Used IT gear: Good stuff cheap -- just not always

Sure it saves money, but sometimes used equipment is just ... old

When Cox Ohio Publishing needed to buy 600 laptops, it decided to buy used gear -- and saved approximately 70 percent of the cost of going with new units.

Brand-new laptops would have cost around $600,000, explains Catherine Bates, asset and configuration manager at Cox Enterprises, the parent company of Cox Ohio in Dayton. But Cox saved approximately $420,000 by going the used-gear route with Redemtech in Columbus, Ohio.

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Cox is rolling out the laptops in the early stage of what's planned to be a yearlong implementation. The Dell machines are less than two years old, and so far everything is working well, Bates says.

"One of the benefits Redemtech offers is the diagnostic and grading process that they put their equipment through," she says. "We knew we were getting grade 'A' machines, which means that there are no hardware defects or cosmetic issues with the equipment. The equipment functions just as if we had purchased it new." The laptops included a warranty that covered Cox for 90 days, she says.

This is on par with what some new laptops come with, though there are exceptions. New Dell Vostro laptops, for instance, come with limited warranties of up to a year, but other Dell hardware warranties vary between 90 days and four years. For its part, Hewlett-Packard's Mini 1000 XP laptop comes with a one-year warranty.

Cox Ohio is by no means alone in considering used-tech equipment instead of new, and a number of companies are taking the lead in servicing this growth market. Hewlett-Packard's Renew division and companies like Redemtech, Canvas Systems and Frontier Computer typically buy used equipment from user organizations that are refreshing their systems. Then the vendors perform diagnostic and grading on the gear, and offer it to buyers at a deep discount off what it would cost new. Sometimes these vendors get their hands on IT equipment that was returned and/or never even used by customers who mis-ordered or decided to go another route, for instance.

Forrester Research analyst Doug Washburn says that IT buyers should consider the different flavors of used equipment, since performance and cost will likely vary. Remanufactured, refurbished or reconditioned are all terms that "refer to a device that goes through a stringent visual and technical refurbishment process," he says, versus just "used" -- which does not guarantee these processes.

Washburn explains that in this economy, when capital expenditure dollars are challenging to come by, organizations are looking to preserve funds wherever they can. Plus, this option does double-duty as "green" IT, which is increasingly part of the agenda at many companies, he says.

Washburn doesn't have hard data about the number of customers who are buying used vs. new, but says demand for refabbed gear is high enough that supply is starting to become harder to get. "People are extending the life cycle of their assets and are not refreshing as quickly," to conserve capital dollars, so there are fewer used machines on the market.

Big Iron in the mix
Laptops aren't the only equipment that companies are looking at buying used. Duc Tran, manager of the Vertical Motion Simulator Lab at NASA, says he's bought used computers because they are compatible with other lab systems that are no longer available as new.

Specifically, NASA has purchased used DEC AlphaServer ES45s to upgrade and to continue support of the lab's existing DEC servers.

"If the used equipment was not available," Tran explains, then his group would have to spend time and money developing a new solution. "This effort would be fairly expensive."

For its part, the IT department at Georgia Southern University purchased IBM x86 servers, Net Applications' Fibre Channel storage, Cisco switches, routers and hubs, Unix servers and other networking equipment -- all from Canvas Systems, a supplier of used IT equipment in Norcross, Ga.

Timur Mirzoev, assistant professor of information technology at Georgia Southern University, says that the university has not had any problems so far. It's also been a great teaching aide for students, who have done all of the actual installation, configuration and management of the used gear over the past four months.

"I think this is the only way we could afford to teach advanced technology ... with real hands-on experience," says Mirzoev. "In addition to reusing existing equipment, we are also supporting the greener global environment. It's the best choice considering the economy in this state."

Forrester's Washburn adds that the performance of used equipment doesn't have to be any less than that of new equipment. For example, he says, HP's Renew program re-manufactures equipment to be in "same as new" condition and touts equal performance at a 15 percent to 40 percent discount compared to new. And, in fact, the refabbed equipment may have never actually been used because of customer returns, canceled orders and the like.

The numbers can really add up
Steve Hawn, president and CEO of used-gear supplier Frontier Computer in Traverse City, Mich., says that customers who need to upgrade their software in a hurry often turn to used hardware to ease the monetary pain. A new version of an application often requires more hardware horsepower, and going with used equipment can cut the cost of that new hardware by up to 90 percent, he says.

Robert Houghton, president of Redemtech, says that one customer who went the used-gear route saved $9.2 million during a two-year period. The customer, which Houghton declined to name, bought Cisco switches and routers, desktops, laptops, laser printers, and Intel and Unix servers, among other things.

But the strategy is not without risk. Steve Brasen, an analyst at Enterprise Management Associates (EMA) in Boulder, Colo., says the primary challenges of using refurbished equipment are ensuring reliability and dealing with technology obsolescence. "Any piece of hardware that was actively used previously is going to show signs of wear. Even 'refurbished' units, which have typically had replaced or repaired damaged components have been subjected to stress and, therefore, contain unseen wear."

Brasen adds that even though there's "no question" that used equipment is less expensive, he recommends that companies still follow their standard decision-making process before making a purchase. "Any hardware evaluation [for either new or used equipment] should factor in the total life cycle cost with the expected return on investment," he says.

Be careful out there
Customers should also be aware that IT equipment typically becomes obsolete in a relatively short period of time, Brasen cautions. This is particularly true of computing equipment. Servers and desktop computers can be expected to have a usable life span of only about three to six years. After that, they become difficult to support as they are replaced by the next generation of system architecture. Telephony and network systems have a longer shelf life, but customers should always ensure that replacement parts and support are available before committing to older technology.

If you're buying directly from a seller and not using a refurbishing company, you should take the same steps upon receiving the new equipment that companies that are disposing of hardware should take, namely a secure wipe of the hard disk and the removal of any external media (CDs, DVDs and so on). There are a number of commercial and open-source utilities available for wiping a hard drive. Among them: DriveScrubber by Iolo Technologies, Wipe It 3.01 by Skylark Utilities and ShredIt 5.0 by The Mireth Technology.

Despite these cautions, "the pros far outweigh the cons," says William Sauter, IT director at Beaver Island Community School in Beaver Island, Mich. "The only con that comes to mind [is] the lack of documentation in the box and the mounting accessories." But these can be overcome by working with a top-notch used-gear supplier, Sauter adds.

He has primarily purchased used Hewlett-Packard/Compaq gear, including an HP MSL5000 tape library, four ProCurve Gigabit Ethernet switches and a disk-to-disk backup system that includes a ProLiant DL360. All of this gear was purchased for less than the cost of the current tape library, Sauter says. The switches carry a lifetime next-day replacement warranty with Hewlett-Packard, even though he bought the switches from Frontier Computer.

Among the suggestions from Forrester's Washburn: Ensure that the products you're purchasing have a warranty and one that lasts just as long as possible (120 days minimum) -- with free parts and labor included from in-house technicians. "And before entering into a new sourcing relationship, check with your existing vendors, since they might already sell used equipment; for example, HP and Dell both offer used options," Washburn says.

"Our best advice," says EMA's Brasen, "is to treat used or refurbished IT equipment like a used-car purchase -- kick the tires and get the dealer to pony up for an extended warranty. Value in purchasing this equipment can be achieved, but only if you're certain that you're not going to get stuck with a lemon."

Sartain is a freelance writer from Utah with a background in computer science. She has written more than 500 articles and can be reached at julesds@gmail.com.

This story, "Used IT gear: Good stuff cheap -- just not always" was originally published by Computerworld.

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