Q

How to perform due diligence on sources of used IT equipment

Used IT equipment can help a business cut capital costs, but be proactive to protect yourself from dishonest gray-market sellers.

How can I find legitimate used IT equipment and protect my data center from black- or gray-market threats? What does AGMA say about this?

Gray-market gear can be perfectly legitimate IT equipment that organizations buy used, knowing it's used and accepting the limitations of vendor service and support. But there are some tactics that you can use to gauge the integrity of a prospective reseller.

First, look for resellers that have been in business for years and can produce verifiable references. When you check references, ask about the reseller's support and problem resolution processes; Will the reseller be there for you when you need them?

Ask the reseller to certify in writing that all of the equipment is original and eligible for manufacturer's service agreements. Some equipment manufacturers require licensing before they provide service or software, so also ask the reseller to guarantee that licensing will not be a problem. If the reseller can't, or won't, put those points in writing, it could suggest stolen or counterfeit equipment -- or the reseller simply can't guarantee the integrity of the equipment. In either case, it's probably best for you to find another reseller.

Other tactics to protect your capital include buying on credit and having a clear understanding of return policies. Any reputable reseller can arrange simple credit terms like "30 days net." If the equipment doesn't meet your needs or you experience any problems at all in registering or licensing the hardware, you can return the gear -- or at least not pay for it. Avoid resellers that refuse to extend credit or offer no-return policies for their gear.

The Alliance for Gray Market and Counterfeit Abatement (AGMA) takes an extraordinarily dim view of the secondary market, citing gray marketing, counterfeiting and service and warranty abuse as central threats to the high-tech industry and intellectual property rights. Certainly counterfeiting and theft are serious concerns worth combatting, but by AGMA's own definition: "Gray marketing is unauthorized transacting in genuine branded goods resulting from diversion from authorized channels into the hands of third parties, including the open market."

This is a challenging definition because it really refers to new gear rather than used or refurbished goods, though it doesn't necessarily exclude used or refurbished goods. Regardless, it's obvious that AGMA doesn't want you buying gear from anyone but the vendors and select value-added resellers -- even genuine gear on an open market. AGMA members include the largest and most influential IT manufacturers in the world, so one might question whether AGMA initiatives favor the interests of the vendors rather than consumers or the greater IT industry.

This was first published in April 2013

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