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Experts Explain How to Avoid Buying a Used Electronic Lemon : Computers: Stick with name brands and expect to pay more before Christmas and during tax and back-to-school seasons, Daley Market Corp. executives advise.


Unlike choosing a used car, few people know much about purchasing a previously owned personal computer. Where are the best deals to be found? How do you avoid buying an electronic lemon? To help explain the PC aftermarket are Pete Daley, president of Daley Marketing Corp. in Costa Mesa, and Sidney Hasin, a senior technical analyst for the company, which publishes a series of reports on the value of older and used PCs and mainframe equipment.

Question: How can you extend the life of an old PC?

Sidney Hasin: You can add on extra memory or a new hard disk for a few hundred dollars on most PCs, which is probably the most popular upgrade. If you're writing a novel on an old machine, a bigger hard disk may be all the upgrade you need. If you're doing something with numbers or want to use a newer program, though, then you're looking at more equipment.

Q: How do you know when you need a new computer?

Hasin: People bump into two kinds of limits. First is whether their machines can run the software they want it to, and second is the capacity for "throughput" of the computers. That means how fast the PC can crunch numbers or do other operations. If you find you're getting impatient, watching the wheels go around until you get an answer from your machine, then it's probably time to add on additional capacity or to buy something more current. I didn't say a new computer, though--just something that's more current.

Q: What are some guidelines for determining the value of older PCs?

Hasin: Depreciation sets in very quickly on computers. After a year they're only going to be worth about 45% to 50% of the retail price, depending on the manufacturer. Two years later, they'll drop by another 40%. So if you've spent $2,000 to begin with, it'll be worth $1,000 a year later, then $600 a year after that, then $300, then $200, then it's junk. That doesn't mean it's worn out, it means you won't be able to sell it for much. Or that you can buy it for a little. Disk drives and printers have a slower depreciation rate because they don't become outdated as quickly.

Q: How much of an expert do you have to be, as a consumer, to have confidence in a used machine?

Hasin: You don't need to worry as much as if you were talking about a used car. Cars wear out because they're mechanical. Computers are mostly electronic, though, so they last. If they've been serviced, and there's a record, then you're probably in good shape. The mean time to die (for PCs)--that's my own expression--is way beyond the limits of economic obsolescence. That's a fancy way of saying a computer isn't going to burn out . . . for about 10 years, at least.

Q: How often should a machine have been serviced? Is it better to buy from a company with an in-house service department?

Pete Daley: Other than for PCs, computer equipment should be on a maintenance agreement with the manufacturer. . . . For mid-range and mainframe computers there should be a preventive maintenance scheduled every month.

The main requirement that an end user should have is that the machine has been under a maintenance contract. You probably want a machine that's been on an agreement with its original manufacturer. There are third-party maintenance companies that can save you 30% to 40% of what the manufacturer's agreement would cost. But the dilemma is that when you take that machine to a broker or to an end-user, whether or not it will be accepted back into the manufacturer's plan is another question.

Q: Does the brand matter?

Daley: If you're buying a used PC, it should be a brand name. That's mainly because the parts that can be inside an other-than-brand-name are often cheap or modified. Anybody can stick a memory board onto a frame, but some of those inexpensive parts or components or memory tend not to not operate properly, or don't last.

Hasin: It's related to market share. Compaq machines (resell) extremely well. IBM also does fairly well, depending on the model. They've got a good image. The clones are unpredictable, though. The ASTs, the Dell machines, they begin to fall out of favor more quickly. Part of it's based on the stability of the company. IBM has had big problems, but nobody expects them to go away. You can't say that for every company.

Q: When is the best time to buy a used computer?

Hasin: Pre-Christmas, when there's a tremendous demand, may not be the best time to buy any kind of machine. Often the best time is in January, when the newer equipment is discounted more. That means the supply of used equipment is more plentiful as well. Then around tax season the demand begins to pick up and the prices go up a little. Then demand trails off until the end of summer, when back-to-school starts and everybody starts looking for deals again.

Q: Where are the best places to buy or sell used equipment?

Hasin: Check with the large retail outlets. They sometimes take old machines in exchange, so they're a good source for what a computer's worth. They may also know what auction houses are looking for.

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