IBM Tweaks Financing Deals to Push Servers, Storage
September 25, 2006 Timothy Prickett Morgan
We’re coming up on the end of another fiscal year, and as is traditional, IBM aims to use financing deals as a means of trying to push products in the fourth quarter.
IBM last week announced a new financing deal for its hardware that will be familiar to its customers, since it is a variant of a deal that IBM has brought out of its bag of marketing tricks from time to time over the past several years. IBM also tweaked the financing rates on an existing deal.
Under a deal called the Financing Advantage Why Wait deferral, IBM is letting customers in the Americas region acquire new servers, storage, printers, and point-of-sale terminals and finance them in such a way that customers do not have to make payments on the gear or pay interest for 90 days. The deal can also be used on second-hand gear being peddled by IBM, too. Under that deal, customers can apply for the deferral program on leases that have a transaction size ranging from $1,000 to $500,000 with fixed terms of between 24 and 48 months. (That term does not include the 90-day deferral, of course.) Customers have to make their deal by December 15 and they have to install the gear they acquire and finance under this deal by December 31.
Excepting IBM’s System z mainframes, this deferral deal can be mixed with the existing Low Rate Financing deal, which comes and goes in the Big Blue playbook a lot, too.
Speaking of which, IBM also last week revised the financing rates on that Low Rate Financing offering, raising the financing rate for the second time this year. IBM brought the Low Rate Financing deal back to life in February after it expired at the end of 2005, and in May IBM inched up the interest rates it charges on equipment, software, and services financing. Last week, even though the Federal Reserve Bank has sat tight on its short-term funds rate, IBM has inched up its own financing rates within the Low Rate Financing deal.
Under the Low Rate Financing deal, which is offered by IBM’s Global Financing unit, customers can finance deals ranging in size from $1,000 to $1 million for System i5, System x, and System z servers as well as storage and printers; customers doing deals for System p boxes can finance up to $2 million of gear. Retroactive to August 1, IBM is now charging a 5.2 percent interest rate for customers who meet its “Best Plus” credit rating on leases that range from 24 to 36 months and which have a $1 end-of-lease purchase option. (That’s up from 4.9 percent.) IBM has also raised the financing rates on its software and Business Consulting Services to 5.5 percent (up from 5.2 percent), and the rate on Integrated Technology Services is now 6.5 percent (up from 6.35 percent). System p buyers can make use of a $2 million deal cap, by the way. To take part in the deal, the products purchased have to ship before December 31.