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Volume 18, Number 42 -- November 30, 2009

IBM Pushes Smarter Mid-Market IT Projects with More Financing

Published: November 30, 2009

by Timothy Prickett Morgan

Last year, IBM started offering enhanced financing deals to IT shops in the United States who would be bold and buy gear even though the global economy was on the skids so they could take advantage of an accelerated depreciation scheme set up by the Bush administration and extended by the Obama team. In June, the company said it was allocating $5 billion in funding to chase "smarter infrastructure" projects around the globe, which generally have an IT component. Now, IBM is aiming some financing deals at mid-market shops and expanding the financing it is offering to cover more regions and more products in its portfolio in an effort to boost sales in the fourth quarter.

"For many cash and credit constrained companies, stepping up to Smarter IT can be challenging," said Dan Ransdell, client financing general manager at Global Financing, in a statement announcing the wheeling and dealing. "IBM Global Financing is helping to make that evolution even simpler with zero percent financing on IBM software and no-payment deferrals on IBM solutions until 2010."

As part of the financing push for the fourth quarter, IBM is boasting that it has "attractive prices" on pre-owned gear that bears its moniker, including servers, storage, and workstations. While this may be true, it is hard to prove since IBM Global Financing is the largest buyer and reseller of IBM gear in the world and more or less sets the market price. Anyway, if you want to check out what wares IGF is peddling, you can see the U.S. catalog of used products, er, excuse me, certified pre-owned products, here and the listing for iSeries and Power Systems boxes running i/OS there. I have a very hard time believing that an iSeries Model 810 with two processors and 2 GB of memory, rated at 1,020 CPWs, is worth $5,595 when it comes preconfigured with OS/400 V5R3. Yeah, that is the discontinued one with no more support. IBM should put i5/OS V5R4 on all boxes it sells as a minimum.

Anyway, the 90-day deferred payment financing deals now include such used gear, not just new iron from Big Blue. You don't make payments for three months, and then you do a 36-month full payout or fair market value lease.

To sweeten its financing deals, IBM is offering zero percent financing on its software portfolio, not just hardware, and its Lotus division is offering zero percent financing for three-year licensing terms. IBM's business partners can finance the software portions of deals they do before the end of the year through IGF. You have to have squeaky clean credit to get the zero percent financing, of course, but IBM says it is offering competitive financing rates in various geographies with 24- to 36-month terms if your credit isn't perfect.

IBM is also rolling out a set of "Cost Buster" financing packages aimed specifically at midrange shops, which breaks the price for a financed solution down to a monthly per user fee. (Presumably, midrange shops can't handle abstract concepts like the cost of a server and its storage. I dunno.) As an example, IBM trotted out the Lotus Foundations collaboration appliance--not the Smart Cube i machine, which is the real midrange box--and explained that it can support 25 users at a cost of $8 per user per month when it is all rolled up into a financing package. To find out more about the Cost Buster financing packages, check out this link on IBM's PartnerWorld site.


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