New Rage at Work: Used, Revamped IT Gear

With credit tight in a rough economy, businesses are offloading equipment while bargain hunters are picking up retooled hardware on the cheap

By Rachael King

David Friedman/Getty Images

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Just off the 101, about nine miles north of San Jose, a section of computer store Micro Center is lined with pristine white boxes. Inside are newly refurbished Dell (DELL) OptiPlex GX280s sporting Intel (INTC) Pentium 4 processors and 1 gigabyte of RAM—all for a modest $299. When these desktop computers were introduced in 2004, they cost almost $800 and were considered a respectable corporate PC. Now, for a budget-conscious business owner who needs features like Microsoft (MSFT) Windows XP—but not a top-of-the-line machine—they'll still do just fine.

Originally those Dell computers sat on the desktops of a large corporation. They made their way to Micro Center through Redemtech, a company that takes old corporate computers, refurbishes them, and resells them. Companies like Redemtech are just starting to see an increase in business that will likely accelerate in coming months. As the credit squeeze and economic slowdown force companies into bankruptcy and cause others to merge or trim headcount, many IT departments want to jettison surplus equipment. Other businesses are looking for gently used machines on the cheap. "In the last couple weeks, we've seen a huge upsurge of people contacting us with items they want to liquidate—a threefold increase," says Patrick Sutton, CEO of SoftBuyers, a firm that purchases used hardware and software before reselling it to other companies or simply recycling it. "It's becoming a priority because of the downturn in the economy to supplement IT budgets or to simply generate revenue."

As alluring as it may be to save money on used equipment, would-be buyers need to make sure they're purchasing from reputable resellers. Companies getting rid of computers need to ensure the machinery is wiped clean of data.

Used High-End Gear, Too

By some estimates, the market for used computer networking equipment alone is worth as much as $3 billion; that doesn't include the market for PCs or servers. This so-called secondary market encompasses everything from used desktops and laptops to the servers that run Web sites and corporate networks. Some businesses even opt for used versions of high-end gear, such as switches that connect computers, routers for linking multiple networks, and the hulking mainframe computers that support hundreds of users. "There will be a bunch of systems that will come out of downsizing or failed companies," says Robert Houghton, president of Redemtech, one of the many providers that help corporations move large volumes of used equipment and determine whether it can be resold. Redemtech sends its best equipment to Micro Center for resale. Other refurbishers include Intechra and Network Hardware Resale. Even IT equipment manufacturers such as IBM (IBM), Dell, Hewlett-Packard (HPQ), and Cisco Systems (CSCO) play a role in helping refurbish used gear.