It has worked so well in the auto industry that Microsoft (NASDAQ: MSFT) is introducing zero percent financing for some of its business customers. According to The Wall Street Journal, "Microsoft's promotion, aimed at small and medium-size businesses, is being offered to new customers who spend $20,000 to $1 million on Microsoft's customer-management and accounting software."
Like the car companies, Microsoft risks offering credit to companies with financial troubles, and Redmond may end up writing off some of its loans. But Microsoft is large enough to absorb that in the name of increasing its revenue.
But write-offs are not the real risk of the program. Turning Microsoft's software into a commodity is. Products and services that come with too much cut-rate pricing and ridiculously good financial terms risk being perceived as "cheap" and not worthy of a premium price tag. Microsoft''s image could be put at stake at a time when it is already facing new competition from companies ranging from Google (NASDAQ: GOOG) to VMWare (NYSE: VMW).
A sale is not always a sale when it undermines reputation.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
11-14-2008 @ 1:54PM
Lari said...
A sale is not always a sale when it undermines reputation.
++ Reputation,shmeputation. Are YOU serious here?? Do you HONESTLY give investment advice. ..Seriously, in this horrid $financial environment you are prissying about "reputation" instead of bringing in cash and being alive when the environment improves? Are you for REAL? How about the "reputations" of Lehman,Wachovia,Bear Stearns, Linens'n Things,Circuit City..maybe they listened to you and worried about their" reputations" more than being profitable and alive tomorrow.?
11-14-2008 @ 9:29PM
Ty said...
I have to agree with the previous comment. Doug McIntyre (whoever he is?) knows zero about business.
For starters, WHAT could be more precious than actually having a "commodity" in the first place?
Doug you need to get another job.
Pathetic insight on your part.