Microsoft to raise products prices in India by 10 to 25 percent

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, a senior company executive said. It will impact popular products such as MS Word, PowerPoint, Windows Server operating system and other office software, priced in Indian rupee rates.

The company said the increase is mainly to bring the cost of its Indian products in line with global prices. Microsoft's products in India are sold at a much lower rate compared to developed markets.
Microsoft is estimated to have generated about Rs 4,800 crore from India in fiscal 2011.

"The rise in prices is linked to the release of several new Microsoft products. India has a highly mature IT market and we are sure it will absorb our new prices. We are in the process of talking to our partners and analysts," said Floris van Heijst, head of its marketing and operations in India, who is based in Gurgaon.

Heijst said that all non-hardware products sold in Indian rupee rates will see an increase in prices, including the removal of special rates-essentially price discounts. He said that products like gaming console Xbox that are priced in US dollars will not be impacted.

The Redmond-based company, which is the third-most valuable technology firm in the world after Apple and Google, said it was not worried about its clients shifting to rival products or open source platforms that come at lower rates.

"We don't see a risk at all. Other firms had increased prices over the few months and we saw that the Indian market was able to absorb these new prices," said Heijst.

Microsoft's rival, Google, doubled the price of its online storage services in April. Its 200 GB storage costs $9.99 now, up from $4.17 earlier. This is the first time Microsoft is increasing prices after it began offering products in rupee rates last year.

Ray Wang, CEO and principal analyst at Constellation Research, said Microsoft typically sells products at a 40% discount in India, compared with Europe and other developed markets. "They are adjusting for currency flux and market pricing. Microsoft traditionally prices low for market share and then works its way up over time using the licencing structure and small increases over time."

Just a few days ahead of launching its much-hyped Windows 8 platform later this month, Microsoft has decided to increase prices of its products sold to consumers and businesses in India.

The price hike will be 10-25 percent, according to a company executive, and will impact both consumer and enterprise-level products, such as MS Word, PowerPoint, Windows Server operating system and other office software, offered in Indian rupee rates.

The price increase will be implemented over the next several months, beginning November 1. Microsoft generated about over Rs 4,800 crore of annual revenues from India in fiscal 2011, according to technology magazine Dataquest. The company said the increase is mainly to bring the cost of its Indian products in line with global prices. Microsoft's products in India are sold at a much lower rate compared with the developed markets.

"The rise in prices is linked to the release of several new Microsoft products. India has a highly matured IT market and we are sure it will absorb our new prices. We are in the process of talking to our partners and analysts," said Floris van Heijst, head of its marketing and operations in India, who is based in Gurgaon, Haryana.

Heijst said that all non-hardware products sold in Indian rupee rates will see an increase in prices, including the removal of special rates-essentially price discounts. He confirmed that products like Xbox that are priced in US dollar rates will not be impacted.

Microsoft is launching the Windows 8 operating system on October 26. In September, it had organised an app fest in Bangalore, where close to 3,000 app developers gathered to create apps for it.

The company, which is the third-most valuable technology firm in the world after Apple and Google, said it was not worried about its clients shifting to rival products or open source platforms that come at lower rates.

"We don't see a risk at all. Other firms had increased prices over the few months and we saw that the Indian market was able to absorb these new prices," said Heijst.

Microsoft's main rival, Google had doubled the price of its online storage services in April. Its 200 GB storage costs $9.99 now, up from $4.17 earlier. This is the first time Microsoft is increasing prices after it began offering products at rupee rates last year.

Ray Wang, CEO and principal analyst at Constellation Research, said Microsoft typically sells products at a 40% discount in India, compared with Europe and other developed markets. "They are adjusting for currency flux and market pricing. As you know, Microsoft traditionally prices low for market share and then works its way up over time using the licencing structure and small increases over time."