ARTICLE POSTED October 25th, 2004 Second-hand storage: Not just for penny pinchers anymore Mary Brandel Have you ever gotten fed up with the weeks-long wait for a new storage system to be delivered? Have you ever wanted to test out a product in your own environment to be sure it will deliver as promised? Have you ever needed interim storage capacity for just a short period of time? Most storage managers have encountered all the above, but far fewer have discovered a solution through a low-tech but practical means: purchasing or even renting systems from the used-computer market. Those few have found that second-hand storage is not just for penny-pinchers anymore. Not that people are thronging to the used storage market. Robert Davie, founder of ITParade.com, a Web-based marketplace for refurbished computer equipment in Cary, N.C., estimates that storage systems and components account for about 5% of the overall used computer market, which is expected to reach about $7.5 billion in the U.S. this year, according to Bruce Caswell, vice president of marketing at World Data Products, a refurbished computer reseller in Minnetonka, Minn. But second-hand storage purchasers have discovered not only that they can trim 60% to 70% off list price, but that they can also more flexibly acquire, maintain and use their storage systems. Storage on-demand Paul Smith, director of information services at ATA Airlines, for instance, characterizes his firm as entrepreneurial and cost-conscious, even to the extreme. "We don't wash our Dixie cups after using them, but in IT, we're very aware of saving money," Smith says. The IT staff at the $1.2 billion airline in Indiana even does its own hardware and software maintenance, keeping an inventory of spare parts in the event of breakdowns. Smith saves a lot of money by purchasing storage systems through World Data Products. But there are other advantages. For instance, Smith says, he's found the remarketing sector can produce product much more quickly than standard sales channels. This works well for ATA, which runs a lean-and-mean storage shop with 70%-to-80% utilization rates. In other words, when he needs a new array, he needs it now. So when Smith wants a couple of extra terabytes of disk, he says, "We can pick up the phone and expect to see it the next morning. Through the regular channel, even with an expedite, getting delivery within a couple of weeks would be extraordinary." In this sense, Smith is able to operate in an almost "storage-on-demand" fashion. "We're extremely agile, and we don't want to keep our money tied up," he says. Sticking with the old A more common reason for acquiring storage from the refurbished market is to lengthen the life of an older storage platform that works fine but is no longer sold by the manufacturer. "A real common one is the IBM 3990 optical library, where the newer machines are based on a 30G-byte plasma technology," points out Doug Rengel, a consultant at Xerxes Computer Corp., a refurbished computer reseller in Bloomington, Minn. "A lot of people are comfortable with what they have, and when they look at the cost of converting, as well as the compatibility issues, they'll weigh either buying used or moving to the new technology." Similarly, if a customer had a whole row of older IBM 3580 tape drives for backup, "there'd have to be a good reason to get rid of that and invest in new tape drives," Rengel points out. If the platform doesn't have high-performance requirements, the customer may as well add on as cheaply as possible. Smith faces this situation with some older HP storage arrays that ATA uses. "It would be a challenge for us to do a migration, and at this point, we'd be more willing to spend money on repairing them than upgrading because it's easy enough to find spare components on the used market," he says. Testing ... testing Customers are increasingly buying or renting these lower-priced systems for multiple reasons, such as testing, according to people who sell used equipment. Testing can include benchmarking, performance testing or business continuity testing, according to James Davie, a vice president at Canvas Systems, a reseller in Norcross, Ga. Increasingly, he says, customers prefer trying things out in their own environment rather than relying on published benchmarks. "The drive to get an accurate benchmark has driven a lot of our rental business," Davie says. "A lot of folks can't get hardware from the manufacturer or from the VARs because their loaner pools are not adequate." When Smith is considering purchasing storage that is new to ATA's environment, such as Serial ATA drives or iSCSI interfaces, he test-drives it by renting it for a week. "If you want to compare technology from competing companies, it's much easier to do it through the refurbished market than by going to the vendors," he says. Even through a VAR, he notes, the company is sometimes contractually obligated not to sell certain competing products. Rental terms vary, but at Canvas, the term can last from a week to 90 days, at a cost of 10% to 20% of the sale price, a portion of which can be applied toward the purchase price, according to Davie. Davie says he has also recently rented backup systems to companies in Florida that needed to prepare to withstand the series of hurricanes that region endured this fall. "They're either doing disaster recovery testing or using it as backup at an offsite location," Davie explains. Even companies that have a relationship with a hot site provider such as Sungard might need to augment that strategy. When the rental term expires, the company may return the equipment or purchase it, with a partial credit applied toward the purchase price. Filling the gap Another time to rent is when a manufacturer is due to come out with a new model but the user needs more storage capacity before the model is available. Rather than do without, the user can purchase or rent a system to fill the gap with interim capacity. Customers of Xerxes Computer have also rented tape systems for a month or two to help them transition to a new platform, says Peter Schrempp, vice president of sales and marketing at Xerxes. In these instances, the current tape drive was incompatible with the new system, so the customer staged its data on a compatible tape system to transfer the data. As ATA's Smith points out, not all storage purchases make sense on the used market. "For many companies, it's best to look for low-hanging fruit where there are excessive ownership costs and where you can align yourself with a vendor that has technical expertise," he says. But once you form a relationship with a seller of refurbished storage systems, you can reap rewards of flexibility and creative ways of saving money. About the author Brandel is a freelance writer based in Grand Rapids, Mich. She can be reached at mary.brandel@comcast.net. Feedback: feedback@snwonline.com Questions: questions@snwonline.com Technical difficulties: webmaster@snwonline.com