New Financing Options Offered

Partners and customers can now finance a broad range of software, hardware, and services through Microsoft Financing. Founded as Microsoft Capital, the unit previously limited its financing activity to Microsoft Business Solutions (MBS) products, such as Great Plains, but it announced at the company’s July 2005 Worldwide Partner Conference that it is expanding its financing to include all Microsoft software, as well as hardware and services are associated with a Microsoft software deal. To spur interest, Microsoft Financing will pay a bonus to partners at the conference who use its services by the end of Sept. 2005.

Managing Risk

Vendor financing is not unusual in the IT world, but it has generally been confined to hardware. Commercial lenders have been reluctant to finance software purchases, since repossessed software cannot easily be resold and the vendor will not usually refund the purchase price.

In 2002, Microsoft stepped in as a lender for MBS customers, offering “total solution financing” that covers not only the Microsoft software but also related hardware and services.