The debut of a new IT hardware shopping Web site hopes to capitalize on the estimated $12 billion dollar annual secondary parts market.
ITPartShopper.com was recently launched by Montreal-based e-business solution provider MediaGrif Interactive Technologies Inc.
The shopping site specializes in refurbished and hard-to-find IT parts.
The site’s arrival comes at a pivotal time in enterprise lifecycle management. Most enterprises likely purchased PCs just prior to Y2K. The average lifecycle of a PC in a Canadian organization is approximately four years, experts say. And towards the end of that lifecycle the question for IT organizations looms: should the enterprise refurbish existing hardware or upgrade to all new systems?
While there are already similar IT shopping Web sites such as Shopping.com, Yahoo! Shopping and even eBay.ca, the new referral service site hopes to carve out a specific IT niche by specifically focusing on secondary parts.
“We know that space is getting somewhat crowded on the online shopping side but we think that we have a niche that no one is addressing,” said Tom Peck, president of ITPartShopper.com. There are over 100 niche vendors on the site, he added.
“We have greater depth…and we’re not in auction format. You compare the vendors that have the product and then you go and contact who you want to buy from.”
Geared toward corporations, government agencies, schools and other end-users, the site offers over 500,000 hard-to-find and refurbished IT parts, including PCs, motherboards, printers, telecom, datacom and networking parts and systems, Peck said.
According to the Computing Technology Industry Association’s 2003 statistics, the secondary parts market is estimated to be as high as US$20 billion in North America.
Enterprises can generally expect to save between 10 per cent to 50 per cent by buying secondary parts, Peck said.
“Especially for IT departments and corporations, I think that everyone is budget-conscious now,” Peck noted. “We see signs of things picking up, and people might be spending more on IT but you still are always going to have the budget conscious IT departments that say… (there’s) always a need to be cost conscious.”
But when contemplating whether or not to replace or refurbish, the bottom line for most IT organizations should be in whether clinging on to existing systems offer a smarter total cost of ownership (TCO) and return on investment (ROI) than a system upgrade.
Enterprises are generally trying to squeeze more life out of their existing systems, said Tony Olvet, senior consultant for IDC Canada Ltd. in Toronto.
There’s no magic formula for determining whether to replace or refurbish, but the overall costs of the refurbished part usually is among the determining factors, Olvet added. But as the price of new items such as desktop PCs come down “it may make more sense for the enterprise to replace the whole unit rather than spend what can often be a significant amount, just for one part.”
According to Stephen Ibaraki, a New Westminster, B.C.-based analyst for e-business solution provider iGEN Knowledge Solutions Inc., what has been fueling the secondary parts market has been the overall downturn in the IT market.
With the economic decline, enterprises were looking for cost savings or reducing expenditures by getting the most value out of existing resources. “Therefore, keeping existing systems going was a priority fueled by the parts market,” Ibaraki said.
However, with the initial signs of economic recovery happening, this strategy will change to one of upgrade in 2004 and growing faster in 2005. Ultimately utility and business needs should influence the “replace or refurbish” conundrum.
“Refurbish if the existing equipment supports your business strategies,” Ibaraki said. “However, when your changing business strategies require newer technologies, then replace with new equipment. The business requirements compel the decision.”