E-Commerce, New Products to Push IT Leasing Industry

Fueled by an acceleration in technological changes and a decrease in technology equipment lifecycles, US information technology (IT) equipment leasing industry revenues are expected to grow more than 49 percent in the next three years, from $10.706 billion in 1999 to $15.991 billion in 2003, according to a report by International Data Corp. (IDC) for the Equipment Leasing Association (ELA).

The study, “Status and Outlook for the US IT Leasing Marketplace,” identified data communications and software application leasing (with 13.7 and 10.7 percent annual growth), as the fastest growing IT leasing sectors. The study also revealed that rapid change within the high-tech equipment leasing industry will lead to a number of major changes in the ways that IT leasing is conducted.

One of the most significant changes will be the move away from a hardware-concentric model to one of financing implementations.

“We anticipate a dramatic change within the high-tech leasing industry in the next few years that will be driven by e-commerce and the increased introduction of new products among equipment vendors,” said ELA president Michael Fleming. “These changes will allow technology equipment lessors to extend client relationships through expanded service offerings and provide companies with a cost-effective means of keeping up with rapidly changing technology needs.”

The study reported that the following market drivers will force smaller and midsize lessors to alter current practices in order to compete with larger independents: technology obsolescence, changing business fundamentals, the Internet, and competition. To compete, smaller lessors will need to find a market niche, offer more value to customers, use new technology to their advantage, and take risks with service providers and software and services financing.

Other trends reported include:

  • Immediate investment in e-commerce infrastructure is essential. The Internet is an essential businesses tool that enhances customer relationships and reduces the costs of business practices.
  • New economy lessors must be prepared to finance non-traditional products and offer innovative programs to serve new economy clients.
  • Partnerships are key to increasing revenues. To represent all the requirements of the Internet-based economy, lessors will need to build numerous vendor relationships and diversify their businesses.
  • The lines between technology leasing companies and capital equipment leasing will blur as customers’ requirements evolve to a total leasing and service offering rather than solely equipment leasing.
  • Lessors must anticipate and be prepared to jump into new technology markets with growth potential.
  • Lessors should look to nontraditional partners and sources of funding, and expand their scope of lenders by working with multiple funding sources.
  • Global reach will become the key to success in this market. Companies should consider foreign or global lessor partnership strategies.

This article originally appeared on internet.com’s dc.internet.com.

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