Microsoft readies 22% NZ enterprise cloud price hike

Microsoft partners have warned enterprise cloud service customers to expect a 22 percent price increase from April 1.

In a message to its customers one Microsoft partner says the increase applies to Office 365, Azure, CRM-Online, Enterprise Mobility Suite, Intune and other enterprise online services.

The customer message reports Microsoft saying

… this is an adjustment to more closely align prices to the NZ market and reflects the rapid evolution of cloud services and the dynamic nature of the market.

In Microsoft’s defence, the partner points out it is years since Microsoft prices have risen and that there is now more value in the products.

Subscriptions "still make sense"

It goes on to say that a 22 percent price increase does not alter the financial sense of buying a subscription.

While these points are both true, the price rise is still a long way ahead of New Zealand inflation. At the time of writing inflation is close to zero.

It is also out of line with the recent fall in the value of the New Zealand dollar.

Companies can renew before the end of the month and pay the existing rate.

Frazer Scott, director of marketing and operations, Microsoft New Zealand says:

Microsoft is committed to delivering state-of-the-art security and compliance enhanced cloud computing solutions. As part of our on-going business process and in light of the rapid evolution of the local market dynamics, Microsoft will adjust prices for company’s enterprise cloud products in New Zealand.

Microsoft’s price increase underlines the risk companies take when adopting cloud services. Although there’s no absolute lock-in, moving a company that depends on, say, Outlook.com for its email to an alternative service, is far from trivial.

Many businesses will feel they have little option but to swallow this price rise. Yet Microsoft is taking a risk here. If customers fear that subscription software prices will ratchet up in coming years, they’ll look elsewhere. A 22 percent increase tests the limits of what customers are happy to accept.