If you're borrowing from your vendor, you can't afford it
TechDirt tries to put a pretty face on vendor-financed software/hardware deals, but let's be clear: if you have to borrow from the vendor that is overpricing its software (or hardware) in the first place, you can't afford to buy it. If you can't afford to buy software (or hardware) with cash or bank financing, you can't afford to buy software.
I'm not sure why this is complicated for some. The last organization you want to borrow from to buy software is your software vendor. This lets the vendor completely control your destiny, not to mention the fact that it creates serious conflicts of interest for the vendor (e.g., it can charge maximum price since it is financing the deal). This is the sort of muddled thinking that put the global economy in the toilet in the first place.
Valleywag is right to call out that such arrangements usually end badly for technology shareholders. Defaults on loans are a fact of life, whether for bank loans or vendor loans. The difference is that vendors have to not only back out of bad loans, but also the revenue.
I have a better idea: spend less on IT. Buy open source.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure.
From personal experience I can also say that financing does not give a vendor any particular leverage in setting price necessarily. If vendor financing is the ONLY way you can purchase something you need so badly that you must pay any price, then yes-- you can't afford it. However that is hardly the only scenario.
Remove the "or hardware" note there... it simply isn't relevant, especially taken in the context of the "open source" remark. Open source, free as in beer telecommunications infrastructure hardware? Please, sign me up!