Get ready for Microsoft's coming UK price increase

Get ready for Microsoft's coming UK price increase

Summary: Starting July 1, Microsoft's raising substantially the prices it will be charging its UK business customers for software and services. Here's what you need to know.

SHARE:

I'm taking a couple weeks off before the busiest part of Microsoft's 2012 kicks into full gear. But never fear: The Microsoft watching will go on while I'm gone. I've asked a few illustrious members of the worldwide Microsoft community to share their insights via guest posts on a variety of topics -- from Windows Phone, to Hyper-V. Today's entry is all about a major change in Microsoft pricing for businesses and is authored by Richard Gibbons.

Microsoft alerted partners in early 2012 that there would be “significant” price increases coming to Volume Licensing in the UK starting July 1.

Many partners were been preparing their clients for “up to 30%.” Recently, partners received the final word from Microsoft:

  • Enterprise Agreements = 25.7% increase
  • Select/Select Plus = 24.6% increase
  • Office 365 = 21% increase*
  • Open Value/ISV/SPLA = 33.5% increase
  • Open = 7.5% increase

* This will all but wipe out the Office 365 price drop we saw earlier in the year.

This change does not impact consumer software or academic pricing, but it does affect many other customers.

These are huge increases. There’s no doubt about it. An £80,000 order now will be £100,000 in 7 or so weeks!

Why has Microsoft done this? Word is, it’s to bring the UK into line with the Euro pricing seen throughout EU/EFTA as up to now the UK has been up to 30 percent cheaper than mainland Europe for no real reason other than currency fluctuation. I think it is also fair to say that Microsoft, in general, alters its pricing less frequently and less radically than many other vendors thus making this a more immediate and obvious hit. (By the way, as part of this price alignment, Microsoft also is reducing pricing in Switzerland.)

If you currently have a three-year agreement such as an Enterprise Agreement (EA), then anything on your agreement before July 1 is price-protected until the end of the agreement. That means you will be able to add additional licenses of those products at the pre-increase price. So if you’re planning to deploy a new product before the end of your agreement, such as CRM or Visio, adding just a single license now will lock in your pricing for up to three years (depending how long your contract has left to run, of course).

That said, organizations must be careful not to “panic buy” and end up with licenses that they don’t need. Buying something before the price increase is still more expensive than not buying at all. Performing due diligence and identifying the correct solution is still very important, and this is an area where Microsoft is drawing fire.

Even with the advance notice given to partners, the window for organizations to evaluate their plans and their budgets will only be around 4 months; in the world of large enterprises, and even many SMBs, that is not a lot of time for what can be a major business decision. Chief financial officers may well feel pressured into green-lighting projects earlier than they feel comfortable with to avoid paying the increased costs come July 1.

For organizations with purchases on the horizon, even if that horizon is 18 months away, it is definitely advisable to talk to your VAR/LAR/partner of choice (as well as your Microsoft Account Manager if you’ve got one) to discuss your options and how this could/will affect you.

Rich Gibbons is a Manchester United supporting, MLB & NFL watching Software Manager at European VAR Bechtle and one of the (seemingly) few fans of Microsoft Licensing. His tweets and blog posts keep customers, colleagues & others up to speed on not just licensing but most things Microsoft, including Xbox, Cloud & Windows Phone.

Topics: Telcos, Microsoft, Operating Systems, Software, Windows

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

15 comments
Log in or register to join the discussion
  • It makes sense. They have to pay for

    shipping the master disk overseas by private jet somehow. ;)
    William Farrel
    • Sadly there is a degree of truth in that

      comment. I work across 80+ countries and we are constantly shipping physical media to match regulations.
      sonnet37
  • SPLA increase deferred

    According to the latest information from UK SPLA distributors, and because of the feedback given to Microsoft over these price increases, they have decided to defer the price increase for the SPLA program only until January 2013. This is good news for the hosting industry who were getting ready for a drop in orders beyond July 1st.
    Phil - Cloud4 Computers
  • That'll teach 'em

    for the bloody Stamp and Tea Acts, something that all but the most diligent have long forgotten. Go Redmond minutemen.
    klumper
  • Gottcha!

    EU made Microsoft pay a penalty now Microsoft is reclaim that money back.

    and the beat goes on.....
    SHAMKEN@...
  • Given how Microsoft openly stated it wants people to pirate

    (CNN's "How Microsoft Conquered China" article from 7/2007, the link I posted didn't go through, a web search will find it quickly), it's safe tp say Microsoft will continue this form of wealth redistribution for some time. The UK hike is only the latest.

    http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
    HypnoToad72
    • Errr.....

      So you are basing your biased decision on an article almost 5 years old? OK.
      Article doesn't say much about Microsoft loving pirates.
      Gisabun
  • Forbes names Ballmer Worst CEO EVER

    LOVE IT!!

    http://www.forbes.com/sites/adamhartung/2012/05/12/oops-5-ceos-that-should-have-already-been-fired-cisco-ge-walmart-sears-microsoft/3/

    #1 Steve Ballmer, Microsoft. Without a doubt, Mr. Ballmer is the worst CEO of a large publicly traded American company today. Not only has he singlehandedly steered Microsoft out of some of the fastest growing and most lucrative tech markets (mobile music, handsets and tablets) but in the process he has sacrificed the growth and profits of not only his company but ecosystem companies such as Dell, Hewlett Packard and even Nokia. The reach of his bad leadership has extended far beyond Microsoft when it comes to destroying shareholder value and jobs.

    Microsoft peaked at $60/share in 2000, just as Mr. Ballmer took the reins. By 2002 it had fallen into the $20s, and has only rarely made it back to its current low $30s value. And no wonder, since execution of new rollouts were constantly delayed, and ended up with products so lacking in any enhanced value that they left customers scrambling to find ways to avoid upgrades. By Mr. Ballmers own admission Vista had over 200 man-years too much cost, and its launch, years late, met users avoiding upgrades. Windows 7 and Office 2010 did nothing to excite tech users, in corporations or at home, as Apple took the leadership position in personal technology.

    So today Microsoft, after dumping Zune, dumping its tablet, dumping Windows CE and other mobile products, is still the same company Mr. Ballmer took control over a decade ago. Microsoft is PC company, nothing more, as demand for PCs shifts to mobile. Years late to market, he has bet the company on Windows 8 as well as the future of Dell, HP, Nokia and others. An insane bet for any CEO and one that would have been avoided entirely had the Microsoft Board replaced Mr. Ballmer years ago with a CEO that understands the fast pace of technology shifts and would have kept Microsoft current with market trends.

    Although hes #19 on Forbes list of billionaires, Mr. Ballmer should not be allowed to take such incredible risks with investor money and employee jobs. Best he be retired to enjoy his fortune rather than deprive investors and employees of building theirs.
    Pete&Pete
    • And yet many others disagree as

      Balmer still manages to bring in billions each quarter. And a look at Adam Hartung's biogrophy shows him to be a less then noticable human in your finacial world.

      :|
      Tim Cook
    • Such a shame

      Great Post, and its such a shame to see what Mr Ballmer's leadership seems to have done to the company that changed the world for the better only 20 of so years ago. As Apple hits record volumes and profits Microsoft turned its back on the rapidly emerging markets they serve with the odd desperate attempt to compete AKA the windows phone! Windows 8, it promises to be an improvement but its not going to change the world again. Sorry Microsoft its your turn to chase the bandwagon.
      Phil - Cloud4 Computers
    • From the sounds of your post, Microsoft must be getting ready to file for

      bankruptcy, and it must be losing billions of dollars each year.

      Yet, in the last few years, they've been bringing in some very good quarters of large profits. Perhaps you have the wrong Microsoft and the wrong Ballmer in mind in your comments.

      Microsoft, in fact, is in much better position going forward than any other tech company out there, and a failure here, and a failure there, won't be bringing them into insolvency any time soon, SINCE, they are the company with huge diversification and a huge array of products and services, the likes of which, neither Apple nor Google nor even IBM can match.

      When it comes to market cap, it's nice to have, but, it's not the way to measure the future of a company, since stocks can take huge tumbles in a short period of time, and even overnight. Apple has the market cap, but they lack the diversification which is needed to guarantee a secure future. 3 products; that's what Apple is. iPhone, iPad, and Macs. If one of them stops selling like they've been doing in the last few years, the market cap will fall like Humpty-Dumpty. And, Apple won't have a backup plan. Whereas, Microsoft has many backup plans, with their many and varied products and services.

      Microsoft has taken some huge gambles in the past, and lost a few and won a few. XBox, for example, was a very big gamble, and now, they're the number one game system in the world. Then there is Bing, which is still fairly young and has garnered about 30% of the search market. Windows 7 is also a tremendous success, contrary to your opinion. And, Windows 8 is another huge gamble, but, if they had just stood still with Windows 7, and had not offered to begin really competing in the mobile market, then that would have been the biggest blunder of all. Windows 8 is a gamble, but, because it's Windows, it's bound to become the biggest OS in the world. They also have the biggest software footprint in the enterprise of any company. Not too shabby.

      So, how do you measure success? Most people with any kind of thought process, would look at profits and call Microsoft a huge success. Yet, there are others who overlook that success, because, they simply don't like a company or don't like its management. Personally, I couldn't care less about the CEO of a company, as long as the company, overall, is successful on the bottom line.
      adornoe
      • Apple has a huge risk in few product appealing to finicky consumers

        The assumption is that Apple will be able to keep 'exciting' consumers, but that is not guaranteed.

        A new and exciting device from another company can suddenly divert a lot of whim money away from Apple, leaving them with huge inventories in their supply chains.
        Patanjali
  • SME's will walk first

    I think what you will now find is an increase of British SME's turning to free solutions and Google Apps. Microsoft could not have picked a worst time to introduce price increases anywhere when small businesses are looking to cut back and save every penny they wont be willing to pay more money for a Microsoft license key. The biggest problem for Microsoft is that there will be a likely increase in license overuse.
    ben.rattigan
    • Yep, you're spot on..

      We're just in the process of switching all our servers to Ubuntu as much as we can to keep costs down.. not sure what's going on at Microsoft these days?

      I've been a MS developer since MS-DOS (and Amiga-DOS technically) days, through every version of Windows, but after trialling MS Windows 8 for a month, I've just switched to Mac OS (I have a Windows 7 VM for VS2012 and SQL Server development), and a year with Windows Phone 7 convinced me to switch to iPhone. Can't believe they've applied Metro to Server 2012 as well!!

      Microsoft are heading in a direction that my company, and me personally, just cannot follow. Sad days.
      brentj73
  • What Recession?

    The UK economy has contracted by 0.3% last quarter. Huge numbers of jobs are being lost. UK government services are contracting. Public services are cutting spending massively.

    In this environment businesses that want to sell are cutting prices. Some public sector organisations are opting out of Enterprise licensing and are returning to licensing on a PC by PC basis. Software upgrades are being scrapped for cost reasons.

    Microsoft increase their prices 25%.... I think their customers will be considering new options to avoid any increased spending. Guesses about the adoption of Windows 8 in Britain's business sector?
    Stephen Townsley