Used IT gear: How to get good stuff cheap and avoid the lemons

When Cox Ohio Media needed to buy 600 laptops, it decided to buy used gear -- and saved about 70% of the cost of going with new units.

Brand-new laptops would have cost about $600,000, says Catherine Bates, asset and configuration manager at Cox Enterprises Inc., the parent company of Cox Ohio in Dayton. But Cox saved about $420,000 by purchasing used Dell systems from Redemtech Inc. in Columbus, Ohio.

Cox is rolling out the laptops in the early stage of what's planned to be a yearlong implementation. The Dell machines are less than two years old, and so far everything is working well, Bates says.

"One of the benefits Redemtech offers is the diagnostic and grading process that they put their equipment

through," Bates says. "We knew we were getting grade-A machines, which means that there are no hardware defects or cosmetic issues with the equipment. The equipment functions just as if we had purchased it new."

The laptops included a 90-day warranty, she says. This is on par with what some new laptops come with, though there are exceptions. New Dell Vostro laptops, for instance, have limited warranties of up to a year, but other Dell hardware warranties vary in length from 90 days to four years. Hewlett-Packard Co.'s Mini 1000 XP laptop comes with a one-year warranty.

Cox Ohio is by no means alone in considering used IT equipment instead of buying new, and a number of companies are taking the lead in servicing this growth market. HP's Renew program and companies like Redemtech, Canvas Systems LLC and Frontier Computer Corp. typically buy used equipment from user organizations that are refreshing their systems. The vendors then perform diagnostics, grade the gear and offer it to buyers at a much lower price than what it would cost new. Sometimes these vendors even get their hands on IT equipment that was returned but never used by customers who ordered incorrectly or decided to go another route.

Forrester Research Inc. analyst Doug Washburn says that IT buyers should consider the different flavors of used equipment, since performance and cost will likely vary. "Remanufactured," "refurbished" and "reconditioned" are terms that "refer to a device that goes through a stringent visual and technical refurbishment process," he says. In contrast, a machine that's just described as "used" isn't guaranteed to have gone through that process.

Washburn explains that in this economy, when capital expenditure dollars are hard to come by, organizations are looking to preserve funds wherever they can. Plus, the reuse option does double-duty by fulfilling "green IT" goals, which are increasingly part of the agendas at many companies, he says.

Washburn doesn't have hard data about the number of customers buying used vs. new, but he says demand for refabbed gear is high enough that supply is starting to become an issue. "People are extending the life cycle of their assets and are not refreshing as quickly" to conserve capital dollars, so there are fewer used machines on the market, he explains.