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Low-cost/Refurbished PCs TCO comparison A study by Open Research Research funded by DFID/Catia Alan Finlay & Alastair Otter

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Presentation on theme: "Low-cost/Refurbished PCs TCO comparison A study by Open Research Research funded by DFID/Catia Alan Finlay & Alastair Otter"— Presentation transcript:

1 Low-cost/Refurbished PCs TCO comparison A study by Open Research Research funded by DFID/Catia Alan Finlay & Alastair Otter

2 Research objective Compare the Total Cost of Ownership differences between new and refurbished PCs over a 5 year period SME, NGO and Education sectors (in Africa)

3 Methodology Background research Interviews Questionnaire – Africa-wide Mini support survey Workshop Site visits Development and application of TCO calculator

4 What are refurbs? Second hand or used PCs Pre-used, end of lease PCs Terms used interchangeably No reconditioning Refurbished PCs Pre-used, end of lease PCs Typified by repair, cleaning or, in some cases, replacement Recycled PCs The process of decommissioning and disassembly of PCs into component parts for recycle

5 Sourcing second-hand PCs International agencies Receive from international donors/companies Typically low levels of refurbishment, often none at all Increasingly standardised shipments, but not guaranteed Commercial refurbishers Source from international vendors Low levels of refurbishment Sell to local CSOs/NGOs as well as private buyers Corporate/government donors Donate end-of-life PCs to CSOs/NGOs Typically no refurbishment

6 Putting it together Implementors Netday, DireqLearn, Tuxlabs, Schoolnets, 7c, HP i- community Typical deployments of refurbished PCs School and community laboratories Universities Some success in thin client business environments

7 How many PCs? I n 2003… 200 million PCs old worldwide 1 million PCs sold in South Africa Compares with…  Sweden (1 million)  Germany (8 million)  UK (7.5 million) South Africa accounts for 50% of all the PCs sold in Africa – suggestions that half of these are refurbished PCs.

8 What is e-waste? Includes computers, televisions, monitors, cell phones, pagers, microwave ovens, hand- held electronic devices, etc. Hazardous materials include: lead, cadmium, mercury (Cathode ray tubes), plastics, copper, chromium, solder nickel, zinc

9 Statistics US: 50% to 80% exported (for dumping and re-use) US: 130-million computers are expected to be manufactured and sold in 2004 Canada: around 50% of households have computers; ton-for-ton only around half the PCs, laptops and servers disposed of in 1999 were recycled (2000) UNESCO report states that 600-million PCs will be decommissioned in OECD countries in the next five years

10 Some treaties and regulations Basel Convention The Waste Electrical and Electronic Equipment (WEEE) Expected that consumers will be able to return their obsolete computers to retailers for recycling free of charge. National Action Plan for End of Life Recovery of IT and Telecom Waste (Canada) Specified Home Appliance Recycling Law (Japan)

11 By far the best way to minimize impact on the environment from a personal computer is to extend its useful life. – United Nations Thinking…

12 Some objections to refurbs Risk fraud Increases likelihood of fraud Low quality of capital stock Can't take advantage of new developments Non-standard equipment Support and maintenance issues Not adding value Merely repairing defective equipment Short lifespan New PCs have residual value at end of “life” Peripheral support Can't take advantage of new technology Dumping

13 Some TCO definitions… "TCO is an attempt to quantify the life-cycle financial impact of deploying information technology in an institution." - Gartner Group "Procuring, owning and using IT assets over time." - Information Sciences, University of Minnesota "The total cost of owning a PC." - Webopedia

14 TCO adds up to… Price + (C1 + C2 + C3 + C4 + C5...) = TCO Purchase, set-up, support, maintenance, retirement or disposal

15 Direct and indirect costs Direct (HARD) costs  Price of hardware and software and IT infrastructure  Divided by the expected lifespan of the product  Cost of running the IT department, including staff salaries  Value of support contracts  Cost of computer training for staff Indirect (SOFT) costs  User self-help  Peer-to-peer help ("shadow" support staff)  Downtime and loss of productivity

16 TCO breakdown Case studies by the University of Minnesota, on medium and large US companies reveal…. Total TCO comprises: 33% Software and network support 27% Cost of hardware and software 27% Hidden costs, downtime, self help, peer help 13% Internet administration

17 PC Life cycle and lifespan PC life cycle Gartner – three to five years Brand A vendors – three years or even less Also local brand names in South Africa European markets turnover is often quicker Rest of Africa – often around five years Second-hand Computer Aid (three years) Digital Partnership (seven years full life) Average lifespan is four years (UNESCO) Component lifespan - Power supply: 3 years -> - Motherboard: 4 years -> - Hard disk: 3 years -> - CD Rom: 3 years -> - Keyboard: 2-3 years - Mouse: 1-2 years

18 Component lifespan… Power supply Hard disk CD Rom Keyboard Mouse Motherboard Video card Monitor Power supply Hard disk CD Rom Keyboard Mouse Motherboard Video card Monitor Power supply Hard disk CD Rom Keyboard Mouse Motherboard Video card Monitor Power supply Hard disk CD Rom Keyboard Mouse Motherboard Video card Monitor Power supply Hard disk CD Rom Keyboard Mouse Motherboard Mouse Power supply Hard disk CD Rom Keyboard Mouse 2 nd hand NEW PC Recycle Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8

19 PC lifespan… Returns Around % for second hand. Around 0,5% for brand A new PCs Vulnerable parts Hard disks first and foremost Power supplies Monitors Processors hardly ever Environmental condition s Dust always a problem. Heat and lightning less so Erratic electricity supplies. User experience Online survey (29 organisations) 18 said heat a problem (62%) 16 said dust a problem (50%)

20 “Excessive dust settles on the motherboards and generates heat on the components. Sunlight on the PCs heats up the hardware components, warping and damaging the casings and internals. Heat, especially on the servers, causes the hard drive and other internal component failures.” - Schools Linux User Group

21 Replacement costs Replacing parts in second-hand PCs in Africa can be costly: Comparison of South Africa and Mozambique: Component South AfricaMozambique Hard diskUS$ 70 US$ ProcessorUS$ US$ 170 UPS US$ 56 US$ 57 Power supplyUS$ US$ 23

22 Replacement projections

23 Key comparative TCO drivers HARDWARE Server and workstation procurement UPS Replacements SOFTWARE Software acquisition SUPPORT/MAINTENANCE Installation Client support Non-standardization PRODUCTIVITY LOSES Downtime MONTHLY COSTS Insurance DISPOSAL Disposal costs Residual value

24 Some learning experiences…  Factors affecting decisions: Support environment; availability of spares; brand of refurbished PC; project needs.  Balance between purchasing costs and long-term maintenance costs.  Consideration needs to be given to geographic environment, including quality of power, as well as use of network (thin client or fat client?).  Is hardware the real question? OS is pushing the price of new PCs down dramatically. Refurbs make sense in thin client environment. Thin client makes sense in project environment.  E-waste – what are the long term commitments in Africa?  Are we wasting the refurb opportunity? Where is the VW of PCs for Africa?  Significant consumer choice – we are in a position to demand and dictate.


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