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SCMP Reporter

Asian demand for second-hand server computers and networking gear from the United States is beginning to grow, an industry executive says.

Alex Chan, chief executive at Hong Kong-based systems integrator Unitech Networks, said his company was receiving growing numbers of inquiries from overseas enterprises, including product resellers, about acquiring used servers and networking equipment from the US.

'These inquiries have come from companies in markets such as Indonesia, the Philippines and Thailand, where equipment buyers are known to be quite cost-conscious,' he said.

'We have not acted on these inquiries because that is not a business we are in. If we are involved in projects in those countries, then getting such equipment will be the decision of the client and will need to be done through our partners in those markets.'

He said, however, that resellers with operations in those markets can take that lead.

The inquiries consisted mainly of low-speed routers and entry-level Unix servers that run on one or two processors.

'We do not see a demand for those types of second-hand equipment in Hong Kong or the mainland, where our customers prefer new, higher-end equipment,' Mr Chan said.

The market for second-hand servers as well as networking routers, hubs and switches emerged late last year when many failed dotcoms  and communications services providers in the US offered hardware for sale.

'At the recent Networld + Interop conference in the US, one of the most popular booths was by a used-equipment vendor, Network Hardware Resale,' Mr Chan said.

The Santa Barbara, California-based company offered as much as 80 per cent off the original retail price of products with 90-day warranties.

Steve Lo, chief executive at Jardine OneSolution, said the outsourcing for such used equipment from the US might be more viable for a hub such as Singapore, which was close to markets where such a demand could exist.

'Buyers in Hong Kong and the mainland - including the small and medium-sized companies -  require new equipment because the support warranties are very important to them,' Mr Lo said.

Officials from Cisco and Sun said the existence of this second-hand market has not affected Asia-Pacific demand for their products.

'This market for used equipment has not been obvious here, compared with the US,' said Paul Li, Sun's marketing director for Greater China.

After an eight successive quarters of more than 40 per cent revenue growth, Sun slowed to a flat year-on-year performance in the first quarter of this year because of the dotcom meltdown and the economic downturn, according to analyst Avneesh Saxena, of market research firm International Data Corp (IDC).

Sun, the market leader in Unix servers that run on Risc (reduced instruction set computing) processors, held a 16 per cent market share in Asia-Pacific in the first quarter of this year, according to IDC data.

Mr Saxena confirmed that the market for second-hand servers had no effect on the region's server sales during the first three months of the year. First-quarter revenues grew a better-than-expected 9 per cent to reach US$1.38 billion, he said.

On the networking-gear front, Cisco's director of corporate communications for Asia-Pacific, Terry Alberstein, said the market for used equipment had no impact on the company's efforts to manage its excess inventory.

Market research firm Dell'Oro Group has reported that worldwide sales of OC-12 routers dived 41 per cent in the first quarter this year from the previous year.

These routers, which handle data transmission rates of 622 megabits per second, are used by most Asia-Pacific service providers at their networks' cores.



Market for used servers and networking equipment from US increases as cost-conscious countries shop around