A new lease on life
The benefits of leasing computers continue to grow
By Doug Harper -- Industrial Distribution, 1/1/1998
If you're a computer-literate distributor, you probably get a knot in the pit of your stomach every time you lay out your hard-earned cash to buy new PCs, knowing that long before the warranty has expired, the computer will already be heading down the road to obsolescence.In fact you can virtually depend upon the fact that within a year, the central processing unit, the monitor, the hard drive, the graphics card, the sound card, and numerous other components will already be leapfrogged by "new and improved'' versions. At the same time, software publishers will begin selling programs that require these new hardware capabilities to function properly.
Whether the motivation of computer companies creating this unending flow of new technology is -- as they claim -- to lighten our workload or is merely a thinly disguised marketing device to sell new computers, is debatable. But what is undeniable is that the technological equivalent of a sleek new sport utility vehicle today will resemble a rusting station wagon tomorrow.
So if you find yourself spending a sleepless night before placing an order for new PCs, perhaps it's time to consider leasing your next computers.
While leasing may not be the answer for every distributor, it offers some significant financial advantages over purchasing computers. For one thing, leasing doesn't tie up cash that could be used for other long-term capital expenditures. In fact, because of the rapid obsolescence of computers, for tax purposes the IRS allows you to depreciate a computer over a three-year period.
On the other hand, it is frequently possible to obtain leased computers with no down payment and for a period of time that best suits your budget and your computational needs. In addition, lease rates are often superior to interest charges on financed computer equipment.
Finally, at the end of the lease period the distributor is spared the necessity of disposing of the equipment, which usually entails either donating it to charity in exchange for a negligible tax deduction or simply dumping it on the used market for prices that generally represent less than 10 percent of the original cost.
Sam Ali is the vice president in charge of marketing for DirectWave Inc., a computer manufacturer based in Orange, Calif., that both sells and leases new computers. Ali claims that the cost of leasing a computer is almost always lower than purchasing the same machine.
He also points out that for users running applications that benefit from the most current hardware, the lessee can obtain a lease for a period of time as short as one year.
"Leasing makes the most sense for companies that need to stay on top of technology without purchasing new computers every few years,'' Ali explains.
In addition to specifying a one-, two-, or three-year lease, the lessee can also designate what configuration he wants installed in the computer: what CPU, what size hard drive and how much RAM, says Ali.
If desired, the lessee often can obtain the option of purchasing the computer for $1 at the end of the lease.
But for most organizations, the ideal solution is probably a combination of purchasing some computers and leasing others. For those machines being used for fairly mundane applications such as word processing and data base maintenance, which are not particularly processor or graphics intensive, purchasing a computer and keeping it for as long as it can do the job makes the most sense.
On the other hand, if you're using your computers to create multimedia sales presentations or for programming, you might consider short-term leasing, and therefore be assured of obtaining state-of-the-art hardware without frequent purchases.
But whether your computer is purchased or leased, it should be adequate to send your comments to Doug Harper at dharper@interport.net.
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