A Bargain Hunter’s Guide to IT

In every recession, consumers (individual and corporate) are more cautious about spending and look for bargains under every rock. The current recession is no exception, but there’s a new twist this time. Thanks to the massive amounts of hardware that got devoured during the late ’90s and the subsequent failure of many asset-bloated dotcoms, there’s a new way for CIOs to get good stuff cheap. The secondary market for information technology has ballooned from a marginal curiosity to a force to be reckoned with.

The second-hand market is big. Seventy-seven percent of IS executives recently surveyed by CIO are purchasing secondary market equipment, and 46 percent expect to increase their spending in that area next year by some 15 percent.

“There is so much used hardware available now?and so much emphasis on cutting costs?that the secondary market is no longer a niche business,” writes Scott Berinato in “Good Stuff Cheap,” beginning on Page 52. And experts argue that while this trend has been stimulated by the combined forces of the dotcom buildup and crash followed by a generally moribund economic climate, this market is here to stay?at least for a while.

A lot of the equipment finding its way into this market has a pretty long shelf life?chips, routers, motherboards and the like. And there’s a lot of it out there?enough to support the secondary market for years to come. One sign that this is more than just a blip is the number of service organizations emerging to make it easier for IT buyers to get what they need without getting taken.

Smart vendors are learning to live with (and participate in) this new reality. Others still have their heads in the sand. They’d better smarten up. After going to the trouble of learning the ins and outs of this admittedly complex market, the 77 percent of CIOs who have already tried this out are not likely to go back to buying retail if they don’t have to.

Whether you’ve bought from the secondary market or not, Berinato’s article is a great view of what’s happening with third-party brokers and the major vendors, how CIOs are making this new market work for them, and how you can manage the risks. In this economy, it’s a must read.

To see the complete results from our “Second-Hand IT” survey on the used IT hardware market, go to www.cio.com/printlinks.