Feeds

Microsoft price hikes start to bite down on EMEA partners

'Reasonable show from all vendors - except the biggest'

Beginner's guide to SSL certificates

Microsoft's UK price rise at the start of the summer is starting to dampen the financials of partners on this side of the Atlantic, certainly if Insight Enterprise's EMEA results are a metric.

The reseller giant navigated through through a choppy Q3 to report growth in profits despite a slide in sales led by weaker demand for software - well, weaker demand for Redmond's gear anyway.

Globally, sales ebbed by 5 per cent to $1.2bn but operating profits grew 10 per cent to $30.7m and net profits climbed 13 per cent to $19.4m as the segment of higher margin hardware grew.

Back in May, Microsoft revealed plans to align EU pricing to the euro, which forced up the cost of volume licences to British customers - in some instances by more than a quarter.

The rise didn't kick in until 1 July, so Microsoft and its channel partners used the interim to persuade customers to renew agreements early to avoid the price hike, which boosted business for some.

However, the flip side is that there was a lull in sales in the ensuing period, which can be seen in Microsoft's fiscal Q1 figures.

In North America, Insight's turnover fell 5 per cent to $868.8m, with hardware, software and services units dropping 6 per cent, 1 per cent and 10 per cent respectively.

Operating profits in that part of the world were up 15 per cent to $28.3m, while sales and admin expenses dropped 2 per cent to $1.8m.

The small Asia Pacific region grew 2 per cent in constant currency to $36m, and operating profit was $950,000 compared to $599,000 in the same period a year ago.

Closer to home, Insight EMEA's top line was similarly challenged as sales slid 4 per cent to $276.6m, with hardware up 18 per cent in US dollars but software and services down 18 and 1 per cent respectively.

Sales and admin expenses went up 7 per cent on $2.7m due to the acquisition of Inmac earlier this year as well as continued investment in that business. As a result operating profit fell to $1.4m compared to $2.7m last year.

Stuart Fenton, EMEA president of Insight, described the local numbers as "disappointing" but told The Channel it had a "range of initiatives" up its sleeve to bolster numbers.

"There is a big focus to accelerate sales to mid-market clients across the continent and to accelerate the hardware business in Germany and the Netherlands. We've just launched a hardware operation in France".

Fenton added he was "incredibly happy" with the performance of the Inmac operation, saying, "We have continued to invest and reversed the decline in that business. We are seeing increased scale there".

He said the hardware business was healthy in the quarter and reckoned there was a "reasonable performance from all our software vendors except for our largest vendor".

This is Microsoft, though the Insight man would not confirm this. A good proportion of Insight services are related to software, which also explains why those numbers dipped. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
BT said to have pulled patent-infringing boxes from DSL network
Take your license demand and stick it in your ASSIA
Right to be forgotten should apply to Google.com too: EU
And hey - no need to tell the website you've de-listed. That'll make it easier ...
prev story

Whitepapers

10 ways wire data helps conquer IT complexity
IT teams can automatically detect problems across the IT environment, spot data theft, select unique pieces of transaction payloads to send to a data source, and more.
The total economic impact of Druva inSync
Examining the ROI enterprises may realize by implementing inSync, as they look to improve backup and recovery of endpoint data in a cost-effective manner.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.