When it pays to buy used

THE OPERATIONAL TEAM at NASA's Jet Propulsion Laboratory (JPL) found itself recently trying to make the ends and the means meet. The team wanted to augment a bank of SGI Origin computers being used to estimate how quickly Greenland's glaciers were melting, but it had no money for new equipment.Luckily, team members found they could afford refurbished equipment from SGI. The lab purchased two additional SGI Origin 300 computers, one with 32 CPUs and the other with four CPUs, in addition to an SGI Altix 3700 16-CPU system.'No new equipment was really budgeted so we weren't planning on buying anything new, but with the availability of these systems, we were able to find some funding to enhance our computing resources,' said Joseph Kwan, a JPL senior systems administrator.JPL is not alone among government agencies buying refurbished products.A quick search through Federal Sources' government contracts database shows other such procurements.The Midwest acquisition department for the Environment Protection Agency spent $49,200 in 2006 to purchase nine refurbished Cisco Systems Catalyst 3750 Powerover- Ethernet switches in 24- and 48-port configurations. A shopping cart filled with nine identical new switches, which have likely come down in cost since then, would go for about $2,300 more, a recent price check at CDW Government shows. And NASA's Goddard Space Flight Center spent $39,000 to purchase from a reseller five refurbished Sun Microsystems Sun Fire V880 servers ' a server Sun no longer sells.Agencies have budgets for information technology equipment, however tight they might feel at times. Why take a chance on purchasing used equipment? Under the right conditions, used equipment could fill a void. The procurement of refurbished gear that matches what agencies already have could keep a network inventory homogeneous. It also could keep existing code running. And, yes, it could complete an IT inventory when the budget falls short. A used component can cost anywhere from 25 percent to 90 percent less than a virgin equivalent. And unlike used cars, new equipment can be just as reliable as the new stuff.The sale of refurbished or used equipment is a robust, well-formed market, said Joe Pucciarelli, IDC program director for studying technology financing and management strategies.Most large manufacturers, such as Cisco, sell refurbished versions of their equipment at a slight discount. Such companies will put the equipment back under the original warranty and update the units with patches and other updates. Third-party vendors might offer deeper discounts, but the level of support may not be as thorough.'There is a spectrum of choice and a spectrum of risk, and there two are correlated,' Pucciarelli said.Network Hardware Resale (NHR) is a third-party company that offers used Cisco and Juniper Networks switches and routers, in addition to other networking equipment. Purchasers who go through NHR can save 50 percent to 90 percent off the price tag of a piece of equipment still being offered new, said NHR marketing communications manager Sarah Beene. The company started a federal program about a year ago and is listed on the General Services Administration's schedule for IT purchases.NHR builds its inventory from customers who are upgrading and from purchases that were never used. 'There is a surprising amount of equipment that just goes unused, and the manufacturers usually don't take returns,' Beene said. When used equipment comes in, it is tested and reboxed.Beene said many of NHR's customers are out to save money, although a fair number want to keep their IT holdings as uniform as possible. She said Cisco recently stopped producing 6500 series switches, replacing them with the 6500 E series, which uses a different chassis. Not surprisingly, NHR gets many orders for the older 6500 switches from customers who don't want to swap out chassis.Organizations can also use NHR when switching brands. If an organization is exchanging Cisco routers for Juniper models, NHR can take the Cisco routers as part of a trade-in that would go toward the cost of the Juniper equipment. 'Manufacturers will typically offer a trade in on their equipment but not competing equipment,' Beene said.NHR offers a one-year warranty for all its equipment. Although the company does not offer the level of support that, say, Cisco does, it will offer what Beene calls advanced support.'If anything should fail with the equipment, you just call, and we just send you a replacement,' she said.Overall, buying a used router or switch is not as precarious as purchasing a used car, Pucciarelli said. Except for hard drives, most IT equipment is solid-state electronics, lacking moving parts. Once past the initial operations, or the burn-in period, as Pucciarelli puts it, a solid-state electrical component will likely operate successfully for years. And used gear could even be a safer bet because it has already gone through burn-in and testing.New-equipment vendors also offer refurbished versions of their products.SGI sees the used equipment as a service for customers, especially those such as JPL that want to supplement SGI systems, said Bob Ainsworth, senior director of SGI's Remarketed Products Group. A large part of SGI's refurbished offerings come from equipment used internally, originally leased to customers or has come in as part of a trade-in.SGI cleans up the equipment and installs the latest patches and upgrades. Sometimes it adds faster processors or larger memory modules. It then sells the refreshed equipment with the full warranty that came with it when it was first sold, Ainsworth said.Cisco carries a line of about 3,000 refurbished products, either models still sold new or recently discontinued products, said Benson Chan, senior manager of worldwide business development in Cisco's remarketing division. The company has equipment that has come back from lease, in addition to older trade-in equipment, leftover stock and equipment that has been fixed after a failure. Like SGI, Cisco places the same warranty on equipment it resells.Another advantage of buying from Cisco is that the products labeled 'Cisco' are guaranteed to be from Cisco, not a small concern given a recent proliferation of phony gear branded as Cisco, Chan said.Cisco runs a recertification program in which participating companies check the serial number of a product. Counterfeit gear can look so convincing that sometimes even resellers get fooled, so checking back with the mothership is wise.the Juniper equipment. 'Manufacturers will typically offer a trade in on their equipment but not competing equipment,' Beene said.NHR offers a one-year warranty for all its equipment. Although the company does not offer the level of support that, say, Cisco does, it will offer what Beene calls advanced support.'If anything should fail with the equipment, you just call, and we just send you a replacement,' she said.Overall, buying a used router or switch is not as precarious as purchasing a used car, Pucciarelli said. Except for hard drives, most IT equipment is solid-state electronics, lacking moving parts. Once past the initial operations, or the burn-in period, as Pucciarelli puts it, a solid-state electrical component will likely operate successfully for years. And used gear could even be a safer bet because it has already gone through burn-in and testing.New-equipment vendors also offer refurbished versions of their products.SGI sees the used equipment as a service for customers, especially those such as JPL that want to supplement SGI systems, said Bob Ainsworth, senior director of SGI's Remarketed Products Group. A large part of SGI's refurbished offerings come from equipment used internally, originally leased to customers or has come in as part of a trade-in.SGI cleans up the equipment and installs the latest patches and upgrades. Sometimes it adds faster processors or larger memory modules. It then sells the refreshed equipment with the full warranty that came with it when it was first sold, Ainsworth said.Cisco carries a line of about 3,000 refurbished products, either models still sold new or recently discontinued products, said Benson Chan, senior manager of worldwide business development in Cisco's remarketing division. The company has equipment that has come back from lease, in addition to older trade-in equipment, leftover stock and equipment that has been fixed after a failure. Like SGI, Cisco places the same warranty on equipment it resells.Another advantage of buying from Cisco is that the products labeled 'Cisco' are guaranteed to be from Cisco, not a small concern given a recent proliferation of phony gear branded as Cisco, Chan said.Cisco runs a recertification program in which participating companies check the serial number of a product. Counterfeit gear can look so convincing that sometimes even resellers get fooled, so checking back with the mothership is wise.