Massive inflation in the UK tech sector already happening

tech sector inflation

Look out UK – weak pound driving tech sector inflation and unemployment

The news this morning about Tesco no longer stocking Marmite in its online store due to wholesale price hikes prompted a Facebook discussion on  price rises in the tech sector with pals in the industry. 

Looks to me like we are in for some serious inflation driven by the weakening of the pound. Companies are already cutting back on jobs. See the comment threads – I’ve removed names and will add more inputs as I see them:

  1. Pricing on memory and SSDs has all increased recently as disties ran out of “pre-brexit” stock. They’ll go up again shortly with the latest devaluation as well.
  2. We’re now paying 25% more for most domains, ssl certs, software licenses etc. etc.
  3. I did a quote about a month ago, thinking I was reasonably safe for a while using a USD rate of 1.2 (Was 1.34 at the time I think), as there was a lot of licensing in it. How wrong I was.
  4. Yes, we have an interesting mix. One provider where we pay a percentage of list price (which is in USD). Those quotes used to be valid for 30 days, now the quote is effectively in USD and the price we pay is converted at the time the order is placed. A different provider gave us a GBP based price book with year-on-year cost erosion. We’re unlikely to be able to …and yes, I’m having to do major upgrades based on a budget placed 18 months ago where most of the kit is from the first provider above.
  5. Subscription services paid for in $. MS365, adobe cloud, anything like that.
  6. Dell did a 15‰ across the board rise
  7. We’ve revised our USD wholesaled domains twice and might have to do so again. In April .com was £9.17+VAT, today it’s £11.67+VAT – a 22% rise.
  8. My sat phone is paid in $, so that
  9. Not just RAM/SSDs Dell/Supermicro (via Boston) are around 20-30% more expensive for the entire system unit.
  10. Virtually everything for Media Production (apart from some camera mounting kit and a few audio bits and pieces) comes from Japan or the USA, so list has gone up 10% to 14%
  11. Snom phones went up.
  12. We’ve just jacked our prices up by 25% across the board as most of our products are imported and paid for in USD.
  13. Had a meeting about buying a new fancy instrument. “We have a Euro and Dollar price, there isn’t a sterling price as it’s too unstable.”
  14. After Cisco hiked prices significantly we had to decide between massively scaling back an upgrade or not hiring a new engineer. Whoever says the impact is not losing jobs is deluded. There’s a intelligent motivated young man who is currently unemployed, who wouldn’t be if it wasn’t for the cost rises.
  15. I’m being hit with SSD price rises 🙁 At one point 120gb sandisk SSD’s were £31, last time I bought they were £40. They are now £39 on Amazon.
    Also the Wifi AP I bought in June for £108 is now £111 – THE CHEEK! 😀
  16. Our situation: we were buying for an expansion to Geneva just around the time of EUref. Only a few bits of kit were ~5% more expensive, but I could see prices going up almost daily on anything imported. Of course, having installed it all now, colocation costs abroad are obviously feeling more and more expensive. We planned our budget assuming Brexit and GBP-crash, and also our colo supplier there allows pre-pay on their customer accounts — which we did! https://twitter.com/maznu/status/786538777816788992

On a personal note my google drive costs are paid in dollars so my cloud storage costs will already have risen.

update from a vendor:

“it should be pretty common knowledge that “price rises are coming to a vendor near you”.  All components are priced in USD, most  IT and networking equipment is imported, so it’s inevitable.  There may be long term sourcing agreements that mean vendors suffer, but they will need to recover that lost margin from somewhere (meaning those customers without long term pricing agreements in GBP).  I don’t see any upsides.  Even UK manufacturers aiming to export will struggle with all their components priced in USD.  The general effect will most likely be that customers used to getting 10%, 20% more off the initial quoted price will struggle if they make an assumption that will continue.”

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