We have recently learned of Microsoft’s price increase for its cloud-based services which affects all Office 365 products. Other Microsoft products have also seen price rises which have come into force this January 1st.

Microsoft have blamed the increase on the post-EU slump in the value of the pound although to be fair, Microsoft have actually made an announcement whereas other suppliers have been increasing prices more stealthily. The announcement was originally given out in October.

This price rise will be disappointing news for the majority of companies that use Office 365 products and highlights one of the issues surrounding cloud services in general (ie once you’ve migrated to the service, you’re pretty well tied in). Whether prices will remain at this level remains to be seen but there’s little that businesses can do if they want to continue to use Microsoft products (Windows still continues to command 90%+ of the business market).

On the opposite side of the coin, Microsoft continue to build more and more features into the Office 365 suite of products and have just invested massively in three new UK datacentres. Hence it’s inevitable that that prices will increase naturally.

The 22% price increase does fairly well match the percentage price drop in the pound against the dollar since Brexit so whilst many think that Microsoft are profiteering, the reality is that they are not allowing Brexit to affect profits. Microsoft have carried out similar price adjustments in Norway and Switzerland following major alterations in the value of their respective currencies.

In summary despite the price increase, we still believe that Office 365 represents good value for money and is a consequence of Brexit rather than profiteering.

Mark Swann
January 2017