This is an update of a TechSoup article we posted online in September 2009. During those two years, not only has the used computer market been in question, but also there has been major buzz in the IT press about whether or not we're entering a “post-PC” era.

The post-PC era was announced in March 2011 by the late Apple founder and CEO, Steve Jobs, during the launch of the iPad2.

By "post-PC," Jobs meant essentially that computing and Internet use for both work and pleasure will no longer be dominated by PCs, but that there will be an array of smart devices including smartphones, tablet computers, smart TVs, laptops, and even sensing devices in our clothes and cars and other every day items.

The post-PC world was inadvertently ratified by HP when it made a dramatic announcement in August 2011 about trying to get out of the PC hardware business.

How Does This Impact the Used Computer Market?

The used computer market essentially starts with new computers. As Jake Player of the large IT asset recovery company TechTurn says, “there is a direct correlation between the growth of the new PC market and the growth of the used PC market.”

In other words, if the new PC market grows by by 9% worldwide in 2012 as is forecast by the business research firm IDC, then the used PC market will grow as well.

IDC has forecast that from 2009 to 2014, worldwide IT spending will increase from $360 billion to $460 billion, a 5% compound annual growth rate. Thus, it continues the decades-long trend that IT spending has an increasing share of the global economy.

PC shipments in 2015 will be 52 percent higher than PC shipments in 2010.

Forrester Research has also found that total shipments of desktop and laptop computers will continue to rise through 2015. Laptops of various types will be the dominant form factor (42 percent), tablets next (23 percent), and desktop computers will gradually decline in market share. With so many IT devices increasingly in use, strong markets for used equipment are developing worldwide.

How Long Can Refurbishment Last with New Product Pricing Decreases?

The main concerns about the used PC market are the falling prices of new IT equipment. How long the used computer market can last, given the diminishing prices of new equipment?

To paraphrase Mark Twain, reports of the refurbished computer’s demise have been greatly exaggerated. Nor are those rumors anything new. Bruce Buckelew of OTX West, which supplies refurbished computers to low-income students in Oakland, California, recalls the "decline and fall" of the computer refurbishment field 20 years ago.

Below, I’ll describe some recent research on the used, or "secondary," marketplace as well as some of the trends that address the viability of the refurbished computer market.

Refurbishment and the Environment

We at TechSoup have for a long time been fervent advocates for refurbished PCs. They're low-cost, they work well for many purposes, and there's a brilliant environmental case for electronics reuse. Three- to-five-year-old computers are fast, powerful, and adaptable enough to meet the needs of organizations and individuals who need them.

It is roughly 25 times more environmentally beneficial to extend the life of used, three-to-five year-old computers than it is to end-of-life recycle them at that age.

In his book Natural Capitalism, author Paul Hawken writes that when you discard a five-pound laptop, you are also throwing away 20,000 pounds of raw materials it took to make it.

Obviously, not every computer can be salvaged, and your organization shouldn’t accept just any used computer for the sake of environmental responsibility. Yet, for many purposes, refurbished equipment presents nonprofits, libraries, and lower-income families with a more affordable alternative to new equipment; one that will do nearly everything that new computers do.

Growing Supply, Increasing Demand

How robust is the used computer market and is it trending down or up? Current research indicates that there is increasing demand worldwide for used computers. IT and telecom research firm Gartner Dataquest found that the secondary PC market is growing rapidly: 55 million PCs worldwide in 2004; and 86 million 2007.

Gartner also found that of the nearly 200 million PCs that were retired by corporations and institutions in 2007, fewer than half found their way into the secondary PC market. Moreover, the research firm also found that demand remains larger than supply.

Supply. In 2005, Gartner Group’s initial study of the secondary PC market entitled "Thriving Secondary PC Market Puts Old PCs to Good Use," found that more than 75 percent of PCs replaced out of the corporate install base in the U.S. are four years old or less, yet only 36 percent continue to be used.

There is growth room on the supply side of the secondary PC market.

Demand. In Gartner’s sister study "Thirst for Technology Drives Used PC Emerging Markets," they predicted an increased demand for secondary PCs in both the home and professional markets.

A 2008 update on these initial reports, User Survey Analysis: Secondary PC Market Offers Growing Opportunity, continues to support both the supply and demand growth projections. It finds that:

Only one in five PCs suitable for reuse finds its way from a mature to a developing country market, even as demand for secondary PCs outstrips the available supply. The demand for used PCs will remain substantial, even though regional demand patterns will probably shift again as emerging markets mature and new emerging markets join the demand queue for secondary PCs.

Another Gartner study found that export tariffs and high transportation costs tend to restrict secondary PC markets.

One of the best measures of market growth in PC refurbishment to low-income Americans and people in the rest of the world is the growth in software sales in the Microsoft Registered Refurbisher Program and the Microsoft Authorized Refurbishers Program (MAR). These programs provide low-cost Windows XP licensing to 2,500 PC refurbishers in 80 countries, who in turn supply computers to low-income individuals, schools, and charities.

Ordering in the program has been steadily increasing from the program’s inception in 2000. From 2007 to 2008, the Community MAR program had a 57 percent volume increase worldwide. In the recession year of 2009, order volume increased 16 percent. Order volumes have increased 25 percent in 2011.

More Power, Lower Prices

Yet, as the price of new computers continues to fall, will they at some point be just as or more affordable than used equipment?

While it is true that the price of new computers has decreased over the years, refurbished equipment still remains a more affordable option. TechSoup’s Refurbished Computer Initiative (RCI), for example, has been tracking the price of refurbished computers since 2005. During this time, we have found that the price of three-year-old Dell Optiplex computers has fluctuated between one-half to one-third of that of new Dell Optiplex computers.

Currently, our RCI Dell Optiplex machines are about half the price of the new models, and perform the essential functions that nonprofits and libraries need of their computers: web browsing, email, office applications, social networking, and accounting. Moreover, refurbishers are increasingly offering warranties and comparable fail rates as with new equipment.

Microsoft’s Manager of Refurbishment, Sean Nicholson, estimates that the used laptop market worldwide will grow in developing countries rapidly.

Refurbishers in emerging markets will start to see a higher supply of laptops for refurbishment. Because they are much cheaper to transport, laptop prices will come down, and they will start appearing in the larger markets in emerging economy countries.

The Future of Refurbishment

The IT market will undoubtedly change with new developments like cloud computing and the current trend of consumerization of IT in which personal consumer devices like smart phones and tablet devices like iPads are being integrated in to the work place.

It means, however, that large numbers of PCs and also consumer devices of different types will be going in to used market. Someday, I guess, used PCs and other IT equipment will be a rarity.

Futurist Raymond Kurzweil envisions a time when three-dimensional molecular microprocessors will be commonly implanted in our brains for the purpose of intelligence and physical amplification. I suspect that even then, there may well be a decent market for low-cost used computer implants.

Photo: Roger Smith and /tiian