IBM’s Low Rate Financing Deal for Hardware and Software Changes–Again
February 19, 2007 Timothy Prickett Morgan
That on-again, off-again Low Rate Financing deal that IBM uses to help push its hardware, software, and services has been tweaked once again. Back in November 2006, when IBM dropped the interest rates on financing to help stimulate sales, I said that if history was any guide, then if sales were sluggish in December or January, the company would lower its financing rates even further to try to boost sales. This is indeed what has come to pass.
Big Blue finances so much hardware and software on behalf of customers and resellers that it has among the lowest interest rates in the world on the funds it borrows, which means it can afford to be as generous as any company on earth when it comes to providing rates to buyers of its wares. In many respects, IBM is a bank. And that is why it has dropped the financing rates on hardware to 4.6 percent (down from 4.8 percent). Financing rates for software and Global Business Services were lowered last week to 4.9 percent (down from 5.1 percent), while rates for Global Technology Services fell to 5.9 percent (down from 6.1 percent). These rates apply to those IBM customers who have the most squeaky clean credit, and if your company’s credit is a bit smudgy, you’ll be charged a higher rate than this.
Under the Low Rate Financing deal, customers can finance IT acquisitions with value ranging from $1,000 to $1 million in the United States and from $25,000 to $1 million in Canada. (The interest rates in Canada are lower, by the way.) Customers buying System p5 Unix and Linux boxes can finance up to $2 million in the U.S. or Canada under the low rates. The deal also applies to customers in other parts of the Americas region. These rates apply to customers who have IBM’s Best Plus rating, which means they can probably afford to do their own financing or buy gear; IBM is offering 24-month or 36-month leases with a $1 end-of-lease purchase option (meaning, you own it when the payments stop).