News Analysis

No budget for upgrades? Microsoft can help

Margie Semilof, Senior News Writer

MINNEAPOLIS -- At the Worldwide Partner Conference 2005, Microsoft took the wraps off Microsoft Financing, a payment program that customers can use to get the Windows technologies they need to develop their IT infrastructures.

Microsoft's financing program gives customers a way to foot the bill for an entire infrastructure upgrade -- hardware, software and consulting services -- that many companies find hard to do at one time. Customers can also choose to finance software only.

Companies typically have an easier time getting funds from financial institutions for hardware versus software, because with hardware, there is something to recover should the business go south. Small and medium-sized businesses (SMB) often have the most difficult time getting financing for software from commercial lenders, said Paul De Groot, an analyst at Directions on Microsoft, a Kirkland, Wash., consulting firm.

Geared toward both SMBs and enterprises

Although it would seem that the program would be most popular with SMBs -- which would arrange to finance their upgrades through a Microsoft partner -- large business customers are also expected to take advantage of the program, particularly in circumstances where they need to buy software when budgets are already set.

It is possible today to get software financing deals through other resources and it remains to be seen just how Microsoft's deals will stack up against leasing arrangements, experts said.

Barry Krawchuk, vice president of sales and marketing at Logical Business Solutions, a Jacksonville, Fla., technology integrator, said it's unclear what types of personal guarantees and credit criteria Microsoft will require from customers. But customers will like it because "it's Microsoft" doing the offering, he said, and it's also good simply because it's another option for businesses.

Available in nine countries

Terms of the financing agreements run 24 to 60 months, but most companies tend to have agreements in the range of 36 months, according to Brian Madison, general manager of Microsoft Financing, which was formerly called Microsoft Capital. The program is available in nine countries: Belgium, Brazil, Canada, Germany, Mexico, the Netherlands, Spain, United Kingdom and the United States. Microsoft will add more countries in 2006.

Microsoft's program also offers simplified contracts -- roughly three to five pages, and it promises quick turnarounds for approval, Madison said.

For Microsoft, providing financing is a chance to build an annuity relationship with customers, something the company has been actively seeking through its software licensing programs.


This article originally appeared on SearchWIn2000.com, a sister site of SearchSMB.com.


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