Thinking of going refurbished for your business IT? Read our expert guide first to understand the real costs and benefits.
The True Cost of “Saving Money”
Have you ever experienced a situation where "saving money" actually turned out to be more expensive? Maybe it was buying used winter tires that failed you at the first sign of snow. Or maybe it was purchasing a “fixer-upper” home that turned out to be a money-pit of epic proportions. The same possibility exists when it comes to business IT hardware.
When businesses choose off lease (refurbished) computers solely for the sticker price, they risk higher repair bills, user downtime, and faster replacement cycles. As an MSP and experienced IT hardware provider, we've seen firsthand the impact of these decisions on business operations and client morale. This article reveals factors involved in the total cost of ownership (TCO) so you can decide with eyes wide open.
Understanding Off-Lease & Refurbished Computers
To make an informed decision about your business IT hardware, it's essential to understand what off-lease or refurbished really means. These aren't simply 'used' PCs of any age or description. Rather, they follow a general ‘life-cycle’ and are prepared for resale by through a re-conditioning process.
What are Off-Lease Computers?
Off-lease computers are business-grade machines initially leased to corporations. At the end of a standard 36 to 48 month term, these computers are returned, enabling the original companies to consistently upgrade to the latest technology. This strategy minimizes downtime and avoids expenses to maintain aging hardware. Since these models were built to higher enterprise standards, they often have a portion of their expected operational lifespan remaining beyond the original lease period.
The Refurbishment Process for Computer Hardware
Once returned, these computers undergo a refurbishment process. It’s like the process of certifying and preparing a used car for resale - inspection by a mechanic, address deficiencies, detailing. The certified vehicle is then ready to be sold. For computer hardware this process typically includes:
- Testing: Each unit undergoes stress tests to spot failing drives, RAM, or fans.
- Repairs and Component Replacement: Failing parts are repaired or replaced with functional components which may be used or new.
- Cleaning and Cosmetic Refurbishment: The computers are cleaned inside and out, and cosmetic imperfections may be addressed where practical.
- Data Wiping and Software Installation: All previous data is securely wiped, along with a clean installation of the operating system.
Manufacturer Refurbished vs. Third-Party Refurbished: The Mechanic Matters
With used car certifications, the expertise and attention to detail of the mechanic directly impacts the quality of the vehicle. Similarly, the skills and credentials of the refurbisher have a direct bearing on the experience you may have with a refurbished computer.
Manufacturer Refurbished: The Certified Pre-Owned Approach
Manufacturer-refurbished machines, processed by the original manufacturer (Dell, Lenovo etc.), adhere to strict quality standards and often include a limited warranty and potentially offer extended warranty options. This ensures the hardware is inspected and refurbished by experts who know it inside and out, using OEM parts and manufacturer-approved processes.
Third-Party Refurbished: The Independent Mechanic Scenario
Third-party refurbishment, on the other hand, is closer to getting your car serviced by an independent mechanic. The quality of the work can vary, depending on the expertise, standards, and integrity of the refurbisher. Due diligence is crucial when selecting a third-party refurbisher, particularly from online marketplace sellers. It's also vital to understand the warranty's full terms, as refurbished units generally have a higher service requirement.
The Potential Downsides: Navigating the Risks of Off-Lease Hardware
While the upfront cost savings of off-lease computers can be attractive, it's crucial to acknowledge the potential downsides and inherent risks associated with purchasing previously used equipment. As an experienced IT provider, we've observed that these 'savings' can sometimes lead to increased headaches and unexpected expenses down the line.
A primary concern with off-lease hardware is the increased probability of encountering technical issues. Such machines have been in operation for several years and have accumulated wear and tear. To better understand this increased risk, consider the concept of the bathtub curve, a widely recognized model in reliability engineering that illustrates the failure rate of hardware over its lifespan.
As you can see in the graphic above, the bathtub curve typically has three distinct phases:
- Early Failures: This is the period after you unbox the hardware and begin using it. If there are any manufacturing defects these will likely appear very quickly - if not immediately. After that initial few weeks the likelihood of failure drops dramatically.
- Useful Life: A longer period with a low probability of failure rate.
- Wear-Out: A final phase where the failure rate increases significantly as components age and degrade.
Off-lease computers have already progressed through a significant portion of their 'useful life' and are often approaching, or even within, the 'wear-out' phase of the bathtub curve. This means that the probability of experiencing hardware failures is considerably higher compared to new equipment that is just entering its 'useful life' phase.
This increased likelihood of failure can translate directly into higher maintenance costs, increased downtime for your business operations, and potential disruptions to employee productivity. While the initial purchase price might be lower, the cumulative cost of repairs, lost productivity, and the eventual need for replacement sooner than with new hardware can negate those initial savings entirely.
The Pros and Cons of Refurbished Computers
- Pros:
- Lower Upfront Cost: The most immediate and often largest benefit is the lower purchase price compared to new equipment, making them a good option for businesses or individuals on a tight budget.
- Faster Acquisition: Off-lease units are often readily available in bulk, potentially allowing for fast deployment.
- Environmental Benefits: Purchasing refurbished extends the lifespan of existing hardware, contributing to a reduction in electronic waste and promoting sustainability.
- Good for Basic Tasks: Off-lease computers can still be suitable for basic tasks like word processing, email, and web browsing.
- Cons:
- Increased Risk of Technical Issues Leading to Higher Costs: As illustrated by the bathtub curve, off-lease devices have a higher probability of failure. This increased risk often translates into higher ongoing repair costs.
- Potential Loss of Productivity Due to Downtime: When off-lease equipment fails, it can lead to significant downtime for employees, disrupting workflows and impacting overall productivity. This indirect cost can quickly outweigh any initial savings.
- Limited or Shorter Warranty Periods: Warranties on refurbished equipment can vary, but are typically shorter and less comprehensive than those offered on new devices.
- Cosmetic Imperfections: Used devices may have visible signs of wear and tear, such as scratches, dents, or scuffs, which may not be acceptable for all business environments.
- Older Technology: Off-lease computers may not feature the latest processors, graphics cards, or other cutting-edge technologies, potentially impacting performance with newer software.
The Case for Investing in New Hardware
Lower initial costs are admittedly attractive, but even so, many businesses find significant long-term value in investing in brand-new laptops and workstations. New hardware offers the latest technological advancements, the assurance of a full manufacturer's warranty, and the peace of mind that comes with equipment at the beginning of its operational lifecycle. For many organizations, these factors outweigh the higher upfront investment.
A recent case perfectly illustrates this point. A client purchased a fleet of off-lease desktops just two years ago. While initially satisfactory, not long afterwards Microsoft announced the end-of-life for their Windows 10 operating system. Sadly, the devices did not qualify to be upgraded to Windows 11. Forced to replace the computers a second time, the client bought new hardware. This real-world scenario underscores the potential hidden costs of older equipment
The Pros and Cons of New Equipment
- Pros:
- Maximum Lifespan Potential: Starting at the beginning of their lifecycle (as per the bathtub curve) reducing the frequency of replacements.
- Better Warranty: Comprehensive coverage and direct access to technical support for a specified period. This offers peace of mind and reduces the risk of unexpected repair costs.
- Option for Premium Service and Extended Warranties: Available premium support services (e.g., faster response times, on-site service) and extended warranty periods, providing even greater long-term protection and support.
- Latest Technology: Up-to-date processors, graphics cards, memory standards, and other advancements, ensuring optimal performance and greater compatibility with current and future software.
- Potential for Customization: Select hardware specifications to precisely meet specific needs and software requirements.
- Lower Risk of Technical Issues: This reduces potential financial losses due to downtime and repair costs.
- Cons:
- Higher Upfront Cost: Can be a barrier for businesses or individuals with a tight IT budget.
- Environmental Impact of Manufacturing: Greater environmental footprint required for manufacturing and the creation of new components.
- Potential for Longer Lead Times: Depending on the specific models and customization options, there might be longer waiting periods for delivery compared to readily available off-lease units.
- Features May Exceed Basic Needs: For businesses with primarily basic computing tasks, the advanced features of new hardware might not be fully utilized.
Considering a Different Path: The Flexibility of Leasing
So far, we've primarily focused on the decision between purchasing off-lease and new IT hardware. However, there's another compelling option worth considering: leasing. For businesses seeking greater financial flexibility, leasing offers a unique set of advantages:
- Shifting CAPEX to OPEX: Free up significant upfront capital.
- Predictable Monthly Payments: Simplify budgeting with consistent and foreseeable monthly expenses.
- Regular Technology Upgrades: Ensure your business always has access to modern and efficient equipment as leasing agreements permit you to upgrade your hardware at regular intervals.
- Reliable Hardware: Upgrading at regular intervals means your technology will always be operating within its “useful life” (see bathtub curve), lowering unexpected downtime and repair costs.
While a full exploration of the benefits and considerations of IT hardware leasing is beyond the scope of this article, it's a powerful alternative we'll be delving into in a future post. Stay tuned to learn how leasing could be the smart financial move for your organization.
Making the Right Decision: Our Expert Recommendation
Summing up, it’s good to be aware that saving money in the short term can sometimes lead to increased costs down the line. For most businesses, we generally recommend investing in new laptops and workstations. The enhanced reliability, reduced downtime, and increased user satisfaction associated with new hardware typically provide greater long-term value and a lower total cost of ownership.
While off-lease might suit very specific, short-term needs, new hardware is the more reliable and future-proof solution for sustained productivity.
Ultimately, the best choice depends on your specific circumstances. Carefully consider your:
- Budget: Weigh initial savings against potential long-term costs.
- Business Needs: Match hardware capabilities to your operational demands.
- Long-Term Goals: Consider the expected lifespan and future scalability of your IT investments.
Still unsure which option is best for your business? Our team of IT hardware experts is here to help. Contact us today for a personalized consultation and expert advice tailored to your specific needs and budget.