Microsoft To Increase Prices In UK, Blames The British Pound's Decline Following The Brexit
U.S. tech firm Microsoft has announced its plan to increase its products including on-premise software and cloud services for UK enterprises in response to the decline of the British sterling that was brought about by the June 2016 referendum, which saw the exit of Great Britain from the European Union. The new prices will come into effect in January 2017 and will affect software programs such as Word, Powerpoint, and Outlook.
Microsoft joins other tech companies that have raised prices due to the slump suffered by the British pound following the Brexit vote. These companies include rivals Apple, Dell, and Hewlett-Packard whose profits were hit after the referendum. Microsoft's 22-percent increase is higher than the latter three, which imposed price increases by 10 percent.
To be affected by the increase are new purchases and not existing orders. Prices of Microsoft's consumer services are not covered. For resellers of Microsoft products, final prices and currency of sale are determined by them.
According to Microsoft, the Brexit-induced price hike will likely to affect thousands of British businesses. The company conducts periodic assessment of the impact of local pricing of its products and services.
The referendum has been blamed for the pound's continued decline. Companies affected by the decline are those that make money in Great Britain. The vulnerability of tech companies is attributed to the components used in their products, which are priced in dollars.
Microsoft reiterates that UK customers with multi-year agreements with the company will not be affected by the price rise. Existing annuity volume licensing agreements to shield other products from the increase.
The tech sector is not the lone victim of the collapse in the value of the pound. Swiss food giant Nestlé has announced its plan to raise its prices in Great Britain due to the pound's devaluation. Consumer goods company Unilever also raised its prices on UK supermarket Tesco earlier in October.