Dear Microsoft gets "dearer"

Windows Sever 2012 this year for both on-premise and cloud, Microsoft is poised to raise the prices of its consumer and enterprise products in India by 10-25%. The increase will be implemented over the next several months, beginning November 1. It will impact popular products such as MS Word, PowerPoint, Windows Server operating system and other office software, priced in Indian rupee rates in the phased manner, starting from this month and continuing till January, 2013.

Ramkumar Pichai, GM, Microsoft Office Division, said, "We all are entering into a new era of computing with the introduction of Microsoft unprecedented versions of new software be it Windows 8, Windows server and many more releasing this year. Therefore, before we launch new products, we have planned to calibrate our product pricing, which may result in 10-25% increase on the new offerings."

"The idea to introduce preview pricing to the channel one month in advance, is that our channel partners can adjust or absorb the increase in pricing accordingly. Additionally, the increase is mainly to bring the cost of its Indian products in line with global prices," added Pichai.

WHY PRICE HIKE NEEDED?
The calibration of prices for the Indian market has been introduced primarily for three reasons. According to the company, it wants offers true value of the software to customers, and want to ensure global parity of pricing after the introduction of INR billing. The other focus area for Microsoft is proliferation of network program and geo-expansion in tier-2 and 3 cities. Currently, the company is present through distributors in 65 tier-2 and overall 260 tier-2 and 3 cities.

"We are working with our distributors at the same time our value-added-distributors Ingram Micro and Redington. We are also closely working with our partner network and building their competency and assisting them in increasing their average size of deal up to 60%," said Pichai. India is one of the strong and has a highly mature IT market and the company is sure that the market will absorb new pricing. "We are in the process of talking to our partners. The first list of preview pricing, we have already circulated to our partners in the month of October, but it will be effective from November, 2012.

Similarly, the second preview of pricing will be introduced in the month of December in the channel, but the implementation of correction in pricing will be effective from January, 2013. And the last phase of pricing will be announced once the launch date of Office 2013 finalized," explained Pichai.

PARTNERS REACTION
Although, Microsoft claims to inform its partners about the calibrated pricing, but partners have different version to say as they are not aware of this change in pricing announced by Microsoft. Moreover some of the partners fear, that this 10-25% hike in pricing may lead to a drastic drop in sales, by up to 20-40% in next 6 months.

Commenting on the pricing, Delhi based Shyam Modi of Modi Infosol said, "As of now, we have not received any preview pricing list. Sales are already on a decline, as most of the customers are waiting for Windows 8 launch, but if Windows 8 will be launching with increased price, we feel there will be a drop in sales in the next 3 months."

Just a few days ahead of launching its much-hyped Windows 8 platform later this month, the decision to increase price may not be timely.
The hike will have a negative effect on the partners' business feels Paramjit Singh Juneja of Secant Technologies. "The frequent change in pricing, and another steep hike will change the budget of the customer," says he.

"Already Punjab association has banned Microsoft products in the state and are selling alternatives to Microsoft products and organizing seminars on Linux and its various variants and are running anti-piracy campaigns and guiding members on how to sell DOS based laptops and desktops within legal framework.

In such a situation, the recent price hike will further impact the sales of partners, customers may postpone their decision to invest in new technologies, and the long-term effect can be their decision to opt for alternative technology wherever possible. This will have a direct impact on both Microsoft's sales as well as ours," feels Vikas Dewan, director, Strategic Marketing.