An IBM zSeries mainframe that Palm Beach Community College bought for about a half-million dollars in 2005 was sold this month on eBay for US$40,000.
Mainframes and other IT systems "depreciate worse than cars," lamented Tony Parziale, CIO at the college in Florida. Parziale has moved some of the school's business applications from the zSeries machine to an Intel-based server that he said could deliver the same level of processing services at a much lower cost.
But Parziale's options for reselling the mainframe weren't good. He said that a state surplus auction would have drawn a limited buyer pool, potentially resulting in the zSeries system being sold for scrap. Meanwhile, IBM resale brokers offered him just US$15,000 for the machine.
Instead, Parziale decided to list the mainframe on eBay's auction site for a minimum price of US$30,000 in the hope that someone, somewhere might be interested. In fact, there was interest: the auction was completed Jan. 20, and Parziale said the winning bid was submitted by a company based in the Midwest.
He added that he doesn't know much about the buyer yet and that the sale has yet to be completed.
Corey Donovan, vice president of computer equipment reseller Vibrant Technologies, said cases of zSeries mainframes turning up on something like eBay are "pretty rare" -- partly because of the resale restrictions that IBM puts on the systems.
Indeed, Parziale said that he is still running the mainframe at the college while the buyer seeks certification from IBM for ongoing maintenance of the system. To get that, IBM will shut the system down and then recertify it, he said.
New certifications are required for other types of servers as well, but that process is generally less restrictive, according to Donovan. For instance, he said that IBM will simply inspect servers that Vibrant is looking to sell and certify them for resale.
Donovan wasn't surprised by the difference between the original purchase price that Parziale paid and the winning bid in the online auction.
The moment you open the box on a server, its value depreciates by 50%, Donovan said. And a 90% decline in value over three years "is pretty typical," he said.
But Donovan added that he does see increasing demand for used IT equipment, and he pointed to the sagging economy as a reason. "A lot of resellers out there are welcoming a recession -- a recession can really benefit us," he said.
The resale industry surged during a recession in the early 1990s, and then again during the dot-com bust earlier this decade, Donovan noted. Now, he said, resellers again "are looking forward to IT managers thinking about how they can stretch their IT dollars."