The meteoric rise of the US dollar relative to currencies in Europe and other parts of the globe is the reason VMware is reducing channel discounts by mid-to-high single digits and why user pricing will rise.
Virtzilla and its distributors have warned their reseller and integrator customers of the pending tweak to the licensing cost structure from April Fools’ Day.
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Talking to The Channel, members of VMware parnter sales community said the discount changes mean end user pricing for non-vSphere wares will head north by between four to five per cent, and slightly more acutely at seven per cent for vSphere.
“VMware is using the currency issue as an excuse to put its prices up [indirectly, by reducing discounts], of course it is at liberty to do so,” one VMware channel biz said.
Another told us: “The dollar has had a significant impact [on the money US vendors make], so prices probably need a reset, and we have to deal with that.”
Since last July the dollar has climbed roughly 15 per cent, though the British Pound started to stage a recovery last month. Research from Lloyds Bank suggests the recovery will move in favour of Sterling by the end of this year.
Hardware vendors including HP and Dell upped their prices this year so far by on average six per cent, to counter the fewer dollars they are getting back given the exchange rates.
Gartner downgraded global spending forecasts at the start of 2015 on the back of the dollar movement, estimating that customers will splash $3.73 trillion on tech, up 2.4 per cent – initially it expected the market to rise nearly four per cent.
VMware rolled out this quote to us earlier:
“As a normal course of business, VMware regularly reviews pricing for its products and services. We do this as part of our ongoing efforts to ensure that VMware customers receive value significantly in excess of the prices we change”.
Channel partners will obviously react to the reduction in VMware discounts by raising prices to customers, though VMware told us it has "no planned change to end user pricing".
Rory Choudhuri, Senior Product Marketing Manager, SDDC, EMEA, sent us a statement:
"We are changing and adjusting reseller discounts to better suit the capabilities of our channel, and to create global alignment in our business practices and reseller pricing." ®