to price protection. For example, customers with Enterprise Agreements have price protection on previously ordered enterprise software and cloud services, and will not experience a price change during the term of their agreement.
Similarly, business customers with cloud commitment subscriptions such as Office 365 also receive price protection during their subscription term, which is normally twelve months from the start of paid subscription.
US software vendor Adobe, meanwhile, has plans to expand its operation in London with a new office. According to Garrett Ilg, the company's head of worldwide enterprise sales, Adobe—known for routinely increasing prices in the UK—"did not blink" after Brexit. He told the Telegraph:
I don’t think the opportunities degrade in any which way, change can make people nervous but great things can happen. We have a big worldwide view and [Brexit] didn’t cause anybody to have a second thought. It’s an interesting situation, the people have voted for change and change is hard but the way to succeed is to take a hard-right turn.
The new office will be based in east London, and will apparently be double the size of Adobe's current sales office in Fitzrovia.
On Friday, SAP—which has the largest revenue of any business software company in the world—reported "double-digit" software licences sales growth in the UK in the wake of British folk voting for Brexit. Global revenue climbed eight percent to €5.4 billion during the company's third quarter.
Listing image by Scott Hough
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