Will HP Change SMB Financing Terms To Out-Do Cisco?
Cisco's program, announced Monday and in effect through July 31, 2010, casts a wide net. It includes all Cisco hardware, software and services -- including maintenance -- and is available for U.S. small-and-medium sized businesses with 1,000 seats or fewer. Qualifying customers can lease what they want from Cisco, financed for a 36-month period with no interest, and then own it after that.
The price range the program covers is $1,000 to $250,000, and it requires implementations to be 70 percent Cisco, with the financing not available for non-Cisco hardware. Cisco excludes the offer from enterprise, service provider and public sector customers as well.
HP's three-year SMB financing program was first announced in January 2009. Like Cisco's program, it covers financing for 36 months at 0 percent interest paid to HP.
HP's program, however, extends to $150,000, and doesn't cover services or software (a detailed list of what hardware it does cover is listed on HP's Web site here). HP's financing also requires implementations to be 100 percent HP equipment to qualify.
Reached by Channelweb.com, an HP spokesman confirmed that software and services are not covered by HP's SMB promotion, but "are eligible for financing through our standard financing plans."
The spokesman didn't confirm any of the program's terms will change as it renews next week, just that HP would indeed be continuing the program and that HP reviews its programs for renewal on a quarter-by-quarter basis.
HP further indicated that starting February 1, it will also renew the zero percent, 12-month, $1 buyout lease offer it first piloted in January 2009.
HP may need additional SMB incentive to keep its financing programs competitive with Cisco's. Various Cisco solution providers told Channelweb.com that the appeal of Cisco's new financing is that it's, yes, interest-free, but also flexible. It's going to open some new doors for SMB sales, they said, even if Cisco products and services remain prohibitively priced for many SMBs.
"It's no secret that Cisco's never going to be the price leader, so you need other sorts of incentives to entice small business customers," said Ryan Halper, president of Cynnex Networks, a Seattle-based solution provider. "Financing is a big enticer and something the competition usually isn't making available. The biggest difference, though, between this and other lease and financing options is that it's zero-percent interest and essentially lease-to-own."
Cynnex is not an HP partner, but Halper said the options offered in the Cisco program were a definite plus for the channel. The best way to pitch financing to SMBs, Halper suggested, is make customers feel like they're getting a real deal -- and in this case, they are.
"We exclusively work with SMBs and we find that usually, small businesses are very anti-financing at first because they assume they're going to have to pay a lot of interest and there's an underlying negative to it," he explained. "When we sit down with them and help them understand it truly is the same as cash, that's what helps to make it attractive."
Halper said the deal would be especially helpful to Cynnex in wireless networking deployments. But being able to access the entire Cisco gamut -- hardware, software, services, maintenance -- makes the opportunity sizable for VARs.
"The places where we could apply it when they offered things like this before were relatively narrow," he said. "Now, almost any project we'd be working on with a customer could take advantage of zero percent financing. Even though we've been able to go to some other type of financing vehicle before, it's usually something that becomes 'we don't want to have interest' or 'we're not prepared to write a check' or something that's made them gun-shy about capital expenditure. We haven't been able to put an attractive financing offer like this on the table before."
Have a strong thought on HP and Cisco financing? Take it up with Steve Burke on The Real Channel blog in the ChannelWeb Connect community.