We might have just reached the point where the Single Cloud strategy is dead.

The commercial risks of running a Microsoft Single Cloud strategy now outweigh any technical benefit.

Microsoft price increases:

September 2023 including Azure

  • AUD 9% (excluding M365 Academic plans)
  • CAN 6%
  • NZD 7% on-prem

April 2023 including Azure

  • GBP 9%
  • DKK, EUR, NOK 11%
  • SEK 15%

January 2023

  • SQL Server 10%

April 2022

  • M365 E3 12.5% (to make E5 pricing look better)

January 2022

  • Windows Server, Project, Visio 10%

The commercial risks of running a Microsoft Single Cloud strategy now outweigh any technical benefit.

The April 2023 and September 2023 listed currencies also get the earlier price increases, and Microsoft have openly stated that this price volatility could happen every 6 months going forward. Good luck with Azure budgeting. Azure and M365 cost optimization tools have now become a necessity.

The September 2023 price increases from Microsoft would have to be the worst ever example of corporate PR. The provided rationale changed several times, it was confusing and lacking detail, and some Microsoft staff even blamed Microsoft HQ in Redmond for doing it to them. There were no new features or value aligned to the price increase, only a separate piece of PR at the same time saying Co-Pilot AI would be charged in addition to the price increases.

I'm a fan of the recent developments in artificial intelligence (AI) but not if it has an inverse relationship to human intelligence (HI).

For Microsoft 365 E3 customers that haven't done a renewal since before March 2022 your next renewal price is going to start with 12.5% price increase including USD customers. If you're in one of the non-USD countries that got an additional recent price increase, your next renewal will have a further 6% to 15% increase.

The Microsoft price increase communications didn't seem to include:

  1. Azure profit % is declining because of the discounts being applied to +$10mill deals needed to gain market share on AWS and to try and limit GCP growth. Microsoft need to increase Azure profit % before the end of FY24 H1 (12/31/23) or the analysts and investors might drive the share price down, and there is a desire to retain the trajectory of the 50% stock price growth in the last 3 years.
  2. Microsoft are removing Fx hedging when converting funds to USD for transfers to tax havens, and therefore saving money by not buying hedging (Fx insurance). But someone (eg. the customer) needs to pay for the Fx fluctuation risk even if the Fx rate is stable.
  3. For currencies that got a price increase, if your Fx strengthens against the USD are you going to apply the Microsoft logic and expect a price reduction?
  4. Microsoft will continue using an annually-fixed Constant Currency (CC) when doing quarterly SEC filings like Microsoft did in their most recent financial statement where the CC conversion actually increased the reported Azure profit.
  5. M365 E3 and E5 Average Revenue Per Unit (ARPU) will increase for seven listed currencies at the next EA renewal, or sooner if the customer buys any of the 40 E3/E5 Add-On products during their current EA which are not price locked. While Fx may be the excuse, M365 net profit will increase because of the price rises.
  6. It may take customers up to 12 months to realize that their EA price rise will also increase their Unified Support price (it's a double hit). And for indirect EA customers Microsoft will hide the EA price increase inside the Unified "Appraised" look-back licensing spend formula that Microsoft don't publish.

Notice that none of these points mention customer value.

Looking at a more balanced approach to making hyper scaler investments must include Microsoft 365 and Dynamics 365 in the total commercial assessment, not just Azure. If you're using E5 security or compliance products, that may be a Single Cloud strategy and your loyalty would be rewarded with more regular price increases.

We still don't know how Microsoft's cloud encryption keys got hacked (taken). We do know they were used to access Exchange Online and they could have also been used for Sharepoint Online and Azure (regardless of MFA). We also know Microsoft had a legal obligation to inform the authorities and their customers as soon as they knew, and they didn't.

Zero Trust v1 was about protecting your information and infrastructure assets. Think of Zero Trust v2 as the commercial and technical relationship between the customer and the cloud vendor, where part of the solution is a very balanced Multi Cloud strategy for IAAS, PAAS and SAAS.