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Brexit gets real with 22% Azure price hike in UK

Price hike

While most international vendors were keen to state Brexit would not impact the UK negatively in the aftermath of the referendum, it would appear Microsoft has given up treading lightly around the situation.

Microsoft Azure customers received an email which has outlined a price hike for UK customers as of January 1 2017. The tech giant has said it will increase Azure pricing by 22% to ensure it aligns more effectively with Euro prices. This does appear to be a global move as prices are also set to increase in other regions were conditions are testing for the US firm.

“As a part of its ongoing policy to maintain price consistency with euro levels across the EU/EFTA region, Microsoft is announcing a British pound price realignment to euro levels for enterprise software and cloud services. This adjustment will be effective from January 1, 2017 but will not apply to consumer software and cloud services,” the team said in a statement to Telecoms.com.

We got in touch with our own CTO Gareth Webber (Gareth leads the team for the Knect365 division of parent company Informa) for his thoughts on the price hike.

From a Knect365 perspective, the increase in prices is not going to impact how it consumes Azure cloud in the short-term, however it will play a role in decision making in the future. Webber expects AWS to follow suit at some point in the future, and as with any other procurement decision, pricing will play a role how Knect365 consumes cloud. If it becomes too expensive, naturally Webber and his team will look elsewhere.

While Microsoft Azure might have picked a better time to make the announcement (a price hike isn’t exactly full of Christmas cheer), it does have customers in a bit of a bind. Vendor lock-in is not something can be discussed for the moment, but it isn’t far off. Despite numerous companies wanting to shift towards an interoperable multi-cloud strategy, moving workloads between platforms is still expensive and challenging. Azure and AWS do also offer services other cloud providers don’t as of yet. The price hike might not be welcomed by UK customers, but it might not have a significant impact in the short-term.

Although the price hike will have a few people striking Microsoft off their Christmas card lists, this might not be the biggest threat for the US giant in the future. Webber noted that for smaller organizations the prospect of shifting over to Googlemail from Office365 could be an interesting move. Microsoft has pinned its dominance in the enterprise market to date on the (largely) universal acceptance of Office365, though Google could be lurking on the horizon to cause a few issues.

The price hike is not entirely unexpected as UK businesses have gotten away relatively pain-free following the decision to leave the European Union earlier this year. Microsoft may not be in danger of losing too many customers in the short-term, but a general price hike does open the door for a new player to enter the UK with a disruptive pricing model.

With any significant change in a market, like Brexit, there will always be someone lurking in the shadows who has an unconventional idea with the potential to shake things up. Who will it be this time, or is the UK doomed to higher cloud prices?

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