THE LONG-TAIL EFFECTS OF COVID ON TECHNOLOGY REFRESHES AND THE SECONDARY MARKET.
The market for pre-owned computers in the last two years has skyrocketed. Shortages in chips, labor, raw materials, and logistics created tightness in the supply of new inventory when COVID first hit in early 2020. Accelerating matters further, work-from-home drove the global demand for reasonably priced notebooks and desktops, including in regions that typically buy used. In our recent 2022 ITAD Benchmark Report, Cascade Asset Management documents the rise in trade-in value from retired technology in the last two years. But will used equipment values continue to burgeon IT hardware budgets?
Essential Business Barrier No More
Initially, the restriction of used notebooks and desktops was caused by widespread shortage. COVID’s clampdown on corporate campuses and warehouses halted most inbound and outbound shipping of hardware. IT departments, Original Equipment Manufacturers (OEMs), and IT Asset Disposition (ITAD) vendors alike all scrambled to determine how to maintain essential services. The reality was device retirement could wait. Across the industry, computer recyclers saw volumes dry up by as much as 50%. International buyers of used hardware saw their supplies dwindle. Prices surged.
ITAD vendors had to quickly learn how to qualify as an ‘essential business’ to continue operation in cities and counties that restricted contact. Most found that data destruction services qualified as essential, given the sensitive nature of the information on the equipment they regularly disposed of. What remained were protocols to protect those involved in the physical transfer of goods. Tight scheduling controls, personal protective equipment (PPE), and strategies to abate infection risks from potentially contaminated gear helped computer recyclers re-engage customers again.
Today, punctual pick-up requirements and PPE restrictions remain for many transporting old electronics. But the days of limited commerce have largely disappeared. Given the less virulent forms of the most recent COVID strains, namely Omicron, and it seems unlikely this issue will arise again.
PC Supply Chain Woes Waning
The nightly news continues to report supply chain disruptions globally. The Biden Administration has also reported that chip shortages may last throughout 2022. But despite these pressures, the PC industry has been able to keep up with demand better than automobile manufacturers. Gartner recently reported that Q4 of 2021 was the first in 6 quarters to see a decline in PC shipments. That growth, according to IDC, is due to demand for notebook computers.
What is driving the demand for notebooks? The ability to work and learn remotely. Social distancing difficulties drove many to digitally engage from home. The integration of a computer, screen, trackpad, and Wi-Fi capabilities made notebooks the perfect substitute for desktop heavy environments. Additionally, forcing organizations to adopt remote-work capabilities for the pandemic shattered preconceived concerns on worker productivity at home. Although schools are returning to in-class formats, enterprises have embraced the mobile workforce. Forecasts now predict that as many as 60% of workers will be ‘mobile’ by 2024. Cascade’s own Benchmark Report noted a rise in employees working from home of 19%, to 38% in total, among respondents to its own benchmark Survey.
Leveling of Value
So where will this leave IT Asset Management (ITAM) departments when budgeting for 2022 disposition activity? Organizations should expect to see the price of retired technology cool off mid 2022. With PC supply chains keeping up, and ITAD providers able to serve clients directly, it would take negative economic conditions to withhold upcoming IT refresh cycles from replenishing used equipment inventory. Cascade has already seen indications of softening device values in international markets. And our own survey has shown most organizations will resume pre-pandemic disposition volumes soon.
For more information on trends in the IT Asset Disposition industry, register for a free copy of Cascade’s 8th Annual ITAD Benchmark Report.