Gateway to unveil leasing program

Tomorrow, Gateway will announce a leasing program for buyers of consumer PCs, hoping the scheme will generate more sales and more repeat customers.

Consumers who cannot afford to plop down $1,500 for a new computer may spring for one if offered the option of relatively low monthly payments, the thinking goes, according to sources familiar with the announcement. College students are a prime market.

The benefits for the vendor is that it can lock lessees into a program where at the end of the lease they elect to purchase the computer or, alternatively, trade in and lease a new computer.

Analysts familiar with leasing programs said successful programs are structured in a way that makes it easy for people to get started with a new computer. Especially because they are not owners, lessees want to avoid the usual PC pitfalls, such as grappling with hardware and software issues as soon as they get a new machine.

One of the main benefits for consumers comes in the tax position. Lease expenses can be deducted as business expenses. Purchases get counted in depreciation, which is now three years, according to Seymour Merrin of Merrin Information Services.

Merrin adds that users also get to switch computers, preventing obsolescence. You pay more in the end, but you don't get stuck with old stuff, he said.

Last October, Compaq announced a leasing program for some of its Armada notebooks, pointing to similar reasons.