The refurbished marketplace is stymied due to a wide swath of issues, impacting the availability of systems to emerging markets.
While the supply of PCs isn't keeping up with worldwide demand, retired desktops are largely going untapped as an alternative, with less than 50 percent of machines being reused, according to a Gartner study released today.
Though approximately 197 million PCs were retired in 2007, just 44 percent of those entering the secondary market will be reused, according to the research firm. Gartner considers a secondary-market PC to be a system used for at least three months before being replaced.
Emerging markets are also suffering in the trend. Just one in five of PCs dedicated for reuse from established markets makes its way to markets in areas in dire need of technology. Those markets are increasingly important to major IT and software companies, who expect to see sizable growth from regional sales as local users' and businesses' needs increase.
Gartner said the problem of underuse is due to a slew of challenges hampering the secondary market supply channel, including competition, export taxes, high transportation costs and increasing legislation.
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"The secondary PC market offers great opportunity to specialized intermediaries, resellers or vendors, but it is a highly fragmented and competitive market," Meike Escherich, a principal analyst with Gartner, said in a statement.
The study also indicated that laws involving sellers to shoulder the burden of environmental or privacy considerations in dealing with used systems makes it harder for small companies to compete with large vendors in the refurbished PC industry.
That's frustrating for market players, given refurbished PCs can offer a notable margin, between $10 and $15. In bulk sales, that can prove to be as compelling, if not more so, than selling new PCs.
"The economies of refurbishment rely [more] on multiple PCs of the same configuration than individual systems, mainly provided by large and midsize businesses and government agencies," Escherich wrote.
Demand on the upswing
Yet the hurdles come into play even as demand continues to grow for secondhand PCs. For one thing, Microsoft's higher system requirements to run Windows Vista are fostering PC refreshes that, in turn, bolster the secondary market.
In addition to simply snatching up PCs on the cheap, another factor that may be spurring the secondary PC market is software piracy, since branded PCs may still display the original software license stickers -- making it harder for users of off-license software to get caught, Escherich said.
Import demand is highest in the Middle East, Africa and Asian/Pacific markets, China in particular. The top exporters of secondary PCs are North America, Western Europe, Japan and Australia.
"The demand for secondary PCs in emerging regions is likely to grow as pressure increases on developing countries to accept used PCs as a viable technology solution for more basic computing tasks such as Internet surfing and Web e-mail," Escherich said.
He added that the window of opportunity for the secondary market won't be as wide-open as new cheaper mini-notebooks are available.
"Nevertheless, we expect that most buyers of used PCs will prefer a higher-specification A-branded PC over a basic mini-notebook," Escherich said. "Also in times of uncertainty and recession, we expect replacements will slow down with demand increasing and supplying decreasing."
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