Second-hand ICT hardware comes to Thailand

Global reused network-equipment company, Network Hardware Resale (NHR) is planning to enter the Thai market within the next year and expects to reach revenue of around US$10 million (Bt301.9 million) in three to five years.

NHR's chief executive Mike Sheldon said his company would provide refurbished network-equipment products to businesses throughout the Asia-Pacific region at a cost saving averaging 70 per cent of the original equipment manufacturer's list prices - with a proven failure rate of less than 0.5 per cent.

The firm will provide two core products to the Thai market: networking equipment, comprising mainly second-hand Cisco and Juniper hardware, and maintenance support. NHR currently has inventory worth more than $200 million ready to ship.

The company will make Singapore it headquarters, from which it will cover Southeast Asia and create a hub for responding to regional demand for fully tested, pre-owned network-equipment upgrades, replacements and spares. The firm currently supplies used network equipment to other global markets.

Sheldon said NHR was negotiating with a local partner to provide after-sales service. Within 12 months, NHR might set up a new company in Thailand to focus on telecom-service providers, Internet-service providers, government agencies, healthcare organizations and financial-market businesses.

"Thailand is specifically a very strong market for us and one into which we are most excited about expanding over the next one or two years. We have one person currently focusing on companies in the Thai market and we will find the need to hire native speakers over the next three years. We will service and ship equipment to Thailand from Singapore, when I think the market will be much bigger than it is at present. I think that the Asian market is a huge opportunity for us," he said.

Sheldon said the firm had employed 10 people over the last six months to cover Vietnam, Thailand, Malaysia, the Philippines and Indonesia.

NHR's regional director for Asia Pacific Jason Ogden said about 90 per cent of the network equipment provided by the company was second-hand Cisco equipment. The rest was Juniper network hardware. The company purchases second-hand products from Europe and the United States - from sources such as information technology projects, service providers and leasing companies. The equipment is repaired and refurbished before being resold.

Sheldon said that in the next year, NHR expected to provide second-hand Dell, IBM, HP and Sun servers to the market.

"I think reused network equipment will offer benefits to customers because they will be able to save an average of 70 per cent on the cost of network equipment and still get high quality, like new products," he said. "NHR expects to reach revenue of about $240 million this year. We will achieve a 9- or 10-per-cent share of the global network-equipment market, which is worth about $2.5 billion. The company expects to record market growth of more than 20 per cent."

Sheldon said that 95 per cent of his company's expected revenue of $240 million would come from sales of refurbished equipment and 5 per cent from maintenance. He expected the revenue percentage from maintenance to increase in the future.

Local analysts say the local market for second-hand information technology hardware products - including network equipment and servers - is a new one. However, a big challenge to any company entering the market will be the cultural preference of Thai buyers to purchase new products for their businesses.