Used IT equipment: Millennials push enterprises into the circular economy

The millennial generation is becoming a driving force behind the circular economy of used IT equipment.

IT shops have typically bought used gear if they needed to replace old equipment and couldn’t get parts from the vendor. But the idea of buying a low-mileage server with one or two years of use wasn’t very popular. Companies typically bought new.

But that’s changing. IT shops of all sizes are increasingly buying used gear, both brand name and white box brands from China, according to IDC. The research firm puts the CAGR at 5% and estimates sales of used IT infrastructure gear will reach $36 billion by 2024. The deals are being done through the major OEMs as well as resellers like ITRenew, which buys servers from hyperscalers, refreshes them, certifies they are functioning, and resells them.

Susan Middleton, research director for flexible consumption and financing strategies for IT at IDC, says the concept of recycling–whether it’s a company selling its old gear for reuse or buying used–plays well with companies’ sustainability goals.

“We see it growing because of the fact it’s really about climate change,” Middleton tells me. “There is a lot happening because of awareness of the issue. It’s better to buy something and reuse it than buy something and dispose of it.”

Prior to the pandemic and economic downturn, IDC witnessed a renewed interest in the used market to meet sustainability pledges and other initiatives. At the same time, interest in recycling IT equipment has increased to help meet promised goals.

And as the employee population shifts to millennials, sustainability pledges have become more important. Younger workers are pushing their employers for more sustainability-minded policies, including throughout the vetting process for vendor and partner selection. IDC believes achieving success will require building consensus with all internal stakeholders, external suppliers and partners, as well as establishing financial metrics to encourage adoption.

On the vendor side, almost every large IT vendor has a recycling and refurbishment group, either in house or through a partner. But it has been a struggle to sell used gear because customers wanted to buy with warranty and support, Middleton says. 

Today, IDC finds organizations are buying used equipment to add capacity rather than using it as part of an equipment refresh, and vendors are offering warranties.

“It adds capacity without doing a whole refresh, so it saves you money. Vendors are offering refurbished equipment with a full warranty, so it enables the vendor to still have a relationship with that customer,” Middleton says.

Even if you aren’t buying used, it’s a good idea to sell your old gear rather than dispose of it.

“If you don’t have a plan in place for [end of life] assets, that could cost you money. If you recycle and trade in gear, you’re getting cash back you can reinvest in new equipment,” Middleton says. “The stories we’ve heard for years from companies with old assets is they don’t know what to do with it. Well, sell it and use it to invest in your next infrastructure.”