Used PC market surging

The supply of used PCs is expected to grow from 5.5 million in 1997 to 9.86 million in 2002, according to a new report.

Both supply and demand for the used PC will increase significantly over the next five years, according to a study conducted by International Data Corporation (IDC). The research firm estimates that the used PC market shipped 5.5 million units back into the market in 1997, and that this number will expand by 14 percent annually, or to 9.86 million in 2002.

Used PCs are an attractive purchase for many since they are often priced well below $1,000. Some resellers, for example, sell refurbished PCs for as little as $299, though most full-featured used Pentium systems are priced around the $600 mark.

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Businesses are the main source for used PCs coming back onto the resale market, IDC said. The machines tend to fall into two categories--refurbished used and liquidated new machines. Refurbished systems are those sold off after major upgrades or returned from leases. Liquidated new machines generally come from excess inventories and returns to vendors.

The supply of used PCs within the home market replenishes itself, with the majority of used machines being exchanged directly from home to home.

On the other side of the equation, education, small offices (less than 10 employees), and small businesses (less than 100 employees) are likely to make up the bulk to the market's growth in demand.

Part of this expansion stems from the PC industry's increasingly fast product cycle, as some buyers are always keen for the latest technology. The speed with which previously high-end systems make their way into the resale market insures that the popular sub-$1,000 PC will not completely undermine the appeal of used PC, IDC said, though it will serve as a substitute product.

"The used PC market has been evolving from a dumping ground for unwanted and under-powered systems to an acceptable source of low-cost hardware to fit a variety of budget and power ranges," said Christine Arrington, an analyst in IDC's U.S. Quarterly PC Market Tracker program, in a prepared statement. "The new and used PC markets are becoming competitive but will remain highly interdependent," she said.

"Every time there is a price cut in the main market, there is a price cut in the secondary market," Brian Kushner, chief executive officer of Austin, Texas-based used PC vendor Recompute, told CNET in a previous interview. "It's like the used car market," he said.

The IDC report also found that notebooks will begin to take on new significance in the used market, following the growth of notebook shipments in the last few years. The main driver of growth in the used mobile market will be technology advances that will make used notebooks more capable of running critical applications, and thus more desirable to consumers.