Microsoft: Reused PCs Need Windows, Too

The Microsoft Authorized Refurbisher program is designed to make it easier for companies to install Windows on PCs they fix up and resell

Microsoft (MSFT) is working hard to ensure that Windows is the operating system of choice on the growing number of refurbished personal computers being used by budget-conscious nonprofits, schools, and consumers in the U.S. and developing world.

To that end, the Redmond, (Wash.) software maker last year began the Microsoft Authorized Refurbisher (MAR) program to make it easier for refurbishers to install versions of Windows onto desktop computers, says Microsoft Chief Environmental Strategist Rob Bernard.

Of the roughly 70 million PCs sold in the U.S. each year, about 3.5 million are fixed up and resold, according to research firm IDC. The number may rise in the coming months as the economic slowdown forces companies and other purchasers to trim budgets and hunt for bargains. "Demand for all used equipment is likely to grow," says IDC research manager David Daoud.

Half a Million Machines and Counting

Microsoft's program grants authorization to companies that have a track record of supplying an average of 5,000 refurbished machines for the past 12 months and meet other security, privacy, and environment-related criteria. Partners include Redemtech, Apto Solutions, and QSGI (QSGI).

After a year, the program is gathering steam, and Microsoft is considering expanding MAR to notebooks and other electronics. Through it and related programs, Microsoft says it has worked with about 500,000 machines. Bernard spoke with BusinessWeek.com senior writer Olga Kharif on Oct. 27. Edited excerpts follow.

How does the refurbisher program fit into what you are trying to accomplish at Microsoft?
We are looking across all the aspects of Microsoft's business to see how we can accelerate our ability to drive more environmental sustainability, both in the way we run our business and also in the products that we create. The objective with MAR is to really change the paradigm on a big scale. If you've purchased a new machine, and you've got an older machine, wouldn't it be great if you could direct the reuse of that to either an educational institution, a nonprofit organization, or provide a way for it to get refurbished and sent out to a developing nation, so people around the globe can get access to technology at a much lower price point?

And how successful has the program been?
This was really the first year to test and to build the ecosystem which will empower us to accelerate use and distribution of PCs. We've been working with our partners so they can build scale. If we look at the longer-term goal, it's really how do you get into the millions, or tens of millions, of units that can be refurbished and reused.

So far, the program is mostly U.S.-based.
For now, the U.S. is where the majority of our machines have come from, that's correct. But the ecosystem of partners is worldwide. They've got the processes in place and been trained. We needed to make sure that consumers are confident that the security issues are taken care of as these machines get refurbished. But the goal is to do it on a worldwide basis.

Will you expand the program to software for refurbished notebooks, servers, mobile phones?
I see it as very possible, especially in the case of laptops, to extend this to other devices in other markets. The focus right now is to really accelerate what we have now, and then assess what would be the next logical step based on what we learn over the next year or two.

Will nonprofits and schools continue to be the biggest buyers of refurbished PCs?
The untapped market in developing countries, for nonprofits and educational institutions, is large. But I am hopeful we can get to the point where the scale of the program allows us to look beyond these boundaries.

How do you think this economic downturn will impact the refurbished electronics market?
Because such a small percentage of users today are refurbishing their machines, there should be plenty of opportunity to grow this program significantly over the coming years, [even if PC sales do slow down].

Part of what we are doing now as this program matures is training our sales force on how they can help their corporate customers take advantage of this program. What we are trying to do is provide customers with more choices to dispose of their assets. Whether it's recycling and reclamation of over 90% of the components of a machine, or placement of that machine into a developing nation or a nonprofit or educational institution, it's about broadening the choice and reducing complexity simultaneously. If I feel there's a very simple way to dispose of or reuse an asset, then we've really solved a significant challenge for society.