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Used Hardware Makes Its Move : Secondhand Computer Market Has Upgraded Into Big Business

November 13, 1994|ROSS KERBER | TIMES STAFF WRITER

ANAHEIM — In a scrap yard built on the site of an old racquetball club here, the computers come to die.

Truckloads of aged PCs, printers and mainframe equipment pile up in the parking lot of Silicon Salvage Inc., waiting to be torn apart by crews wielding electric screwdrivers and power saws. Disk drives as big as toasters, cooling fans in black cases, green plastic circuit boards, all are piled up for resale or to be melted down for their gold and silver plating.

Although Silicon Salvage owner Chuck Hulse describes his operation as a junkyard, it's more of an electronic butcher shop; most of the machines arrive in good working order. But they are yesterday's models, slower PCs that can't run the latest software or refrigerator-sized mainframes that cost too much to maintain.

Recycling, reselling or rebuilding these hulks keeps scores of small Orange County companies busy, along with several large firms, such as upgrade specialist Kingston Technology Corp. in Fountain Valley and repair giant Cerplex Group in Anaheim. That's in addition to a cottage industry of consultants who help companies decide how much processing power they need.

As ever faster and more powerful computer programs are introduced, requiring more speed and memory, businesses that tear apart or resell displaced equipment are booming. Some electronics auctions feature PCs sold from excess inventories that have never been used.

"I lost track of how many roomfuls of computers I've hauled off," said Hulse, who keeps 14 employees and three trucks busy unbolting and unplugging PCs from offices across Southern California.

Buying in bulk from bigger organizations, such as Lockheed Corp., Southern California Gas Co. and UCLA, Hulse said he often gets the oldest PCs for as little as $10 apiece if he takes them away.

With the parts inside computers often selling for more than the machines are worth intact, Hulse said, the development of the salvage business was "inevitable."

"Everybody's gotten pretty conscious about what's in the computers," Hulse said. "It used to be where I'd be going through people's trash, but now I wouldn't find much."

Hulse's work occurs near the bottom of a computer food chain that begins when businesses and home users decide their machines can't handle newer versions of software programs or are not compatible with newly installed PCs on their office networks.

At that point, says Newport Beach consultant Gary Koch, a business faces a bewildering array of options: whether to upgrade some or all of its older machines; whether to buy more powerful equipment, either new or used, and choosing how much to spend.

"A lot of it is just the learning curve people have with their software," Koch says. "It's not that their computers are too slow, it's that they're better at using them and suddenly (computer) speed is an issue."

The market for used computer equipment and upgraded or spare parts has grown along with the overall PC industry. Executives at several computer-exchange companies estimate that nearly $2 billion worth of used PCs, monitors, printers and other devices were sold in the U.S. secondhand market last year. About $11.5 billion was spent on the repair and upgrade of older PCs, workstations and mainframe computers last year, estimates Don Blumberg, an industry consultant in Fort Washington, Pa.

Michael S. Jordan, president of United Computer Exchange Corp. in Atlanta, said his company arranges 5,000 sales a month, many involving more than one machine. The buyers are small-business owners, parents looking for an inexpensive machine for young children and college students, he said.

"If you have an 8- or a 9-year-old, you don't want to spend $2,000 on a computer for them, you want to get something to introduce them and get used to the idea of a computer," Jordan said. "You'll be less worried about the hassle of, 'Will it work with what I've got?' "

The sellers, meanwhile, are often larger companies and universities. Home users tend to sell to friends or relatives, or stash old machines in the attic, Jordan said.

The Gartner Group, a consulting firm in Stamford, Conn., estimates that companies will retire 50 million to 70 million PCs between 1992 and 1996. And Chris Goodhue, author of the company's estimate, said that even that range is at best an educated guess.

"We did some spreadsheets aimed at calculating PC retirement, but the problem we ran into was: How do you define retirement?" Goodhue said. "Is it just that a machine gets retired forever, or does it also have to be out the door of the firm?"

Fred Anson, for one, can't wait to boot a few machines out of his company's door. Information systems manager of the Irvine pharmaceutical maker Cocensys Inc., Anson says he has trouble getting the company's nine Apple computers to work with 104 other machines running on the IBM-compatible operating system.

"I want them out of the building, period. They're too hard to integrate," he says.

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