Second-hand PCs now big business Margins better than new computers

Second-hand PCs now big business Margins better than new computers

The IT rag and bone trade is booming, with margins on second-hand PCs making those on many shiny new PCs look positively sick.

According to Tania Stuart, marketing director and acting CEO at Vantage Point Technology: "Remarketing of PCs is one of the fastest growing areas in the US IT industry," and it appears to be gaining a healthy level of respect in the Australian channel.

While most distributors and resellers search for market segments where they can exploit some competitive edge, "remarketed" or second-hand PCs could be the dream channel business - where there is both strong demand and margin.

From what started two months ago as the fulfillment of one reseller's request to source some moderately spec'd, checked and cleaned used PCs, Vantage Point's newest division, VPT Remarketing, is now turning over several hundred PCs per week.

Quality stock

And while resellers are making around 30 per cent margin, the only problem is getting enough quality stock. Stuart said they can handle up to about 700 systems a week, and that is the point. For the remarketing business to be profitable, as a distributor, VPT Remarketing has had to find the optimal scale for the operation, without adding substantial overhead, she explained.

"We are only dealing with brand name PCs, and the operation is to check them, clean them and get them to wherever they are in demand." Stuart also claimed that Vantage Point is the only ISO 9002 approved company in Australia to be bundling remarketed PCs and new printers.

The systems are mostly sourced from integrators, government departments and large corporates as part of what Stuart calls the "asset management recovery program" and are supplied to retailers who are targeting budget strapped home users.

As an example, for a brand name Pentium 100 based PC with 16 MB RAM, a 15in monitor and a CD ROM drive, sound card and speakers, dealers will pay around $550 with a 30-day warranty. Stuart said such systems are currently selling for upwards of $800, and retailers can bundle them with a new printer or software to cater for the sub-$1000 buyer.

One Sydney-based retailer and system integrator said there is a big and growing business in the channel for used PCs. ComPlus Computer managing director Tony Prince said: "There are three strong areas of demand, first-time computer users, students requiring word processors, and small offices setting up networks."

Prince agreed that a remarketed P100 should comfortably bring $800 and was attracted by the margins, but warned it would be important for resellers to have some good technical support on hand for new users.

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