What do computer's currently help us to do?

Answer 1

The developing world's ever-growing demand for computers, particularly in the BRIC (Brazil, Russia, India, and China) countries, has been a major factor in the steady growth of US OEMs and the IT industry. As the market for new PCs has expanded in developing nations, there has been a corresponding increase in the demand for recycled systems (also called "secondary" PCs). Theoretically, this secondary market should be adequately supplied, given that there's no shortage of used PCs, but research suggests that this is not the case.

According to new research from Gartner, only 44 percent of the PCs that enter the secondary market are actually redeployed in a new setting. That figure doesn't apply to all the various computers that are trashed or end up in landfills; it's strictly defined as a measurement of how many of the systems meant for repurposing actually end up repurposed.

Gartner defines a secondary/recycled PC as any system that was purchased and used for at least three months before being passed on to someone else. Despite the relatively low redeployment rate, so-called secondary PCs account for a significant percentage (possibly up to 20 percent) of the computers currently in use worldwide. Gartner doesn't mention it in today's report, but the current 44 percent redeployment rate is up 22 percent from the 36 percent reuse rate the firm measured in 2005. Question is, what's keeping the percentage of redeployed systems so low?

As it turns out, a lot of things, most of which haven't changed from 2005 to 2008. Profitability isn't a problem; Gartner estimates an average profit margin of $10-$50 on repurposed systems. Unfortunately, take one step past the question of whether or not the repurporsed PC business is viable and almost everything becomes a mess. The rules and regulations on the distribution and sale of such systems vary from country to country, as do the terms and conditions companies are required to sell the systems under.

Not all recycled PCs are equally valuable or equally desired. Businesses purchasing a significant number of secondary systems prefer to buy a bulk quantity of the same system model, just as companies do when buying new. OEM-branded PCs are also more valuable if they still carry a licensing sticker affixed by the original reseller; Gartner states that these stickers provide a certain claim to legitimacy in the event of a Redmond-sponsored audit.

Rising transportation costs and laws requiring additional vendor responsibility have eliminated some of the smaller companies reselling these systems, but Gartner notes that the market is still extremely fragmented, with "tens of thousands of players." The chief exporters of said PCs are North America, Western Europe, Japan, and Australia, while the primary importers are the MEA countries (Middle East and Africa) and the Asia/Pacific markets-China, in particular.

Gartner's report highlights how vital secondary systems are to bringing countries online and providing basic computer services, but there's an elephant in the living room that the company doesn't mention. If just 44 percent of the systems entering the market are reused, and we know that number is higher (in both real and percentage terms) than it was three years ago, what's happening to the majority of the systems that don't make it to secondary deployment? Obviously they fall out of the chain at some point, but where and why is this occurring?

I think we can make a few assumptions. Not every PC that enters the secondary supply chain is going to be suitable for reuse, due to age, hardware failure, or licensing issues that give a conscientious vendor pause. It seems likely that some of the PCs designated for reuse actually end up being broken down and used for parts. Alternatively, the various components of a system may end up resold individually through eBay or another auction site. If you've got enough of them, even cases might be worth something-I don't know what metal recyclers are paying for scrap aluminum and steel these days, but a few hundred (or a few thousand) individual systems is an awful lot of metal.

The breakdown process doesn't stop once the secondary systems hit their destination countries; local resellers presumably break down system models that don't sell well in order to repair those that do. It seems reasonable to assume that these processes could account for a significant number of secondary systems not reaching the redeployment phase, but not 56 percent of them. Whatever computers aren't accounted for as sold or scrapped are apparently lost to theft, the black market, or the chop shops of China, where circuit boards are melted down for scrap metal.