Hot deals on used hardware

SAN FRANCISCO (10/24/2003) - If you haven't dived into the secondhand market waters yet, now may be the time to think about taking the plunge. The glut of used IT equipment that flooded the market after the dot-com bubble burst made secondhand purchases a no-brainer for many IT shops -- some have even ventured onto eBay to get the best deals.

So does buying used or refurbished IT equipment make sense? Yes, according to some IT execs, but only if you're picky about what you buy and from whom. Howard Bastedo, director of engineering at ISP, which has a 14-person IT department, says there are still bargains on used gear, but advises potential buyers to check sellers' references carefully.

"You wouldn't believe what we bought, it's just amazing," Bastedo says, citing bargains he's gotten on used Cisco Systems Inc. and Foundry Networks Inc. routers and switches, Sun Microsystems Inc., servers, and even Lucent Technologies Inc. telephone switches, both from brokers and on eBay Inc. over the past two years. "You're talking about buying things for 10 cents or less on the dollar of what it would have cost to buy the thing brand new."

Bastedo says he hasn't had many bad experiences, but that's because is "very careful who we deal with," and uses escrow and purchase protections offered by eBay's PayPal to minimize risk. "Other than just saving the money," Bastedo explains, "it has allowed us to expand our network and upgrade in less time than it would have." He also recommends buying refurbished equipment. "We have discovered that Dell's refurbished workstations have less of a failure rate than their new ones -- they pay a little bit more attention to refurbishing them -- more thorough checking, a little bit longer burn-in," he explains.

Etienne Handman, CTO of online mortgage lender E-Loan Inc., a company with US$100 million in annual revenue and 650 employees, recommends focusing secondhand buying efforts on higher-end equipment that has longer product life cycles (and therefore holds its value better), and that is based on mature technology (and is therefore easier to maintain).

"For things that are relatively large, expensive, and long-lived -- certainly for Sun eight-processor-and-up machines -- there's definitely money to be saved," Handman says.

"The heavier iron holds (its) technical value better." By contrast, Handman says E-Loan found that buying used Intel hardware didn't make sense. "The new hardware was so cheap and used hardware was so dicey that the used hardware play just didn't work," he explains.

Handman also says it's not worth buying the latest and greatest gear used: "You can't really get the state-of-the-art stuff used at enough of a discount for it to be worth not having the warranty." And he cautions against buying used disk drives. "I've really learned the hard way on that one, they really do wear out," he says. "Besides, (new) disks are not expensive."

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