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Will Low Cost PCs kill the refurbished PC market?

Will Low Cost PCs kill the refurbished PC market?

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With new low cost PCs like entry netbooks costing US$200 people keep asking me if the refurbished PC market will disappear. I guess the same question applies with the launch of the new Tata $2000 car, do people expect the used car market to disappear? I don’t think so.

 

While we’re working on both ends of the spectrum at Microsoft – from old to new – I do see some changes for the refurbished PC market on the horizon.

 

Firstly, refurbishers will have to focus more on selling a solution rather than a box. A new $200 PC with a good warranty and ready to use software looks very inviting compared to a used PC with limited warranty and no software installed. However, when the refurbishers focus more on selling a solution with a warranty and genuine software, then the conversations with customers will be about what they want to do.

 

 

 

In somewhere like South Africa, you can buy an A-brand refurbished desktop with a faster processor (1 GHz), bigger screen (15inch+) and larger hard drive (20GB) than a new netbook, for under US$100. The refurbisher’s value proposition to a small business owner in Malaysia for instance can become - you can have a more powerful PC from a recognised manufacturer, that gives you more screen space to work in, stores more documents, is easier to repair, is already installed with ready-to-use genuine software, has a warranty for your peace of mind, and hey – it’s cheaper than a slower, smaller new PC, which is still too expensive for you to afford.

 

The second impact will be the appearance in large numbers of refurbished laptops in emerging markets. Right now, we see most refurbished laptops coming out of the installed base in developed markets and staying in those countries for resale and reuse. So unlike the new PC market, laptops are the high premium items in the computer refurbishment ecosystem. But now that laptop sales are over 50% of PC sales in some richer countries and the popularity of cheap netbooks is growing, that should mean refurbishers in emerging markets will start to see a higher supply of laptops for refurbishment. Because they are much cheaper to transport, laptops prices will come down and they will start appearing in the larger markets in emerging economy countries.

 

The bonus for laptops in emerging markets is their lower power consumption. The downside is the greater complexity around maintenance and spare parts. When I go round markets in places like Morocco and Kenya I see many small stalls selling individual mobile phone components for use when repairing the phones – many of them also refurbished – that we see everywhere. I imagine a healthy trade in used laptop components will also spring up as everything gets used and reused and reused until it has no life left in it.

 

 

 

This brings us back to the question at the start. Until new PCs become disposable items and accessible to anybody, there will always be people wanting to reuse surplus PCs as a way to become a citizen of the digital age.

 

- Sean Nicholson

Manager of Emerging Solutions and Refurbishment, Microsoft Unlimited Potential Group

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