With low residual values, there have always been questions
raised over the resale of IT equipment. Yet with the market for
such assets worth over €15 billion in the UK, this is not a sector
that lessors can afford to neglect.
Auction houses divide IT equipment in two
categories: the low-end, which is comprised of desktops and
laptops; and the high-end, which is made up of servers and
enterprise networking.
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Generally, due to their low value, desktops
and laptops are bundled and sold as lots.
“The cost involved in preparing an item for
auction can often outweigh the eventual value,” explained Dan Main,
a communications and technology appraisal specialist at auctioneers
GoIndustry Dove.
This is not always the case, however.
Livingston, another auctioneer which specialises in low-end IT,
will sell single items.
The equipment will have been refurbished and
will be sold with a warranty, thus commanding a higher price. Yet
with the economic climate hitting rock bottom, businesses are
holding on to equipment for much longer, which can reduce resale
value at auction.
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By GlobalDataAfter a certain point – often around five
years – there is little demand for the equipment at all, and in a
downturn, it is likely to be scrapped, said Main.
“In many ways lower-end IT – such as
desktops and laptops – has always been so hard to sell that it
can’t get much worse in the current climate”
Yet he predicted that, as a consequence of the
crisis affecting the banking and financial services industry, a
large volume of equipment will come through within the next few
months, pushing prices downwards, as the market is flooded.
In particular, the auctioneer expects that all
enterprise networking, servers of all types, data storage, desktops
and PBX telephone systems will be affected.
In addition, another factor that lessors need
to consider is how quickly new technology is being developed.
As items become much smaller, with a much
higher data storage capacity – and also cheaper to run – equipment
can become obsolete much more rapidly than in the past, usually
within a couple of years.
“We regularly walk onto a site and marvel at
the huge newish-looking server that takes up a whole rack, only to
be told that a tiny rack unit in the corner is doing this, and much
more,” Main observed.
As a rule of thumb, though, auction houses
tend to consider Cisco equipment as being in the top tier in terms
of residual values – and this is expected to continue despite the
downturn, with any price erosion much lower for Cisco equipment
than for many others.
“In many ways lower-end IT – such as desktops
and laptops – has always been so hard to sell that it can’t get
much worse in the current climate,” added Main.
