Feeds

IBM loans SMBs $1bn to buy stuff

The Big Blue Bank

Reducing security risks from open source software

Big Blue wants to make more sales in the small and medium business space, and it is shelling out $1bn over the next 18 months to make it happen.

IBM is as much a bank as it is a maker of hardware and software and a peddler of services. Big Blue can borrow money at rates that few companies and no consumers can thanks to its stellar credit rating and can loan that money out to its reseller channel so they can stock their shelves and to customers so they can finance those acquisitions of servers, storage, software, and services.

At the end of the second quarter, IBM had $29.8bn in total debt on its books, with $23.4bn of that being for the Global Financing unit that finances, leases, and rents IT wares to partners and users. Of course, it takes a vast base of customers – Global Financing has 125,000 customers – and a lot of lending to make money. And in the second quarter, Global Financing had $519m in revenues. But IBM was able to wring $496m in pretax earnings out of its asset base and wheeling-dealing.

By IBM's definition, being an SMB means having fewer than 1,000 employees, not any particular revenue level. And with more than 65 per cent of global gross domestic product being generated by SMBs, who account for more than 90 per cent of the tens of millions businesses worldwide and who employ a similarly large share of the global workforce, IBM and, more importantly, the channel partners it has designated to chase these smaller firms, cannot ignore this segment of the economy.

Hence IBM is adding another $1bn in additional dough to the Global Financing piggy bank to help the company and its partners sell more gear over the next 18 months. The financing, which is available under the brand Cost Buster, is available worldwide, with restrictions in certain countries.

Stack 'em up

IBM has packaged up 29 different stacks of servers, storage, and software for the Cost Buster program, which you can see here. Ed Abrams, vice president of the midmarket business at IBM, tells El Reg that the Cost Buster deals do not include any bundle discounts, just financing. The setups are focused on cloud, back-end systems like payroll and accounting, customer relationship management, and business analytics.

Most of the systems in the Cost Buster program are running on x64-based System x servers, but there are a few that are running on Power Systems iron, according to Abrams. Many include entry IBM storage arrays and Tivoli security and management tools, Cognos data warehousing, WebSphere middleware, and Rational development tool software from IBM. The idea is to get a solution for 100 users down to a few bucks per user per month – something that an SMB won't sweat investing in and will be happy to finance.

Global Financing is offering IBM's software under a zero per cent rate for a 12 month term if you have great credit. For the hardware part of the deal, those with the best credit can get a full payout lease with a 36 month term for as low as 3 per cent. The financing rate will vary depending on a customer's credit rating, term of finance, offering type (in-house or cloud), and equipment type and options, and will vary by country, too.

Abrams did not want to talk about how much money IBM generates from SMBs – Big Blue does not report figures for this segment in its financial reporting, as it does for various industries, and thus Abrams cannot talk about it – but he did confirm that IBM has "several hundred thousand" SMB customers. It should be something on the order of around 500,000, if history is any guide. "Our SMB business continues to grow and is an important part of IBM's future," Abrams said. ®

Seven Steps to Software Security

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.