The Four Hundred

With a tight economy, and companies unwilling to spend on IT except where absolutely necessary, and interest rates continuing to fall asymptotically to zero, IBM has to do something to help push the revamped iSeries line. Offering attractive financing terms is just about the best option Big Blue has in its bag of tricks. That's why IBM has recently introduced a low-rate financing deal and a deferred-payment deal, with tweaks aimed specifically at iSeries buyers.

IBM Global Financing is offering very low rates on hardware, software, and services to companies that finance equipment over a 24-to-60-month term. The financing deal covers just about everything that IBM sells, regardless of make or model. The low financing rates vary, depending on what products are being financed, and the rates IBM is quoting are for companies that meet its Best Plus credit rating. Companies with lower credit ratings will obviously pay a premium over these rates, though IBM isn't saying how much.

For all hardware excluding PCs, the Best Plus rate is 2.75 percent. PCs are a lower-cost item, so IBM seems to be trying to make a little extra dough by financing them at a 3.35 percent rate for Best Plus customers. All software and services for Best Plus customers are being financed at a rate of 2.15 percent. This is very low. By the way, these financing terms are based on a full-payout lease that allows customers to acquire the financed equipment or software for one dollar if they have a 24-to-36-month term on their lease. The financing deal on IT products and services is being offered throughout the Americas region. Interest rates in Canada are higher, at 5.45 percent for PCs, 4.85 percent for all other hardware, and 4.25 percent for software and services.

There is a minimum transaction of $25,000 for this deal, which, IBM says, is lower than past financing promotions it has run. All models and upgrades in the xSeries, pSeries, and iSeries server lines, as well as TotalStorage storage products, can be financed under the deal, as can all PC models that IBM sells. IBM's printer and retail products can also be financed under the deal, and so can all software that has one-time charges. Integrated technology services and business consulting services from IBM's Global Services unit can also be financed; maintenance and outsourcing services are excluded.

The time terms of this financing deal vary, depending on the geography in the Americas region.

In the United States, Central America, and South America, IBM has to ship the financed equipment, software, or services after July 1 but before December 31, and installation must take place before January 31, 2004. Canadian companies can apply these rates to deals they signed from April 1 through December 15, and customers must request a delivery date no later than December 31. IBM is leaving itself room to let shipments in Canada slip into January if supplies dry up temporarily.

The deferred-payment deal IBM announced on the same day applies to all the same kit, allowing customers to put off payments on their financed gear, software, or services until 2004. Companies can finance between $25,000 and $1 million in stuff per brand, and are offered fixed terms ranging from 28 to 42 months, with payments for 24 to 36 months.

Companies that are thinking of using the payment deferrals to buy upgrades from AS/400 Model 7XX machines to iSeries Model 8XX boxes have to move a little bit faster than those acquiring other stuff. IBM says that customers who want deferred payments on the 7XX-to-8XX upgrade have to place their orders before September 19, and shipment must occur before September 30, which is the end of the third fiscal quarter for Big Blue. (IBM books revenue on shipment, so that date is important.)

And here's an important reminder: October 8 is the last day that you can order 7XX-to-8XX upgrades from IBM. After that, you are at the mercy of the channel and used equipment dealers if you still have a 7XX box.

The real kicker is that IBM says it is offering special low rates on these upgrades that are apparently better than the rates quoted above. We am trying to find out what they are now. IBM's announcement letters did not specify, but simply said that special low rates were available for 7XX-to-8XX upgrades.

Just a reminder of another IBM deal on the books. Since April 29, IBM has been offering discounts to customers with Model 7XXservers who upgrade to iSeries Model 810 or 825 machines. Companies that upgraded and got their machines before June 30 can get a 10 percent discount, but those that take delivery of the machine in the third quarter will only get a 2 percent discount. This deal also expires September 19.