Used Goods

Last month, Chris Marler got a panicked call from the engineering department at Komatsu, Inc. in Vernon Hills, Ill. The department needed a gigabit of memory for a new design application, and it needed it ASAP.

Marler, the data center manager for the construction equipment maker, could have ordered new memory chips from a manufacturer. Instead, he called his favorite dealer of used and reconditioned network gear and related computer products: Midwest Technology/Leasing of Shaumberg, Ill. Marler didn't investigate the cost of new memory, so he doesn't know whether he saved any money on the deal. But he does know that he saved time.

"We were got it overnight," he says. "It would have been closer to a week if we had called the manufacturer." Memory isn't the only product that Marler buys on the so-called gray market. Komatsu acquired most of its nonproduction servers second-hand.

Reconditioned IBM RS/6000s run SAP applications and are deployed in testing and laboratory environments, among other locales. While the savings can be as much as 50% off the price of new equipment, Marler stresses that speed of installation is often a more important factor.

Mike Ward, general manager of Mid-Atlantic Research and Services in Gaithersburg, Md., says Marler isn't alone. The used and reconditioned equipment dealer says the bulk of his customers are more interested in getting servers, routers and other products quickly than they are in trimming a few dollars off the purchase price.

"When customers call a manufacturer, usually they can't get to a product specialist quickly enough to convey the need and work out the deal," Ward says.

"So when we get the panicked call it usually goes along the lines not of 'How much?', but 'When can you get it to me?' "Still, it's nice to save money. David Ochroch, director of IT contract management for Sallie Mae, the student loan financial company in Reston, Va., buys used IBM 3174 servers to power part of the company's transaction processing system. Comparable new servers would cost upward of $20,000. For similar used units, he pays between $5,000 and $10,000.

As with many financial organizations, Sallie Mae uses Tandem midrange computers to run its electronic funds transfer system. While the system is mission-critical, he says there's no need to buy the latest in replacement parts. So he often purchases Tandem-specific high-speed network controllers from an Arizona-based dealer that stockpiles used Tandem gear.

"You are dealing with a fairly stable system, not state-of-the-art. And it doesn't need to be," he says. "If a dump truck will work from point A to point B, why do you need a new Mercedes-Benz?"

Ochroch says he rarely buys routers, hubs and switches used, primarily because the price differential is not that great. And Ward and other gray-market retailers say the demand for used versions of those products is limited.

Ochroch and others advise potential buyers of used equipment to exercise some caution. When possible, look for equipment that is eligible to be certified for the original manufacturer's maintenance plan. Often that means checking directly with the manufacturer before making the purchase.

"That way, if something goes wrong, it's up to the OEM to make it right, so there's no finger-pointing when the product arrives," Ochroch says.

You also need to be more attuned to your specific needs. Used dealers often don't have the staff to send out a team of consultants to determine whether a particular product is suitable for its intended application. And while some offer their own warranties for products they sell, others don't.

Mid-Atlantic Research and Services' Ward suggests taking a close look at the seller's operation. Check the condition of equipment at the time it is sent out and whether it is delivered with the manufacturer's latest engineering changes.

He also recommends examining the network cables and demanding new ones when possible.

"Visit the provider," he says. "Find out how the equipment looks when they accept it. Ask to see their testing facility and meet their technicians . . .

If you buy used, you're going to run into a technical support issue with finger-pointing. You want to know they can support you when it gets into implementation."

Dealers of used network gear range from one-person operations to larger organizations where cost is less of an issue and service and warranties are generally better, according to Ochroch. Which you choose depends upon your needs.

"It's a matter of cost vs. risk," Ochroch says. "If the equipment isn't going someplace where you'll be fired if it doesn't work, you should get it as cheaply as possible. For us, in most cases, it's generally important enough that we need to be a little more careful about what we buy."

Duffy is a freelance writer in Northampton, Mass. He can be reached at tduffy62@compuserve.com.

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