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European cloud users should brace themselves for further price hikes, after Microsoft confirmed plans to charge enterprise users more to use its off-premise products from 1 August 2015.
Dublin-based Microsoft consultant Aiden Finn divulged details of the price hikes in a blog post, after being notified by the software giant of its plans to charge enterprise users in the Eurozone 13% more to use Azure from the start of August.
The post suggests there will be a degree of price protection for users who have previously purchased Azure through Enterprise Agreements or Microsoft’s Server and Cloud Enrollments (SCE) until they need to renew.
New customers will be charged the revised pricing after 1 August. If they choose to purchase Azure services before this date, customers will be charged the current rate.
A Microsoft spokesperson confirmed to Computer Weekly the price hikes will not affect UK users and are not expected to in the immediate future because of the strength of the pound.
“Microsoft periodically assesses our pricing to ensure there is reasonable alignment with the market. In light of the rapid evolution of the market for cloud services and evolving local dynamics, we can confirm that as of August 1 2015, we will adjust prices for most enterprise cloud products within the EU/EFTA region," the spokesperson said.
"The UK is unaffected by these adjustments. The changes will not affect existing annuity volume licensing agreements but will apply to most enterprise cloud products under new or renewing contracts,” the spokesperson added.
Cloud pricing U-turn
The news may come as a surprise to some, given that Microsoft, Amazon Web Services and Google have previously embarked on a series of successive price cuts to lure in users. This has led some industry watchers to question how sustainable their pricing strategies will be in the long term.
Microsoft’s Azure price hike has been prompted by the shift in strength of the Euro, which has seen the currency fall in value by around 20% since the end of 2014, largely because of the economic instability and uncertainty affecting Greece.
Read more about IT spending trends
- CIOs could end up accidentally overspending on IT in 2015, according to Gartner.
- The strong US dollar will influence how CIOs spend their 2015 IT budgets, which may result in increased spending in the cloud.
This is a trend Gartner addressed on 30 June 2015, telling Computer Weekly that the strengthening of the dollar will lead to suppliers upping the price of their goods and services to European users to protect margins and cover costs.
Speaking to Computer Weekly, Clive Longbottom, service director at fellow market watcher Quocirca, said the size of the European market would make it difficult for suppliers to keep their pricing at current levels.
“This has little to do with cloud pricing. It is just a reflection that the Euro has collapsed and on the price of imported goods and services – which Azure has to be regarded as – when a currency falls to such an extent,” he said.
According to Longbottom, until the situation in Greece is resolved, it’s likely the Euro’s value will continue to fall, which may result in further price hikes from Microsoft and its competitors. European companies dependent on a large part of importing from non-European countries will face tougher times because of the price hikes, he added.