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
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
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.”
words, if the new PC market grows by by 9% worldwide in 2012 as is forecast by
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.
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
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
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.
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.
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
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
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
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.
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.
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
This work is published under a Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License.
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