Consumers find hot deals in used computers

For some computer buyers, almost new is good enough. <br><br>``I work for a nonprofit, and basically we don't have a lot of money,'' said Anthony Dempsey, the manager of information technology

Wednesday, November 22nd 2000, 12:00 am

By: News On 6

For some computer buyers, almost new is good enough.

``I work for a nonprofit, and basically we don't have a lot of money,'' said Anthony Dempsey, the manager of information technology for the American Association of Colleges of Nursing. ``I don't have an IT budget per se, and we're always looking to do more with less.''

Consumers who have the same outlook toward used models could pick up some of the hottest deals on personal computers this holiday season, according to analysts and PC makers.

These bargains are simply not used systems going to the highest bidders on eBay or scratch-and-dent models at the local computer store. Instead, they are refurbished, or reconditioned, systems _ returned computers that have been fixed but can no longer be sold as new. Though it may sound implausible, Dempsey, who usually buys from Dell, said he's had more trouble with new systems than used ones.

``They're better than new,'' said ARS analyst Matt Sargent. ``The savings are huge, maybe 20 to 30 percent over an identical, new system.''

PC makers find that consumers and small businesses, more than any other customer segment, buy refurbished systems. ``Refurbs'' are popular with people buying for the second time, looking for multiple systems, or working within a fixed budget.

Not all refurbs start out as defective or returned systems. Some simply are canceled orders. Others are overstocks sold with reconditioned units at a discount. But once labeled refurbished, the systems are reconditioned _ checked over for defects and refreshed with the latest software _ then sold at a deep discount.

In some ways, refurbs are the bane of the computer industry. With margins already razor thin, returned systems are basically sold at a loss, with the PC makers or retailers looking to recover as much of their cost as possible.

Some are also reluctant to talk about how good refurbished sales are for fear of jeopardizing the business in new systems.

``We sold 7,000 units during the first three quarters,'' said Kim Stevens, head of product management for online retailer PC Connection, without disclosing the total sales for the period.

Gateway gets returns mostly because the company offers a 30-day, money-back guarantee on every system it sells, said spokesman Greg Lund. Returned systems are reconditioned, and Gateway sells them refurbished with the same warranty as a new system but cuts the money-back guarantee to 15 days.

While great buys are not uncommon, consumers have to be aggressive and persistent, Lund said.

One of Gateway's best refurbished deals Tuesday was a Solo 9300 notebook selling for $2,103 with a 15.7-inch display and 600-MHz Pentium processor. The refurb cost $600 less than a new model.

Many regular refurb buyers tend to be like Dempsey: mostly consumers or small businesses on tight budgets. They also tend to get the best deals, say PC makers. Someone already planning to spend, say, $1,500 on a system will shop more for features than a better price. For that shopper, a refurb could mean more system for the same price as a new model.

But not all analysts see huge bargains in refurbs. After all, many of the systems were returned as defective.

``Especially in a category like computers where everything is obsolete in three months, what's the advantage of a refurb that's 20 percent off when in three months I could get that product for 40 percent off?'' asked PC Data analyst Stephen Baker, who urged consumers to look closely at the store's or PC maker's policy on handling refurbs.

Warranties can be another problem. While Dell and Gateway back their refurbished systems with full warranties, not every company does. Many offer protection for only 90 days.

When buying from stores, consumers should find out where the refurbs came from. Many retailers buy them directly from the PC manufacturer, which guarantees they are as good as new. CompUSA, for example, typically sells these kinds of refurbs.

Dell has done so well selling refurbs that the company closed its outlet store in Austin, Texas. Demand outside the area compelled the company to expand to an online operation.

``The Austin success story really went national,'' said Mike Jagliardi, general manager of Dell's asset and recovery business.

Dell refurbs tend to be canceled orders _ systems pulled from the line for suspected problems or customer returns. They then are reconditioned and sold as refurbished.

``If we're doing our job right, the only difference between these and new systems is the red (refurbished) sticker,'' said Jagliardi of Dell. He estimated savings of 5 percent to 15 percent when buying refurbished over new.