Return to Enterprise Table of Contents
IS THIS WEEK'S MODEL MORE COMPUTER THAN YOU NEED?Many small businesses are finding used and refurbished PCs suit them just fine
Frederick C. Ford has learned his lesson: He won't buy new computers. After forking over a budget-breaking $6,000 eight years ago for a Compaq portable machine and then finding it was almost worthless two years later, he is buying used and refurbished computers. ''If you are willing to stay just behind the cutting edge, you can save money,'' says Ford, vice-president for sales at Boston brokerage Moors & Cabot Inc.
Ford estimates he has saved at least 50% purchasing technology that's a generation or two old, and he still gets the performance he needs to track clients' portfolios. About two years ago, he bought a 486 desktop and a 486 laptop PC for the then-bargain prices of $1,000 and $1,600, respectively, from computer broker, Boston Computer Exchange. This year, he spent just $1,250 for a refurbished Toshiba Pentium 100 laptop, which operates Windows 95 and contains a CD-ROM.
DEEP DISCOUNT. The downward spiral of computer prices yields great buys on used machines and, perhaps more important for small business, on refurbished ones--nearly-new computers often recertified and sold with original manufacturer warranties. Boston Computer Exchange was selling a Pentium 133 IBM desktop machine with a 1.6-gigabit hard drive and 16 megabytes of RAM for about $850 used and about $1,000 refurbished. It cost about $1,600 new last year. A Pentium 100 Toshiba laptop that sold for about $2,300 last year now costs about $1,250 refurbished and $1,050 used. Those who sell the gear argue that most small businesses don't care about peak processing speed or the latest upgrade. A letter can be typed as well on a $500 used 486 computer as on a $2,000 Pentium. Even more sophisticated functions--spreadsheets and tax programs--run on computers a generation or so old. ''These 486s are the power we need,'' says Pat T. Worley, president of Mallory Canvas Products, a printing firm in Carthage, Mo., who recently bought two used 486 Compaqs.
Experts note a paradox in buying older computers, though. ''The more technically advanced the buyer, the less technically advanced the computer needs to be,'' says D. Navin-Chandra, a former computer-science professor at Carnegie Mellon University in Pittsburgh and chief scientist at Nets Inc., a Cambridge (Mass.) electronics company. Newer computers tend to be easier to use, and the latest technology means you don't have to worry about capacity. Navin-Chandra suggests that the technically secure buy machines just behind the technology curve, and indeed, he says, many small businesses can get by with earlier Pentium models. ''Not everyone needs to run Lotus Notes and Netscape and Microsoft Word all at the same time.''
Joseph C. Pucciarelli, research director at the Stamford (Conn.)-based Gartner Group, cautions, though, that saving a few bucks on hardware can cost a company money in training and operations later when it upgrades--and that's the most expensive part of owning computers. A 486 that will only run Windows 3.1 might be cheap, but will the staff need reeducation for Windows 95, now the industry standard?
''It's a bad idea to buy used computers,'' Pucciarelli says. ''It puts a small company at a technical disadvantage.'' Tech support is harder to get, and many Internet applications demand more horsepower than older machines deliver.
He says the best bet for a company that needs to save a few bucks lies with refurbished machines--equipment returned to dealers in the first 30 to 90 days either for repair or exchange. If it needed hardware repair, he suggests caution: Once a computer has failed, it's more likely to fail again. And the more it's handled, the higher the failure rate.
One solution is to buy a machine recertified by the manufacturer from a refurbisher that provides support. Paul L. Baum, founder of Rumerson Technologies Inc., a New Jersey refurbisher for major manufacturers, says most returns stem simply from changed minds. He says his out-of-box failure rate is less than 3% because of extensive testing. Machines are recertified with the original manufacturer warranty and sold with original documents. Although more expensive than used, they can save money. Rumerson sells a major-name refurbished Pentium 133 desktop with a 14-inch monitor and color inkjet printer for about $1,000, compared with $1,850 new.
MATCHMAKERS, TOO. Dealers abound in this market. Refurbished machines are sold through mail-order catalogs, computer-refurbishing companies such as Rumerson (www.rticorp.com), and a few manufacturers such as Dell Computer Corp. Brokers such as Boston Computer Exchange (www.bocoex.com) and Atlanta-based American Computer Exchange (www.amcoex.com), sell both used and refurbished equipment and match buyers and sellers. Retail stores are another source. Franchise outlets, such as Minneapolis-based Computer Renaissance, even have their own service departments. Flea markets--such as a monthly all-night sale in Dallas that attracts 20,000 people--can be a good place for savvy buyers to shop.
The used-equipment business is developing into a sophisticated marketplace, says Alister C. Miller, owner of the Dallas flea market. And many dealers are targeting small business as a logical market for trade-ins from big corporations. That's probably good news for small business. With technology moving ahead at warp speed, a seat on the leading edge may not be worth the ticket.
By Janin Friend in Dallas
Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.