Avaya extends zero-percent finance scheme
Published: 16 Jul 2008 15:20 BST
The communications company Avaya has announced it is to make all of its products available to European enterprise customers on a zero-percent finance scheme.
The company said the move is designed to combat the recession, but commentators have said it may be better for Avaya's bottom line than for those of its customers.
In its Wednesday announcement, the company also said it would not levy any upfront costs for its products "in the wake of the recent economic downturn". Avaya already offered zero-percent finance to its small to medium-sized enterprise customers, but this has now been extended to Europe-based businesses of all sizes.
"In times of market turbulence, companies sometimes put off investments in technology even if, paradoxically, those very investments are what can help them ride out any potential economic downturn," said Martyn Lambert, Avaya's vice president of marketing for Europe, the Middle East and Africa.
The programme effectively allows customers to lease the equipment over a three-year period, with no interest being levied. Maintenance and upgrades are included.
"One of the best parts of this programme is that there are no surprises; at the end of the term, customers can purchase the solution for £1," said Lambert. "There are no balloon payment or additional charges, though, as with any software solution, we will recommend continuing maintenance/upgrades/services in order to shape the products as companies grow."
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The extension of the zero-percent finance scheme is not the first time this year that Avaya has pinned an announcement to the current economic climate. In March, the company said its new unified-communications bundle was priced in response to "an expected downturn".
Gartner research vice president Steve Blood told ZDNet.co.uk on Wednesday that Avaya's move was an alternative to cutting its margins, and would probably still result in companies paying more over the three years than they would upfront.
"Customers will not be getting the discount upfront that they would get in tough negotiating positions," said Blood. "All Avaya has to do is pay the interest to the finance house, and what's the cost of finance? Five or six percent probably. It's a lot easier to pay six percent to a third party than drop 20 percent [in negotiations]."
Blood added that companies were increasingly looking to fulfil their communications and networking needs through services, but Avaya has not been very successful at selling its equipment through service providers. "Cisco's really killed them there," he added.
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