Brexit: the danger of 'holidaying' your app abroad

Analyst: Owen Rogers

Britain's vote to leave the EU has sent shock waves across the world, with markets plummeting globally and uncertainty rife among investors. For cloud consumers, those at most risk are those that are located outside the US but that have chosen to consume cheaper US resources in an on-demand fashion. This is a fairly common scenario considering the US is, on average, 3% cheaper than the EU and up to 45% cheaper than Latin America. For preproduction or test/dev applications, on-demand enables experimentation without commitment, and a cheap location allows this to take place without the expense of hosting locally.

End users that have paid up front or made commitments in local currencies are most protected because the provider will take the brunt of currency fluctuations. However, those that buy resources as they need them are exposed to daily changes in currency markets, and these changes are not trivial. On the day of the referendum, £1 would buy 18.5 hours of a US small virtual machine based on Cloud Price Index data; today, that same pound will only buy 16 hours.

Will things get better? We dearly hope so; these may be short-term fluctuations. But in the longer term, new trade agreements and data legislation will have some impact on end users' access to global cloud services. This impact will also hit all other MSPs and vendors. The British public (and it appears its politicians) is as confused as anyone about what the future may hold. Ultimately, time will tell.

Learn more about our Cloud Price Index here.
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