Sig, This looks like a booming business! :)Leigh
abcnews.go.com
Firms Make Big Bucks Selling Used PCs
Collecting the Cyber Trash
The online market for used computer equipment is growing, according to one Web vendor. And it will only increase as more small businesses embrace the Internet. (Photodisc)
By Roland Jones
ABCNEWS.com from TheStreet.com
Feb. 24 - When it comes to computers, there's money to be made from other people's garbage.
As companies are forced to upgrade technology at increasingly frequent intervals, the resulting boon for established PC makers also becomes a burdensome expense for their customers.
But now Web-based companies are stepping into the gap, making a mint from selling used computers and other technologies online. And aside from providing businesses with budget priced hardware, these firms are helping to transform the balance of power between seller and buyer in the technology marketplace.
Techno Trash
A case in point is TechSmart.com, whose bread and butter is selling hardware and other technology to leasing companies, financial institutions and small- to medium-sized businesses.
The business plan: Recover the cost of unwanted or off-lease computers by buying them and then selling them on the Web at auction prices. If a computer is not resalable, its parts are used for scrap.
"If Compaq has a bunch of unsold computers or Staples has a load of returned computers that it can't sell, TechSmart recovers assets on those products," explains Terese Kelly, a spokeswoman for TechSmart. "They make sure that the products are working properly and then they put them online for auctions to small and medium business markets."
TechSmart, for example, recently sold 225 Compaq Presario laptop computers for $1450 each, compared with the $2500 tag price for brand new models. That makes for a $1000 saving for the buyer.
'Waste Disposal' a Big Business
"Lots of small companies don't have the money to go out and buy the latest technology," says Dennis Lynch, CEO of TechSmart, the company he started in his mother's living room three years ago.
Based in Edgewood, N.Y., TechSmart now employs more than 100 people and boasts a former CEO of Apple Computers on its board of directors. Last November, the company won $13 million in first-round financing from a handful of key venture capital firms and expects a second infusion of cash later this year, just before the company plans to go public.
And by Lynch's reckoning, TechSmart is on course for greater profits.
If $200 billion worth of new computers are sold in a given year in the United States, the market value for reselling those computers will be worth about $24 billion, he says. If TechSmart gets just 1 percent of that market it will make $240 million, Lynch adds.
Resale Market Set to Expand
But TechSmart is not alone in the technology reselling business.
Tradeout.com, based in Ardsley, N.Y., is an online marketplace for buying and selling excess inventory and idle assets, including computer products, industrial equipment and machinery.
Other Web sites, like SingleSourceIT and PurchasingCenter.com, are providing smaller companies that don?t have huge technology budgets PC products and other hardware online.
Indeed, the market for small businesses is set to escalate as the number of those business grows and they increasingly use the Internet for e-commerce, according to International Data Group, a market research firm based in Framingham, Mass.
PC Money
Reselling hardware on the Web may be limited to PCs for now, says Simon Yates, an analyst at Boston-based Forrester Research. Equipment like servers and other hardware is not sold much.
But the market is out there for more online sales, with the greatest opportunity laying in auctions, says Yates. A company that needs 3,000 laptops can issue a request for computer companies to make bids on that business on the Web, he explains. The bid price goes down because it?s a bulk order, Yates adds.
In time, selling computers will go the same way as selling cars on the Web, suggests Yates. Instead of having to shop around at dealerships a company can now use the Web to court the best price from a number of computer sellers.
"This takes the negotiating power out of the hands of the vendor and gives it to the buyer," says Yates.
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