Microsoft is raising prices, again. According to heise online by 11% for M365 from April 1st. The last price increase of 25% was just last year. Some enterprise customers with long running contracts faced increases of 30-40% when signing new contracts.
Outrage is huge. The Cloud Infrastructure Sales Association of Europe (CISPE) lamented that customers had no choice but to pay. The Business Software Alliance (BSA) suspects collusion in the context of competition law investigations, others recognise tactical moves now also with private customers, resentment broke out among board members, companies would now wake up from the bad cloud dream.
Not a charity - surprisingly
Indeed, the cloud providers' strategies are obvious. First, they offer a good product for free trial. Then there are low entry prices, customers jump in, after a while, the market is captured. Finally, when the customer can no longer imagine life without the product, the prices are raised. Reminds us a bit of a drug dealer, doesn't it?
And it gets worse: after all, the drug dealer has costs for production as well as for his dangerous supply chain. And he bears high compliance risks. But the hypercalers? Modern software development is done quickly with a few developers, deployment and operation are fully automated, hardware is virtualised and used multiple times. Whether 100 customers or 100 million customers are serviced, it doesn‘t matter much for Microsoft. If you are still looking for proof of the profitability of software-based business models, take a look at the balance sheets (page 36) of AWS and the likes.
Outrage is the tool of the powerless
With the book "Time for Outrage", the French UN diplomat Stephane Hessel called on the sufferers of European austerity policies to resist. But are we, the users of American cloud services, really as powerless as those victims of discrimination and social cuts? Do we have to be outraged in the media so that higher powers such as politicians and competition authorities eventually force Microsoft to lower its prices?
The clear answer is: No. The technology landscape of this planet gives every digital player in Germany room for self-efficacy.
There are plenty of comparable alternatives
Microsoft (with M365) is far from the only provider of workplace software. There is a direct alternative from Google, even AWS is also building its own. Classic Office is available from Libre. Nextcloud and Owncloud even offer open source alternatives to OneDrive for self-hosting. Additionally, Slack or Zoom offer very attractive cloud messaging services with free variants. As far as I know, none of the alternatives is as comprehensive and as integrated as O365, so companies have to make the effort to combine them and manage the resulting complexity. It's certainly an effort, and it certainly requires a bit more know-how.
You can also do cloud yourself
David Heinemeier Hansson shows another way with his companies Hey.com and 37signals. He describes in very detailed articles why he is leaving the public cloud, how much he is saving, how he is doing it, and how the migration is going. Of course, the whole information sharing campaign is not entirely altruistic; with Hey.com, he runs a competitor to Microsoft365. Nevertheless, his openness in this regard is striking a nerve in the market, the posts on the topic are going viral and finding a lot of approval on LinkedIn.
But Heinemeier-Hansson´s approach is not the most convenient: he has to negotiate with HP (no charity either), deal with sysadmins (check Google for admin jokes to get a gist what that means), manage internal change (you know how hard that is), and solve many technical problems (here is his current list of topics). And most importantly, instead of de-k8s-ifying (sorry for the jargon), his staff could certainly develop great new features for his clients in the meantime. But: Heinemeier Hansson is self-effective and seems quite in peace with himself. Instead of lamenting, he acts, and even gets free marketing throughout the process. Chapeau.
There are even local alternatives
We have talked a lot about workplace IT, but infrastructure and middleware services account for the majority of cloud revenues. The small German start-up innus shows what high-performance IT in the private cloud can look like. We reported on this in detail in our white paper "Digital Souveränität im Cloud-Zeitalter". In two years, seven employees developed a comprehensive core banking system and deployed it in a German private cloud from ScaleUp within two weeks from contract conclusion to go-live. Even without having to deal with sysadmins and HP, dependencies on hyperscalers can be avoided.
Self-efficacy instead of laziness
Attitude even more than know-how is the key to surviving in the world of technology leaps. Convenience, complacency, lack of will to change - this is what associations, boards and politicians have used to navigate their way through the world for decades. This is how we got into the fatal gas dependency on Putin. And it is with this attitude that associations and executive boards are again commenting on the actions of supposedly superior actors.
All I can say to this is: If you complain about the high prices of M365 and continue to use the software, then the prices are still too low.
Still, I would like to end on a positive note: German laziness in energy policy financed Putin's war against the West. But with our laziness now, we are at least financing the world´s shift into the future: Microsoft uses the money to continue to invest in AI, because ChatGPT (still free by the way) requires billions of Euros in additional computing power. And: with every Euro price increase, the chances of European alternatives like Hey.com grow.
