"Second-hand" is no longer only the purview of used clothing, furniture and book sellers. The market for hand-me-downs now includes PCs and servers for business use.

Purchasing used or "pre-owned" hardware can reduce the total cost of owning sophisticated technology for sometimes cash-strapped small and mid-size businesses. At the same time, businesses can demonstrate social responsibility to potential customers and clients because buying used prevents computer equipment -- which often contains hazardous materials -- from ending up in landfills.

Bolstered by the increased attention paid to removing data from old computers and other equipment and disposing of it in a pro-environmental way, there is a growing market for second-hand hardware. The assortment is vast -- IBM AS/400s, IBM RS/6000s, HP9000s, Sun Microsystems, Cisco, Intel, networking and storage equipment, etc., can now be shipped overnight by a growing number of companies that act like a CDW for the hand-me-down market.

Under warranty and speedy delivery

Hardware seller Rick Tashman had a client who was moving into a new office and needed to dispose of several uninterruptible power supply (UPS) devices that did match the power requirements of the new facility. By coincidence, he had another client who was looking for the exact same equipment. Hooking up the two clients saved the buyer $13,000. Tashman, who is a business development manager for Syscom Technologies in Blue Bell, Penn. and trades in new and used equipment, ended up with two happy clients -- and a commission to boot.

Companies can save money and eliminate the new equipment learning curve by purchasing used, leftover or "bad box" equipment, some of which includes a warranty. Used equipment that has been refurbished by the manufacturer is often tested more extensively than new hardware to ensure that it won't be returned, according to Tashman. Businesses that are hesitant to buy hardware that has previously been in service can still save by purchasing equipment that had packaging damaged during shipping or boxes opened but never used. Sometimes firms return sophisticated technologies because the projects they were intended for were cancelled.

Sometimes businesses that were intent on buying new end up with pre-owned equipment because new products were not available, according to Tashman. Hardware that is out of stock can be had faster and cheaper through channels that sell pre-owned equipment. Retail computer chains are joining the ranks of hardware suppliers such as Ingram Micro and TechData that are satisfying the "ship today" demand with pre-owned hardware programs. "The driving force is speed of delivery," Tashman says.

Hardware at half price

Recently-introduced hardware can be obtained for up to 50 percent off the retail price, while older products are discounted by up to 80 percent, according to James Davie, vice president at Canvas Systems, a Norcross, Ga.-based supplier of used and refurbished IT equipment. Small or mid-size companies often consider buying used because they don't have access to the volume pricing and leverage that their larger competitors do, and they don't want to overspend on technology.

Davie says smaller companies "tend to use technology longer and can take advantage of the secondary market to lower their total cost of ownership." In addition to the lower upfront cost, pre-owned equipment that replaces the same model of hardware can be integrated into an existing computing platform as is. That also eliminates additional spending on training and lost productivity that can occur when staff is required to learn new hardware, he says.

Businesses that are unsure if new technology will work in their environments can rent pre-owned equipment for a month to make sure that it is compatible before buying. Davies says that saves companies from reselling almost-new hardware at a substantial loss. Companies looking to minimize the potential for lost productivity from hardware failure can buy inexpensive used spares to keep onsite so that they can immediately be put into service. Businesses can also customize their orders by purchasing used hardware, selecting components from the most suitable manufacturers instead of being tied to single source, according to Davie.      

Companies that buy from used hardware vendors can also sell their old equipment and not feel guilty about the environmental impact of upgrading. Davie says his company will donate usable equipment that they can't sell to non-profit groups. The firm also works with recyclers to take out reusable components to prevent the materials from going to landfills.