Refurbished Systems Shift To Schools

Electronic News, July 20, 1998 by Carolyn Whelan

The education market is a lucrative one, and has a long way to go before saturation. Last year, it was a $5.5 million market (IDC), set to grow exponentially over the next few years, due to a number of factors, including grants from districts and states, volume discounts, and lower price tags. The federal government is offering $2.25 billion per year to US schools and libraries to upgrade their technology through the Universal Service Fund.

Should OEMs be worried? Given the possibility of offloading excess inventory, many companies view the used PC market as a double-edged sword.

"They shouldn't be," said Mr. Hause. "It's a good outlet for older systems, which enables companies to buy new systems." The guilt-free way of turning over machines regularly creates new business opportunities in the corporate market. And for most companies, the education market is only a small portion of their business.

Today, the refurbished PC market for schools isn't that menacing due to that age-old stumbling block, bureaucracy. The number of hoops most vendors of refurbished PCs need to go through, says Ms. Arrington, limits the volume that suppliers can promise. The 18-month window schools typically needed to plan PC purchases means suppliers can't necessarily guarantee the inventory to larger districts in urban areas. That leaves smaller districts with tighter budgets and a shorter window; ideal prey for refurbished systems vendors. Those districts could well go for donated PCs too. Despite the fact that many companies now resell their machines, others will always donate, and it's hard for schools to argue with free goods.

But refurbished PCs will make inroads. IDC forecasts that in the year 2000 800,000 units will be shipped to schools; that number is projected to jump 20 percent in 2002, to 1 million units.

The silver lining? Component suppliers. Given lagging capabilities in some used systems, hard drive, memory and peripheral makers may win new business. Simple add-on upgrades to older systems could prove lucrative.