Out With The Old

Costs Plus

Market analysts tell us we're about to reach the point where one PC is retired for every new one purchased. Where do old PCs go?

Unfortunately, only about 6 percent of them were being recycled in 1998, according to the nonprofit Silicon Valley Toxics Coalition (SVTC). And that's too bad, because 90 percent of computer contents can be reused.

A widely quoted Carnegie Mellon University study projects that we're on our way to retiring 325 million PCs between 1985 and 2005. An increasing number are being recycled, and even more are sitting in company supply rooms, but Carnegie Mellon estimates 55 million are headed for landfills-enough to cover 1 acre 4,000 feet deep.

Some think that's what landfills are for, but old PCs have chlorinated and brominated substances, Poly Chlorinated Biphenyls (PCBs) and Poly Vinyl Chloride (PVC), heavy metals, gases, acids and plastic additives-and that's just for starters. (For a complete list, see the SVTC Web site) All those chemicals have incredibly long half-lives.

You want your new house sitting on top of this stuff? Not to mention, the EPA will be all over you if you're discovered throwing PCs in the trash. And according to IDC's analysis of a tracking survey, that disposal method costs roughly $217 per PC anyway.

In general, a lot of PC disposal costs are realized in soft dollars, and a certain amount of those are fixed. IDC says it will cost companies at least $150 for every PC taken out of service. First, there's the labor involved in physically removing a system and its network components, disconnecting peripherals and scrubbing the hard drive of software, passwords and sensitive company files. Then there's the downtime for employees during the move. After that, your costs will vary depending on how you choose to dispose of the old PC and may include payment for things like testing and repair or, in many cases, contractual or other legal costs.

The traditional method of PC disposal, especially for smaller organizations, is to pass hardware down the corporate ladder. But that's your most expensive option, according to IDC. It costs $397 to de-install and re-install a PC. And you haven't even solved the problem of declining capital equipment efficiency; you've only moved it to a different part of your organization and temporarily postponed the day when you have to incur disposal costs.

Another popular option is to sell old company PCs to staff. IDC says your net out-of-pocket per PC is $272 if you can sell it to an employee for $100, and $119 if you sell it to a third-party broker for $200. (Remember, costs vary among disposal options.) The good news is, the PC is gone. But in both cases, you have to sell the PC before its value reaches zero. And those three years for a mid-range PC and four years for a high-end box go by quickly.

Of course, brands vary. You can look up the residual value of your PC in the Orion Computer Blue Book. You can purchase the latest version of the Blue Book with the most recent prices from the Orion Research Web site or by calling (800) 844-0759. You also can look up prices for individual PCs online at $3.99 per shot.

Some brand-name PC-makers have trade-in programs-IBM, Gateway and Dell, for example. Don't expect them to give you much for your hardware tool, though. Third-party brokers won't pad your pockets that much either, says Bill Dorsey, owner of Used Computer Mall in San Diego. "Two-hundred dollars is probably a high estimate," he says. But expeditious disposal allows you to avoid storage costs, IT repair, upgrade work and declining worker productivity.

The only thing required of you is to wipe each machine clean of files for your own security, although a list of your PC's configurations would help. And a machine's cosmetic condition is really important, says Dorsey. He also doesn't like to bid on less than 10 to 15 PCs, and though some brokers aren't as picky, he thinks selling to employees and donating are the best ways to get rid of fewer than 10 PCs.

Most old PCs have years of utility left in them-just not for you. There are tons of schools, community groups, senior homes and other needy institutions (as well as scam artists posing as needy institutions) that would be happy to take them off your hands.

Unfortunately, donation is another of the more costly disposal options. By the time you get done with moving, temporarily storing, shipping, tax record-keeping, making contractual arrangements with the beneficiary, possible testing and repair, and, of course, facing the ever-present legal exposure, IDC figures it will cost you $344 for each PC donated.

And the legal exposure is real. You could get sued for donating a defective or virus-infected computer, or you may be asked to defend the tax deduction. Share the Technology outlines some of the pitfalls for givers and receivers on its site. On the upside, the infrastructure for charitable donations is well-advanced, making this option less time-consuming.

Whether you give it away, sell it to a broker, trade it in on a new one or sell it for scrap, don't expect to get much for your used PC. It's a rapidly depreciating asset that, hopefully, you squeezed productivity and tax benefits out of and moved through your organization expeditiously.

No single solution fits all companies. How well the list of disposal costs applies to you can vary by your number of PCs, your geographical location, your time constraints, technology needs, free cash-any number of factors, says IDC. In some cases, you may be able to salvage some PCs with hardware upgrades or deployment for low-demand applications like communication or print servers. You might want to get out of the PC ownership business entirely by leasing. Weigh your options in the context of your company's unique situation.

One thing about PC ownership is clear, though: The time to start thinking about how you'll get rid of a new PC is the day you buy it.

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This article was originally published in the April 2001 print edition of Entrepreneur with the headline: Out With The Old.

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