Whether you call it used, pre-owned or refurbished, buying IT hardware in the secondary IT market can provide significant benefits. If your organization hasn’t considered Second User equipment, then now is the best time to consider the value of what many say is ”equally reliable” equipment.  Second User equipment has been a vital option for State and Federal governments as well as private and public organizations around the world.  These organizations are stretching budget dollars by capitalizing on this non-traditional IT planning and in the acquisition process.

Second User equipment and new overstock is a result of terminated leasing contracts, OEM overstock, purchasing mistakes, company closures and discontinued programs, which supply the secondary market with a surfeit of current and end-of-life equipment. This surplus is comprised of primarily used equipment, although a significant portion is new, manufacturers’ surplus, open-boxed or unused (out–of-the-box) equipment. This fully functional hardware, including routers, switches, network modules, servers, server options, telephony and much more is available and priced at fifty to ninety per cent off list price. With savings in that range, IT budgets are extended significantly, while limited IT budgets can achieve superior technology through the acquisition of IT surplus that would not be possible through traditional channels.

Many major OEMs, such as Cisco, HP and Sun, also are directly participating in the second user equipment market to meet the growing IT demand for quality and economical IT Equipment.  And, for many reasons, such as cost and logistics, there’s a significant amount of surplus equipment that OEMs are not buying back or destroying. This sets the stage for JE Components, Inc., a small, privately owned, U.S. based firm that stocks its own inventory.

A flourishing secondary market does raise the question “Is used as good as new?” To answer this, let’s agree that the average refresh cycle is three years for established brands such as Cisco, Foundry, HP, Juniper, IBM and tier one brands. This top of the line equipment has an extensive life span due to superior engineering, which is why it is priced higher than lower end equipment. Most high-end equipment is built to last and when it does fail it is usually due to human error as in mis-handling the hardware. The consensus is that it’s a safe to say that off-lease equipment is “as good as new.” (Consider that it is not uncommon for new equipment that is randomly tested to fail immediately or within a short time frame.)

Today’s reality is that used equipment is thoroughly tested prior to re-entry into the market. Used equipment from JE Components has a two to three per cent failure rate, which is not much more than that of new equipment. After deployment and passing an initial inspection, previously owned equipment generally proves itself within a short time frame, thereby suggesting that acceptable performance will continue. As is true with new equipment, when used equipment fails it is often the result of human error such as mishandling, not hardware failure.  In other cases, an easy fix may be to replace power supplies, drives, system boards or such.

Let’s consider another advantage of purchasing from JE Components, for instance, have you experienced the disappointment and frustration when a perfectly good model is discontinued, and its replacement has far more bells and whistles than are necessary?  Not everyone requires the latest and greatest technology. Earlier models often offer the same performance as newer models; the bells and whistles are often unnecessary—except for leading-edge users. If you’re satisfied with your current solution, stick with what works and avoid changes to your network configuration. And, if you have a proven track record with hardware that’s been discontinued, check with JE Components before you let the manufacturer’s representative sell you on an upgrade! Keep in mind that used equipment is an economical solution for additions and upgrades, test beds, corporate training, replacement parts, temporary sites and spares.

It is also important to know that a surplus market is based on supply and demand, and it’s impossible to guarantee pricing and availability. Large orders can deplete the supply of a particular part (especially “hard to find” and “end of life”) and can also drive up prices. For instance, if there is an open order for a large order of a discontinued Cisco router or an IBM server, this order can deplete surplus inventory for several months and raise the price for a period.   Unlike, traditional distribution of new, current-- future availability on surplus is very rarely guaranteed as another purchase order can directly impact supply.  Timing is everything and like any other commodity markets there are many variables involved.  If you have interest on a large qty, especially “hard to find” hardware that is priced right and available, a prompt decision is imperative to avoid losing out to another buyer.  The wait for the inventory to reappear on the market could adversely affect your IT planning.  On the other hand, an over abundance of inventory is also good for the buyer as the pricing will be even more competitive.

Recognizing the value and capitalizing on some if not all aspects of the secondary market can only benefit your organization.  Whether it’s buying a particular component, a portion or all of your IT equipment you’ll save money from buying at reduced pricing and eliminating maintenance contracts by having in house spares.  Selling your surplus and decommissioned IT assets correctly will provide ROI dollars that can be used for additional IT equipment or spent on other areas of your organization.