Microsoft Puts Surface in Reach with New Financing Options

Posted on August 1, 2017 by Paul Thurrott in Uncategorized with 28 Comments

Microsoft Puts Surface in Reach with New Financing Options

Taking a cue from the smartphone industry, Microsoft’s new Surface Plus program now provides flexible financing for both individuals and businesses. This should help make the premium devices more affordable.

“Surface is designed to help people better create, collaborate, learn, and get things done,” Microsoft’s Liz Hamren explains. “Surface Plus and Surface Plus for Business are flexible financing options designed to help more people and businesses take advantage of the power of Surface.”

Available now exclusively from the Microsoft Store and in the United States, Surface Plus helps individuals purchase a Surface device with low monthly payments over two years and a 0% interest rate. Better still for the fans, you are eligible to upgrade to a new device after 18 months.

Surface Plus members also get what Microsoft calls “best in class” service and support from Microsoft Stores. And customers can add the Microsoft Complete extended service plan to their monthly plan if they wish, too. There’s even a 30-day no-questions-asked return policy.

Surface Plus for Business likewise helps small and medium-sized businesses add multiple devices of different types to a single agreement, including even the 55-inch Surface Hub. Business users can even add Office 365 for Business for $8.25 per user per month, and choose more flexible terms of 18, 24, or 30 months, with the ability to upgrade after just 12 months on a 24 month or higher term. Surface Plus for Business also comes with the Microsoft Complete for Business extended service plan with accidental damage protection.

This is a smart move. Maybe it’s time for me to price out a sweet Surface Laptop.


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Comments (28)

28 responses to “Microsoft Puts Surface in Reach with New Financing Options”

  1. sgbassett

    This is indeed a smart move. Most potential Surface buyers likely already have high-end smart phones they are purchasing the same way. Having adopted that way of purchasing one of the two tech essentials (smart phone), there is every reason to believe they will adapt to purchasing the other tech essential (laptop) the same way.

  2. Darmok N Jalad

    "This should help make the premium devices more affordable."

    How does it do that? Won't the buyer either pay the full price over the 0% term, or, if they miss that term window, it then becomes more expensive with likely 20% APR waiting on the other side? Deals like these never hurt the seller, but they sure do bring risk to the buyer.

  3. Crimson

    And...again we have a typical Microsoft move. The U.S. does have lower income citizens, but the regions where this makes a heck of a lot more sense (Europe, India, Africa, South America, Southeastern Asia, etc.) need this kind of program a lot more. Microsoft must face the fact that it competes against companies that bring their products all over this Earth. It's hard to gain users if you treat the rest of the world like it doesn't exist. Get out of your US shell, Microsoft! You can do it!

    • Chris

      In reply to Crimson:

      I agree. I'd like to own a Surface device, but the only ones I can currently afford to buy outright are used, and slightly damaged devices on Ebay. Something like this would allow me to buy a new device, and I'd make sure that I paid it off before the interest free period ended (been down the path of buying something interest free, and not paying it off in time...)

      Pity that Microsoft still thinks that everyone outside the US either doesn't exist, or doesn't matter...

  4. SvenJ

    0 percent interest is always a nice option. It being over 2 years doesn't bother me in the least. My Surface Pro 3 shows no signs of being obsolete over that time frame. No reason a new Surface Pro wouldn't last that long or be viable for longer. This might tempt me to upgrade earlier than I might otherwise.

  5. Daekar

    If I didn't build my PCs, I would definitely consider this. I like having current computing hardware and the payment plan makes it very appealing...

  6. MattHewitt

    This is a really ingenious move. I think there are a lot of people out there that would be willing to do this.

  7. Polycrastinator

    This is, essentially, how I purchased my last 2 Surfaces, I just did it through Best Buy. But I'd prefer to go direct through Microsoft if I could.

  8. Waethorn

    I see companies doing this, but I have to figure that Microsoft is going to lose money on this in the long run. Zero percent interest rates mean that Microsoft has to borrow funds to issue credit. That's gotta look good on a balance sheet *snort*.

    When I see companies do this, and especially when they offer in-house financing options where "everybody's approved", on delinquent accounts they'll just hire a collection agency directly. I know - I get calls from Dixon Financial all the time, and they, along with several other companies push this kind of business model now instead of businesses hiring a credit agency to handle customer credit lines. Of course, when they collect, Dixon gets a minimum of 10% of the unpaid amounts, meaning the creditor loses money.

    In any case, Microsoft is going to lose money on this business endeavour.

    • Chris_Kez

      In reply to Waethorn:

      That's TBD I think. There's a lot of factors we won't have visibility to. It may encourage more people to buy, or more people to upgrade early (giving MS a pool of devices to resell again). It might encourage lock-in. It might get more people to sign up for Microsoft Complete since the payment is bundled. Could there also be tax implications for MS since they're essentially leasing these? We just don't know how all of this stuff will net out compared to the potential impact of credit defaults.

      Seeing Apple and the cellular carriers doing this for several years suggests to me that maybe this isn't a priori a losing strategy. Certainly its not always a win for consumers; they can end up paying more by tacking on extra services and then giving back the device (rather than selling it themselves).

      • Waethorn

        In reply to Chris_Kez:

        Microsoft doesn't make 40% margins on hardware like Apple.

        And these aren't phones. The cellular providers are the ones subsidizing phones. At this point, they're not even subsidizing the purchase price of the phone - they're subsidizing the credit line, since there is no markup on spreading payments anymore.

        If this plan of Microsoft's were to take off in any considerable way (I doubt it will), I can just imagine how screwed up their financial statements are going to look to shareholders, having to rejigger funds here and there to cover credit on devices taken out of inventory. It's not like shareholders aren't already sick of this kind of crap with the write-downs from earlier Surface and phone endeavours.

        As is the rule though, consumers shouldn't put themselves into debt for such frivolous things. You don't need a Core i5 to use cloud services.

        • Chris_Kez

          In reply to Waethorn:

          Okay, ignore Apple or other cell phones for a moment. Zero-percent financing options have popped up just about anywhere you want to buy something costing more than $500 from appliances to furniture. What do you think Best Buy's margin is on a washing machine? Or how about the margin on a sofa from Bob's Furniture? Do you think retailers are ramping up these offerings because they historically lose money? They work with a third-party company to provide direct financing and that is who the consumer is contracted with. If you are late or default you deal with that finance company, not the retailer. Microsoft just rings up another sales. Do you think Microsoft has managed to come up with a program that actively loses money? Have you outsmarted all of the sales, finance and accounting people at Microsoft?

          • Waethorn

            In reply to Chris_Kez:

            Rarely have I seen a retailer that heavily advertises "zero dollar financing" where it wasn't done in-house. Remember that credit issuance agencies make a commission on sales too, just like merchant credit card processors.

            Have I outsmarted Microsoft's finance team? Well, does it take a rocket scientist to figure out their nearly 10 billion in writedowns between previous Surface 1-3 (and who knows how much in repairs) and smartphone business endeavours was a money waster?

            • Chris_Kez

              In reply to Waethorn:

              Aw, come on now, be reasonable. Overestimating demand for Surface RT and writing off the Nokia business is not comparable to facilitating a third party finance program for a relatively successful product line. There's no need to dig your heels in on this.

            • ym73

              In reply to Waethorn:

              Every zero percent financing option I have done in a store involved an outside credit card company, usually synchrony bank. The page announcing this deal says microsoft is using a company called webbank. The way this works is that the retailers pay a fee to the credit card company. When I was buying a mattress, they told me that fee is about 5% of the purchase. Where the credit cards make out is if you don't pay off the balance by the promotion period. That interest is being accrued and it you don't pay it off they hit you with the full 20%+ rate. This promotion seems to say that they will only charge interest after 2 years if not paid in full.

              The credit card will be responsible for any defaults. I'm pretty sure Microsoft's profit margins are high enough that they can absorb the fee the credit card charges.

            • jgraebner

              In reply to Waethorn:

              I've used quite a few 0% financing plans (always pay it off before interest accrues -- I'd rather have the money earning interest in my own account) and I've never seen one that isn't through a third-party bank. Among ones I've used, Apple uses Barclay, Best Buy, Home Depot and Sears use Citibank, Firestone uses CreditFirst and Living Spaces (furniture chain), Amazon, and Motorola all use Synchrony.

              • Waethorn

                In reply to jgraebner:

                Correct me if I'm wrong here, but don't those all just use store credit cards that can be used anywhere Visa or Mastercard can be used, not lines of credit specific to a single purchase financing option?

                • jgraebner

                  In reply to Waethorn:

                  No, they are all store credit cards that are only good at that store. In some cases, they do also offer branded Mastercard or Visa as alternatives. In some cases, the two types of cards aren't even the same bank, though. Amazon, for example, offers purchase financing through Synchrony and also has a branded Visa through Chase.

                  Note that even car companies rarely offer their own financing anymore. GM sold GMAC to Ally bank a few years back, for example. I just recently bought a new car and the dealership arranged financing through Bank of America.

  9. rmlounsbury

    I like that this also comes with in store support. Something Apple has always trumped every device manufacturer on is that they have stores everywhere. If you have a problem with an Apple device just schedule an appointment, bring in the device, and they'll deal with it. It is as friction-less as one can get... Aside from dealing with the hordes in the store itself.

    I've been debating between the Surface Book and the decidedly thinner Lenovo X1 Carbon or Dell XPS 13. This adds an interesting wrinkle to my decision. The only thing missing from the Surface line is an LTE modem so I can toss my spare sim into it and use it wherever/whenever without having to futz with the hot spot on my phone.

    Kudos to Microsoft for doing this.

  10. JustMe

    For your own awareness, the links take you to a page that says "page requested cannot be found." Though they may go live later in the day (I believe the blog link mentions 0900 Pacific as when the program goes live).

    I get financially why Microsoft would do this. For them, from that perspective, it is a smart move and makes sense. I would question "best in class" service (at least, based on my own experiences at the Microsoft store), however. I also know I wouldnt ever use the service (I tend to source my own phone as opposed to taking what a carrier offers). Personally, I just cant see paying on electronics for that long. But as I say, I do get why they would offer a program like this.

  11. JacobTheDev

    Love this, wish it had been available when I bought my Surface Laptop on launch day! I really appreciate companies offering these things for ridiculously expensive products; spreading out the payments over a number of months makes it easier to stomach :)

  12. glenn8878

    Or buy a cheaper HP equivalent.

    • ChristopherCollins

      In reply to glenn8878:

      That's what I did... Returned it four times. First one, bad speakers, second one stopped responding to touch, keyboard, or touchpad for up to five minutes at a time, third one had random 'touches'. I video'd that one and showed it to the HP support person who STILL reinstalled Windows drivers after I explained that the video was from the UEFI diagnostics and not Windows. Fourth one, had a defective, yellowish screen.

      The fact that I (just me) got four separate defective items from one manufacturer is mind boggling for quality control. Their support is horrid. I will never get that two hours of 'phone support' back. I loved that laptop and tried very hard. Nothing but MS or Apple stuff from now on. Basically, for the support. They both offer advance replacement. HP wanted me to ship it in for 'a few weeks'. Luckily for me, all of these HP problems happened within 14 days of purchase. Two of them had loose trackpads too, but I had adapted to that.

  13. Simard57


    would you recommend a SP over the HP Spectre X2 due to this option or is the X2 the way to go for a 2-in-1?

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