IT shops can profit from recycling

Technology vendors have long used Earth Day as an excuse to polish their environmental records, but in 2007, many companies are finding they can generate revenue through the practice.

In the past year, PC vendors including Dell Inc., Hewlett-Packard Co. and Apple Inc. have expanded their programs to take back their customers' obsolete computers for free recycling. And cell phone vendors Motorola Inc. and Nokia Corp. this week offered their customers greater incentives to return old equipment.

This is not just charity work, analysts say. In addition to improving their public relations, those companies can also generate new cash.

Some PC vendors earn growing revenue by selling parts, as they see rising global demand for plastics, components, scrap and refurbished PCs, according to a report by David Daoud, an analyst at Framingham, Mass.-based market research company IDC. Some vendors also use take-back programs as a way to convince customers to buy new PCs more often.

One of their biggest challenges is finding a better way to collect the flood of obsolete hardware. Just 7% of consumers put their used PCs into municipal recycling, while 34% donate them to friends and family, and 35% store them in an attic or garage, IDC said. The corporate world is nearly as bad, recycling only 30% of PC assets through official channels, compared with donating 70% of them to nonprofit groups and employees.

In 2006, that picture started to change, Daoud said. The percentage of recycled PCs rose significantly, as companies cut the number of computers they tossed in the trash and saw a shrink in the demand for donated obsolete technologies.

One reason for the shift is greater awareness of other options, supported by Web sites such as MyGreenElectronics.org, which lists the location of nearby recycling centers sorted by zip code. And the EPEAT government IT procurement site helps institutions buy PCs that are manufactured with less of the lead, copper and cadmium that fills up toxic landfills.

Another reason is the growing realization in corporate boardrooms that companies can combine profit with social responsibility, said Bob Houghton, president of Redemtech Inc., a Columbus, Ohio-based firm that helps connect companies disposing of their old IT assets with recyclers seeking raw materials.

Most large enterprise companies have strict rules for IT procurement and deployment, but only vague guidelines for hardware retirement and disposal, he said. Many of those companies are glad to make grand statements about upholding their environmental responsibility, but the message often gets lost by the time it reaches IT directors with limited budgets. Generating revenue from the process can change the whole equation.

"A sustainable IT operation has to be financially advantageous for the company and its shareholders. If you can do that, it becomes very easy to do. Otherwise, it's just risk avoidance," Houghton said. "Ultimately, being 'green' saves overhead, saves money in terms of life-cycle cost and extending your infrastructure, and the board benefits from what it wants to do with social responsibility."

IT vendors are lining up to help their customers find these savings. Sun Microsystems Inc. and Advanced Micro Devices Inc. say their servers and chips will reduce users' carbon footprints, the carbon dioxide emissions caused by electricity generation that can lead to global warming. Fujitsu Ltd. and Salesforce.com Inc. say they are cutting their own carbon footprints through improved office and factory practices. And LANDesk Software Ltd. says it can save customers up to $75 per PC every year with an application that puts idle computers into low-power sleep modes sooner.

Profit opportunities in e-waste recycling will continue to grow fast. The 490 million PCs retired worldwide between 2000 and 2005 will rise to 955 million retired between 2005 and 2010, according to an IDC forecast.

Copyright © 2007 IDG Communications, Inc.

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