by Scott Berinato

The Secondary Market: How Big Is It?

Oct 15, 20022 mins

At no point in this story do we estimate the size of the secondary market. There is a reason. No one knows what it is.

The secondary market is complex. To estimate its size, data would have to be culled from manufacturers, lessors, resellers, brokers and auction websites about gear that is used, equal-to-new, refurbished, remanufactured, slightly damaged and lost.

There’s just too much used gear in too many places. And it moves too fast. Tweeners?brokers who sell used gear to other brokers?sometimes move equipment a half hour after buying it.

Insiders bandy the number $20 billion, but that’s less precise than a wild guess. This much we know: The secondary market is big and getting bigger.

Secondary gear dealer Asset Recovery Center has grown from $1 million in revenue to almost $50 million in three years, according to CEO John Lynch. Another company, Optimus, expects to grow 25 percent year-over-year, from $100 million to $125 million this year.

Six of Inc magazine’s 500 fastest-growing private companies in America of 2001 sold used gear.

The number of listings on eBay for secondary networking hardware is about 25,000 at any given moment. It rose 98 percent in 2001, 150 percent in the past year and a half, making it eBay’s fastest-growing section.

HP Financial Services expects to move 1.5 million units on the secondary market this year, and secondary market activity accounts for roughly 40 percent of HPFS’s $3.5 billion revenue.

IBM’s Global Asset Recovery Services receives 780,000 off-lease units per year, most of which go into the secondary market.

Dell Financial Services sold 300,000 pieces of used equipment in the past year and expects that number to rise.

While manufacturers used to ignore used gear buyers unless they were doing deals in the six- or seven-figure range, they’ll now compete tooth and nail for deals as low as $70,000, according to several CIOs and brokers.