Good quality refurbished PCs can be a viable technology choice — and sometimes even preferable to lower-quality new PCs.
That’s one of the key findings of a total cost of ownership study into new and refurbished PCs by South African-based research consultancy Open Research.
The study is part of the continent-wide Catalysing Access to ICTs in Africa programme (Catia), and provides some useful guidelines for small business, non-profit organisations and schools in Africa considering refurbished PCs.
While good quality new PCs are likely to be the most stable over five years, their high purchase price is often cost-prohibitive for a small organisation or school in Africa.
In contrast, a key inhibitor for refurbished PCs is their high ongoing costs, including the cost of hardware replacements, support and repairs labour, and downtime — costs that have led many people to argue against the use of refurbished PCs on the continent.
“What’s important about our findings is they show that under certain conditions good quality refurbished PCs may be worth it — at least for the first few years of ownership,” says Alan Finlay from Open Research.
“But it’s not a wholesale situation. They need to be top-quality PCs, in most cases imported from blue-chip companies in Europe or North America. If they’ve been looked after, there is likely to be a window period of two to three years of stability, but after than an organisation’s ongoing costs are likely to escalate rapidly.”
According to Finlay, this allows for some creative IT expenditure. For instance, an organisation could plan to refresh its technology every two years and buy a completely new network of good quality refurbished PCs. This should mean a relatively stable, cheap and productive network. At the same time newer technology will be acquired.
The study found that lower quality refurbished PCs are likely to result in high, consistent ongoing costs for an organisation or school — and a very unstable network. It suggests that they are not a viable technology solution.
“The problem is there’s a lot of pressure from industrialised nations for Africa to accept refurbished PCs as an answer to ICT under-development — and their relatively low cost makes them attractive,” Finlay says. “Hopefully our study helps people become more proactive, and selective consumers.”
The study, entitled Paying the Price?, considers the key cost differences in owning new and refurbished PCs over five years in a small business, NGO or school in Africa. It discusses issues that set the context for a TCO consideration — such as PC quality, brand position in Africa, pricing, distribution, and specifications — before isolating the key drivers or factors that are likely to make a difference in ownership costs. By considering these key comparative TCO drivers, it provides a guideline for organisations facing a technology choice between new and refurbished PCs.
A comparative TCO calculator has also been developed for calculating projected costs.
“We invite people to differ with our results,” says Finlay. “Little work has been done in measuring the TCO of refurbished PCs, particularly in this context. The calculator developed for the study hopefully provides a useful starting point. But we also hope it is adopted by others, modified and improved, so that it becomes a useful, living tool.”
Key findings
The key TCO drivers that make the five-year ownership costs of new and refurbished PCs different are: PC purchase price, hardware replacement costs, repairs labour, support and the cost of downtime. Depending on the quality of the PCs, the residual value of hardware after five years can also play a part.
Given the budget, good quality new PCs are likely to be the most stable, and in many instances will be the preferred technology choice. However, their high purchase price remains a key inhibitor to lowering their comparative TCO in a small business, NGO or school. New PC purchase prices can account for 63-85% of the ownership costs that make TCO different between new and refurbished PCs. In contrast, a key TCO inhibitor for refurbished PCs is their failure rate and associated ongoing costs. This accounts for 64-75% of the comparative TCO costs.
A network of good quality refurbished PCs (imported brands such as Hewlett Packard, Dell and IBM) offers a window period of stability, making them a viable technology choice under certain conditions. They are likely to have the lowest TCO over five years. While the hardware replacement costs over that period could be the equivalent of the purchase price of the PCs, most of these costs are likely to occur in the final years of ownership.
The high frequency of failures, together with the high ongoing costs for lower quality refurbished PCs (some 75% of the comparative totals), suggests that they should not be considered a viable technology option. In the case of lower quality refurbished PCs, hardware replacement costs alone can be more than 140% the purchase price of the PCs. A high level of failure can be expected throughout the five years of ownership.
In some instances, a network of good quality refurbished PCs could prove a better technology choice than a network of lower quality new PCs.
It is possible that a thin client architecture will reduce hardware replacement costs by 10% to 30%.
The TCO study forms part of the Catia programme.
Catia is a three-year programme of the Department for International Development in close collaboration with other donors and role players.
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