Microsoft raises UK software prices after Brexit weighs on pound

Microsoft has raised the prices of its UK enterprise software services such as Office and Azure to reflect the plunging pound in a sign of higher technology costs to come for British businesses following the vote to leave the EU.

The cost of Microsoft’s widely used Azure cloud services will climb by more than a fifth from January, while prices of enterprise software will be increased by 13 per cent.

Microsoft provides software to some of Britain’s biggest businesses such as Marks and Spencer, as well as government departments including the UK Ministry of Defence, whose 250,000 employees use Office 365 and Azure, and an NHS trust. The MoD said that it would not be affected by the price rises.

The US technology group opened its first UK-based cloud computing centre in September to serve its British corporate clients.

“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,” said a Microsoft UK spokesman.

Sterling has fallen by a fifth since the vote by Britain in June. Microsoft is not the first technology company to raise prices to reflect the fall in sterling since the Brexit vote, although the increase in the cost of its cloud services in particular appears to be more than many.

Dell and Apple both confirmed price increases of up to 10 per cent, which have been passed on to consumers by electrical retailers.

Technology executives have also already complained about rising costs of other parts of the technology supply chain, from hardware such as memory and hard drives to domain names, software licences and subscription services.

In July, Gartner, a research firm, warned that the collapsing pound and uncertainty because of Brexit could wipe as much as 5 per cent off spending on technology in the UK this year.

Azure — Microsoft’s cloud product — has been a main focus for the company in a rapidly growing part of the technology market.

Azure recorded revenue growth of 116 per cent in the first quarter, an acceleration from the 102 per cent of the previous quarter, taking it to about 11 per cent of the market by sales, compared with rival Amazon’s 31 per cent.

Amazon said it had no plans to raise prices for its enterprise products, instead indicating a price drop as recently as August 2016.

“For those that would like to pay for AWS technologies in local currency … we have also released a feature where credit card customers can set their preferred payment currency,” an Amazon spokesperson added.

“Using this tool, customers can pay for their AWS resources in pound sterling or 10 other currencies, converted from USD to their preferred currency at a competitive exchange rate.”

A survey of more than 7,000 businesses by the British Chambers of Commerce this month found that more manufacturing and services firms said that the exchange rate was more of a concern than three months ago, with 30 per cent of services businesses — from 15 per cent — and 48 per cent of manufacturers — from 35 per cent — expressing worry.

[Source:-Financial Times]