What`s IT worth during disposal?

Report
What’s IT worth during disposal?
Resale value trends for retired IT assets
Neil Peters-Michaud, CHAMP
CEO, Cascade Asset Management
IAITAM Fall ACE: Taming Your ITAM Jungle
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Agenda
• Why it’s important to maximize resale values at disposition
• Different reuse options at disposition
• Our survey of disposition practices and resale trends
– Survey methodology
– Validation with other tools you can use
– How to predict future values based on current pricing
• Optimizing values at resale in line with company priorities
– Security considerations
– Donation, redeployment and employee sales
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Why resale values are important
It’s Part of the Total Cost of Ownership
Laptop – 4 Year Refresh Cycle
$43
$76
Resale Recovery
can reduce TCO
by 14%
Acquisition Cost
$70
Training
PC Engineering
PC Deployment
$406
Software and Patch Deployment
Help Desk
$1,150
Out of Warranty Repair
$108
Recovery
Value = $278
Deskside Support
Additional Upgrades & Peripherals
$89
Retrieval and Disposal Costs
$21
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$28
$25
“Using TCO to Determine PC Upgrade Cycles,”
Mahvi & Zarfaty, 2009
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Markets for reusable IT assets
Retail / Direct
Wholesale / Indirect
Employee Sales
Donations
eBay, Craigslist
Surplus auctions, public sales
Partner with ITAD firm
Brokers
Resellers – Computer shops
Equipment Maintenance
Put items out to bid
Specialty equipment depots
More money, but more hassle
Outsource the hassle, for a fee
Taming Your ITAM Jungle
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Outsourcing options
Sell outright
• Cash up front
• Known price
• Potential lower
returns
• Adversarial
relationship with
buyer
Revenue share
Subscription/lease
• Cash after sale
• Mutual interest to
maximize return,
but value not
guaranteed
• Need to ensure
process is legit
and payment is
made
• Disposition value
embedded in the
cost of product
• Should reduce
initial purchase
price
• Requires items to
be returned in
good condition, or
penalties
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Data analysis methodology
• Sales period reviewed: Q1, 2012 – Q1, 2014
• Good, Working Desktops and Laptops
–
–
–
–
Tested to perform to manufacturer specs
Some cosmetic cleaning and repair
No Operation Systems
Predominant Brands, with ~10% White Box desktops
• >39,000 desktops and >20,000 laptops
• Single Core (Pentium 4, Pentium M, Celeron, Pentium D)
• Dual Core (Intel Core 2 Duo, AMD Opteron)
• Quad Core (Intel i3, i5, i7; AMD Opteron)
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Source of equipment
N = 63
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Other: automotive, marketing and advertising, Hospitality and
Recreation, insurance company, Retail Grocery, Engineering
Consulting, philanthropy, Software Development and Premedia,
Audit and Accounting, HR/payroll/time & attendance software,
Architectural, transportation, TPA, Social Service Agency, nonprofit (2), Real Estate,
Cascade Asset Management
Survey of Customers, January, 2014
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Demographics
N = 55
Taming Your ITAM Jungle
Cascade Asset Management
Survey of Customers, January, 2014
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ITAM Program
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Cascade Asset Management
Survey of Customers, January, 2014
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ITAD Program
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Cascade Asset Management
Survey of Customers, January, 2014
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ITAD selection considerations
The higher the number, the more important the criteria.
Taming Your ITAM Jungle
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Cascade Asset Management
Survey of Customers, January, 2014
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Resale Values from Laptops
$400.00
Dual Core, 1.6 -2.0 GHz
Dual Core, 2.2 - 2.54 GHz
Quad Core
Single Core, 1.5 - 2.13 GHz
$350.00
$300.00
$250.00
$200.00
$150.00
$100.00
$50.00
$2012 - Q1
Q2
Q3
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Q4
2013 - Q1
Q2
Q3
Q4
2014 - Q1
“Current Generation” processors command a
premium
 Monthly resale depreciation over 27 months is
1.22% - 1.75%
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Laptop Resale Quantities
1800
Dual Core, 1.6 -2.0 GHz
1600
Dual Core, 2.2 - 2.54 GHz
Quad Core
1400
Single Core, 1.5 - 2.13 GHz
1200
1000
800
600
400
200
0
2012 - Q1
Q2
Q3
Q4
2013 - Q1
Q2
Q3
Q4
2014 - Q1
 Quad Core (Core i7 processors) introduced in
early 2011
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 Cascade seems to resell “3 generations” of
processors
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Resale Values from Desktops
$250.00
Single Core, 1.8 - 2.8 GHz
Dual Core, 1.8 - 2.4 GHz
Dual Core, 2.8 - 3.4 GHz
Quad Core
$200.00
$150.00
$100.00
$50.00
$2012 - Q1
Q2
Q3
Taming Your ITAM Jungle
Q4
2013 - Q1
Q2
Q3
Q4
2014 - Q1
Significant difference between Quad Core values
and all others
Values generally increased!! Avg. Monthly
depreciation was -0.7% to 3.5%
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Desktop Resale Quantities
4000
Single Core, 1.8 - 2.8 GHz
Dual Core, 1.8 - 2.4 GHz
Dual Core, 2.8 - 3.4 GHz
Quad Core
3500
3000
2500
2000
1500
1000
500
0
2012 - Q1
Q2
Q3
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Q4
2013 - Q1
Q2
Q3
Q4
2014 - Q1
 Dual Core processors are predominant
since Q4, 2012
Quad Core desktops retired slower than
laptops
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How do these values compare?
Archives historical
pricing on Amazon
and eBay. Track sell
through rates and
final selling prices
(not just listing
prices.)
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Prices from nationwide surveys of
dealers of used products. Only consider
items sold within 30 days of listing.
Grade product as “Used Retail” (what it
sells for at a shop) and “Trade in
Mint/Average” (what you would sell the
item for at a pawn store.)
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Lots of “parts machines” sold, which drive down
average eBay price.
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Variation based on “newness” of product, and
whether sold in mint condition or for parts.
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Orion Blue Book price
July 1, 2014
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Orion Blue Book price
July 1, 2014
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Mobile Device Sales – Avg. prices
BLACKBERRY
iPad2
iPhone
iPhone 4
iPhone 4s
iPhone 5
iPod
iPod Touch
$33.84
$228.48
$91.87
$122.14
$173.18
$308.00
$30.00
$83.10
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Cascade Resale values,
spring 2014
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Orion Blue Book price
July 1, 2014
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How prices change
Age of Product when Resold
MSRP (when originally sold)
Retail (used, at resale)
Mint Wholesale
Avg. Wholesale
Retail % of MSRP
Mint Wholesale % of Retail
Avg. Wholesale % of Retail
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HP 6930p HP 8540w iPhone 4S
6
3
3
$1,399.00 $2,699.00 $699.00
$155.58 $769.00 $198.59
$99.23 $494.58 $125.18
$68.30 $341.97 $85.61
11.1%
28.5%
28.4%
63.8%
64.3%
63.0%
43.9%
44.5%
43.1%
When you have someone else sell your used
product, expect to get between 45% - 65% of
the resale price (if you sell them one at a time).
Volume dispositions can get you better rates.
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Some prices do go up!
1984 Macintosh
128K Original Model
M0001 Rare NONUpgraded EARLY
Mac Picasso Kit
SOLD
7-10-14
$2,499.84
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Making Resale Data Useful in Forecasting
How can we predict what future values will be
for equipment we try to resell?
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Price per MHz
Dual Core 2.8 – 3.4 GHz desktops
$0.100
$0.090
$0.080
$0.070
$0.060
$0.050
$0.040
$0.030
$0.020
$0.010
$-
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1 GHz =
1,000 MHz
Max
Min
Average
2012 - Q1Q2
Q3
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Q42013 - Q1Q2
Q3
Q42014 - Q1
 Stable average price per MHz
A small number get a premium price
for premium features
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Price per MHz
Dual Core 2.2 – 2.54 GHz laptops
$0.250
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1 GHz =
1,000 MHz
$0.200
Max
$0.150
Min
$0.100
Average
$0.050
$2012-Q1
Q2
Q3
Taming Your ITAM Jungle
Q4
2013-Q1
Q2
Q3
Q4
2014-Q1
 As a contrast to desktops, laptop price
per MHz is declining
 Laptop values about 3x the price per
<Hz of desktops
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What’s our conclusion?
Knowing what we know
– Prices drop dramatically in
the first 3 years after
introduction (year 3 is ~25%
of purchase price)
– After year 3, price drop is
less dramatic.
Taming Your ITAM Jungle
Still want surplus IT assets now –
Companies shouldn’t store them or
drag out refresh cycle.
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Factors Influencing Recovery Value
Company
Policies
• Security – do items need to be destroyed?
• Refresh rate
• Donation, employee sale, executive favors
ITAM
Program
• ID and retrieval of end of use assets
• Condition of assets (complete & quality)
• Coordination of disposition program
External
• Market conditions – demand for assets
• Ability to sell equipment
Taming Your ITAM Jungle
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Consistent refresh = lower ITAM costs
• By retiring equipment on a consistent basis
– Reduce storage costs
– Reduce maintenance costs from supporting old and
broken technology
– Reduce compliance costs
– Reduce personal property taxes
– Stop subscription charges
• Reduce your costs and keep resale values
consistent
Taming Your ITAM Jungle
THANK YOU!!
Q&A
Neil Peters-Michaud, CHAMP
CEO, Cascade Asset Management
608-316-6637 * [email protected]
www.cascade-assets.com
IAITAM Fall ACE: Taming Your ITAM Jungle

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