Dell is moving to bolster its channel storage sales—and undercut competition—by offering zero-percent financing on EqualLogic equipment purchased through authorized Dell resellers.

"In an economic downturn, customers are under pressure to save money," a Dell spokesperson says. "Dell's Americas Channel group is offering new and competitive financing and leasing options that partners can offer to their end customers designed to close the gap between their customers' technology needs and their cash flow."

The initiative guarantees that end users that buy at least $40,000 of EqualLogic equipment will qualify for a 12-month zero-percent lease offer. Payments are made quarterly. At the end of the lease period, customers will have a $1 purchasing option.

Dell will also offer a second lease finance offer on other Dell hardware, however the financing rate will be dependent upon the customer's credit worthiness. 

The zero-percent financing through the channel follows a similar offer to enterprise customers that was announced last week.

While the poor economy is putting pressure on IT budgets, storage is seen as one technology that may resist downward recession pressures. Dell’s move could undercut other storage vendor’s channel initiatives, and many of Dell’s competitors also are offering purchasing and financing incentives.

Tom Gallivan, senior vice president of worldwide sales at storage vendor, explains ONStor offers various leasing options including a no payment for 90-days program through Key Bank. 

OnStor also has a trade-in program to incent solution providers' legacy customers to upgrade from the company’s Bobcat platform to the latest generation Cougar platform. Under the program, ONStor solution providers receive credit for the legacy systems; they can turn legacy systems in and pass the savings on to the customer when a new ONStor solution is purchased.

Hewlett-Packard also recently renewed its program that offers 36-month, zero-percent financing on all HP storage equipment and Proliant blades.

Additionally, HP recently expanded its TotalCare program to include a TotalCare Access card, which allows solution providers to bundle hardware, services and financing for their customers. Through the program, solution providers can offer business-technology consumers 36-month equipment leases at 4.9 percent, said Ramona Thibeault, vice president of SMB sales in HP Solutions Partner Organization.

Dell’s financing deal may be another attempt by the vendor to outflank its competition by undercutting on price and scale, as many other storage vendors don’t have the infrastructure or the market share necessary to support initiatives like Dell’s.

Dave Egan, senior vice president of storage at Fujitsu, says generous financing offers will become more prevalent as the economy tightens. Fujitsu has been offering a host of rebates, financing and credit programs to help resellers, including a $3,000 rebate on Fujitsu’s UDS 1000 and 2000 products sold to solution providers through distribution.

“We haven’t quite gotten down to zero percent for a year, but we’ve got a 90-day, no-payment option for partners who get a 12-, 24- or 36-month lease,” says Egan.

Dell isn’t targeting any particular competitor with its zero-percent financing offer, but one vendor that could feel the effects is NetApp.

The storage vendor was unavailable for comment for this report. However, newly installed NetApp global channel chief Julie Parrish recently told Channel Insider that she was most concerned with the competitive threat presented by HP and Dell through its EqualLogic line.

“Accelerating our channel to get beyond EMC is what we have to do, but guarding our flanks against aggressive competitors in the rearview is definitively necessary,” said Parrish.

Channel Insider correspondent Sharon Linsenbach contributed to this report.