[ale] Compaq Reliant web server

Jeff Hubbs Jhubbs at niit.com
Thu Jul 12 16:18:14 EDT 2001


Leonard -

What happens when you look at the bottom line - INCLUDING the taxes?  Do I
really want to pay more in lease costs than I would in purchase costs just
for the privilege of lowering my taxes by only part of the difference?? 

And, what if my requirement does not grow at anywhere near the same rate as
the power of the computers that become available to me for the same lease
cost?  Do I want to go through all of the integration work and changover
logistics just to get computers that are roughly four times as powerful (in
an crude, abstract sense) to run my requirement, especially if my
requirement stays level?  And what becomes of the computers that come off
lease?  Why, they're sold by the lessor for one last pulse of revenue.  

Sounds to me like the only beneficiaries are the lessors/manufacturers, and
the politicians they buy.  The rest of us try to run on a treadmill and
often aren't allowed to get off or at least choose our timing.  

My approach is to keep machines semi-disposable and cheap where possible,
use Open Source software, and use what other people consider junk where
possible.  I'm not the kind of person who thinks the letters D-E-L-L are
worth an extra $1000-2000 per system.

These lease plans erode our liberty, encourage overspecification, produce
excess waste, hamper our effectiveness as IT managers, promote a derelict
taxation system - and no one has convinced me that an organization helps its
bottom line through there use in perpetuity. 

Yes, there is a place in this world for leases.  If I'm assembling a project
team that will only exist for a year, I'd seriously consider leasing their
desktop PCs even if it cost me a little bit more to do so.   Same if I've
got a six-month development project that involves RS/6000.

To change the off-topic subject a bit, part of my motivation is to minimize
my contribution to the staggering piles of junked computers that we are
creating, with their toxic metals, etc.

- Jeff

-----Original Message-----
From: Leonard Thornton [mailto:Leonard at Intelis-inc.net]
To: ale at ale.org
Sent: Thursday, July 12, 2001 2:33 PM
To: Dan Mount; Bao C. Ha; ale at ale.org
Subject: RE: [ale] Compaq Reliant web server


It is far more cost efficient, both from a tax standpoint and a technology 
standpoint to lease as opposed to buying.  If you purchase computers, you 
are forced into depreciation schedules for tax purposes which far exceed 
the usable life of the computer equipment and imposes significant costs to 
replace the equipment early.  Additionally, the capital cost associated 
becomes a taxable asset used in determining the value of the company and 
subsequent taxable  value at the end of the year.  Leasing allows you to 
obtain the best equipment for a more flexible time period AND you get to 
use the expense of the lease as a write off against income at the end of 
the year.

At 02:02 PM 7/12/2001 -0400, Dan Mount wrote:
>-----Original Message-----
>From: Bao C. Ha [mailto:baoha at sensoria.com]
>Sent: Thursday, July 12, 2001 1:22 PM
>To: ale at ale.org
>Subject: RE: [ale] Compaq Reliant web server
>
><snip>
>
>All of the computers are replaced by leased ones.  The
>3 year-leases cost more than just to buy the computers
>outright.
>
>Unfortunately, your tax-payer money is paying for these
>mis-management mistakes, which actually showed up as
>progresses.  This was an IT department which rebooted
>Unix servers at least once a week to fix a memory leak
>problem.
>
></snip>
>
>I'm not an accountant (bean counters feel free to elaborate/correct me),
>I'm not sure of specific numbers, but here is how I understand the lease
>versus purchase decision.
>
>Would you rather come up with all of that cash out of pocket, or pay for
>it over time? A company buying large amounts of equipment would run out
>of cash trying to buy all of the equipment that it might need. If you
>lease, you just start making monthly payments. Also leasing gives the
>company opportunities to write off the cost of the equipment in the time
>of the lease. At the end of the lease the company would probably replace
>the equipment anyway. Why not finance? Well, in certain cases it might
>be attractive, but leasing generally gives the company more cash in hand
>and a quicker 'depreciation' versus purchase. Go talk to your bean
>counter about capitol expenditures versus leasing and he/she can give
>you more insight to the tax/financial implications that each brings.
>
>DM
>
>--
>To unsubscribe: mail majordomo at ale.org with "unsubscribe ale" in message 
>body.

The difficult while you wait.....the impossible overnight.

Leonard Thornton
Intelis, Inc.
5960 Crooked Creek Rd
Suite 30
Norcross, GA  30092

Office: 770.825.0032
Fax:            770.825.0028
Cellular:       404.583.5402
Pager:          888.785.9188
Email:          Leonard at Intelis-Inc.net

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