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Scavengers profit from computer carrion

Scavengers profit from computer carrion

From Kristie Lu Stout

(CNN) -- None of the monikers thrust upon him was particularly appealing, so Marren Leizaola chose his own.

He likens himself to a junk collector at best -- as an organism that feeds on fetid flesh at worst. Generally, he goes by the title of "IT Scavenger," although he prefers "The Recycler."

Leizaola is in the business of failure. He scoops up used PCs, routers and servers at bargain prices from bankrupt companies and resells them at a profit. The practice has earned him the names "Dot-com Undertaker," "Hearse Chaser" and "Grim Reaper."

"In one way, it's a bit negative," Leizaola says. "But there's another side to the equation, in that we're also helping creditors and liquidators maximize their value, and people's money is not just (sitting) there in a warehouse or a cupboard."

Leizaola may be a small-time player. But second-hand tech is becoming big business.

"This has been an active business for many years, obviously through the IBM mainframe market and so forth," says Bob Hayward, senior vice-president at Gartner, a company that provides strategic technical consulting.

"But it really took off in Silicon Valley about 18 months ago when the dot-coms started to fall under. And there were so many -- particularly Sun servers and Linux machines and PCs on the market.

And if more companies go bust, there will be more gear to come: Corporations sell off their high-tech hardware when they become desperate to salvage any remaining value.

Scooping up deals

Smaller businesses used to be the principal buyers of such equipment, but industry watchers say even multinationals are buying from the bargain bin now.

"In the last year or so, the culture is certainly changing," says Russell Kincaid, CEO of Sweeney Kincaid, an industrial auction company. "There are certain large MNCs (multinational companies) that ... only recently we sold a large amount of IT kit, high-end kit, here in Hong Kong to one of our neighbors -- one of the biggest banks in the world."

Auctioneers like Sweeney Kincaid can put almost anything on the block, from switches to printers or even entire packaging lines. While second-hand boxes aren't necessarily second-rate equipment, buyers should inspect goods thoroughly and patronize trusted vendors.

"You have to make sure this equipment fits in with the new environment," says Gartner's Hayward.

"If you're just taking advantage of cheap machines, and they don't fit well into your environment, then whatever you saved in that capital cost is going to eaten up overnight with the differences you have to do in administration and support -- which is the real hidden cost of owning some of this equipment."


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