SIC 7377 Computer Rental and Leasing

Encyclopedia of American Industries | 2005 | Copyright

SIC 7377
COMPUTER RENTAL AND LEASING

This industry consists of establishments primarily engaged in renting or leasing computers and related data processing equipment on the customers' site, whether or not also providing maintenance or support services. This industry does not include establishments engaged in both manufacturing and leasing computers and related data processing equipment. Establishments primarily engaged in finance leasing of computers and related data processing equipment are classified in SIC 6159: Miscellaneous Business Credit Institutions. Establishments primarily engaged in leasing computer time are classified in SIC 7374: Computer Processing and Data Preparation and Processing Services.

NAICS Code(s)

532420 (Office Machinery and Equipment Rental and Leasing)

Industry Snapshot

Companies in this industry bought, sold, and leased new and used high-technology equipment. These companies included maintenance companies, refurbishment/reconfiguration firms, transportation companies, financial institutions, original-equipment-manufacturer (OEM) finance companies, software distributors, and industry consultants.

The success of computer rental and leasing companies evolved from the strong urge among U.S. industries to remain on the cutting edge of technology. While many companies wanted to upgrade their computer equipment, few were ready to invest the necessary money up front, and many decided instead to turn to rental and leasing companies. By leasing equipment, companies could experiment with new computers and peripherals, upgrading as they felt necessary.

Sales volume in the computer leasing and remarketing industry was between $15 billion and $25 billion annually in the early 1990s. By the late 1990s, equipment leasing had grown to a $183 billion industry, according to the Equipment Leasing Association. The second half of the 1990s proved to be a profitable environment for the computer leasing industry, despite dramatically reduced purchase prices of new computers. Some computer leasing companies responded by adding services to their leases, such as computer maintenance and insurance.

Organization and Structure

The two main types of leases used in the industry were finance leases and operating leases. In direct finance leases, which were excluded from this industry classification, the lessor provided the financing. In leveraged leases, other investors provided debt financing. Operating leases were considered the best option for companies trying to avoid depreciation deductions. In an operating lease, the lessor owned the equipment and took the depreciation,...

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