REDMOND, Wash., Nov. 9, 2007 – As consumers and companies of all sizes buy new computers, they are facing a growing and sometimes perplexing problem: what to do with their old machines.
In response to concerns about the safety of intellectual property and potential harm to the environment, many enterprises and consumers outsource management of their old PCs to companies which wipe away the data and applications, refurbish and re-sell the computers to new customers.
The Microsoft Authorized Refurbisher (MAR) program will help simplify volume licensing of refurbished computers and provide refurbishers with the tools they need to grow their business. The program, which was announced today, builds on the success of a similar currently available Microsoft program called Community MAR, which is designed for charities, educational institutions and nonprofits. This new program broadens Microsoft’s offerings to include commercial enterprises.
PressPass spoke with Hani Shakeel, senior product manager of the Genuine Windows Product Marketing team, to get more details about the program and how customers and refurbishers will benefit.
PressPass: How big is the market for refurbished PCs?
Shakeel: Refurbished PCs are part of is what is referred to as the secondary PC market. This market consists of computers that are currently out of use. Large companies, small businesses, even homes may have used them and have replaced them with a newer model. Eventually these PCs go to a number of destinations, either to be refurbished, recycled or disassembled and sold for parts. In some cases — and this is a big problem — they often just sit in storage. Companies don’t know what to do with their old PCs, so they collect dust in the company cafeteria or stack up in the hallways. This is a very common fate for PCs these days, especially with the increased environmental regulations around the disposal of computers.
In 2004 Microsoft conducted a joint study with Gartner that focused on the secondary market. What they found was 150 million PCs entered the secondary market, and of those, approximately 20 million were refurbished and resold. Today we project that this number is closer to 28 million PCs, making refurbished PCs over 10 percent of the worldwide PC market.
PressPass: What prompted Microsoft to launch the Microsoft Authorized Refurbisher program?
Shakeel: Typically, these refurbished PCs are taken out of the enterprise by an asset management company, an original equipment manufacturer (OEM), a leasing company or a refurbisher. The computers are physically cleaned up; maybe a few parts are fixed, but often they’re sold as-is either directly to customers, to resellers or to brokers who ship them around the world. The MAR program is focused on supporting these companies.
We actually started work on the program after receiving requests for help from PC refurbishers. We weren’t working directly with them, but some of these companies were closely related to PC manufacturers, OEMs and system builders that we do business with on a regular basis. Over the years these companies have come to us with requests for genuine software solutions for this market. Consequently, we’ve since engaged in discussions with partners, conducted a pilot, and are now starting the MAR program.
What these companies were asking for was essentially a means of installing genuine Windows software on a large volume of the PCs that they were collecting and refurbishing. Some of these partners refurbish thousands of PCs per day, but they didn’t have an effective means of loading Windows in a high-volume manufacturing environment.
PressPass: Can’t the refurbishers just transfer the software licenses from the original owner?
Shakeel: When it comes to securing licensed software for a refurbished PC, there are scenarios where a refurbisher can reinstall the software. For example, they can reinstall the software if they have the computer’s certificate of authenticity (COA), which proves the PC was originally licensed and shipped as a new computer with Windows, and if they have a recovery media or recovery image for that computer on hand as well. Possession of these two items permits a refurbisher or a customer to reattach that software to the PC. Essentially, they’re restoring the PC to its original state when it was first shipped from the manufacturer.
In many cases the refurbisher does not have the recovery media or recovery image for a PC. The only way to restore the original image is for the refurbisher to go back to the OEM and order replacement media. However, this process isn’t efficient or feasible when refurbishers process thousands of machines each day with different makes and models. The process doesn’t scale. Our intent is that the MAR program will fill that gap, make it easy for the refurbishers to license a large number of PCs and do so with a license that is suited to their business.
PressPass: How does the licensing work under the MAR program?
Shakeel: Microsoft is offering a new license for refurbishers that is only available through the MAR program: Windows XP Home for Refurbished PCs and Windows XP Professional for Refurbished PCs. As long as the PCs that are being refurbished have a Certificate of Authenticity (COA), they can be easily licensed.
Initially, we’re offering these Windows XP licenses in English, French and Spanish. Right from the start, refurbishers will have the ability to ship anywhere in the world.
PressPass: What are the benefits of the MAR program?
Shakeel: One of the big concerns in the secondary market is with the proper disposal or recycling of PCs, rather than having them end up in landfills. The refurbishers with whom we are launching the MAR program have put in place strict environmental processes to address these concerns. This is a key differentiator for them compared to their competition. The MAR program enables partners to take this further, and differentiate themselves based on how they treat intellectual property and software licensing.
This differentiation will drive benefits upstream to the enterprises from which the refurbishers source their PCs, who will have a partner they can trust with end of life management as well as a source for purchasing properly licensed refurbished PCs. It will drive downstream benefits to the customers they sell the computers to who will receive a refuribished PC ready to go with genuine software. Participating refurbishers will also enjoy an enhanced relationship with Microsoft. From this relationship they will have access to resources that help them grow their business – resources such as a dedicated account manager, Microsoft tools that make it easy to deploy Windows in volume on varied hardware, and the ability to purchase the refurbished PC licenses that Microsoft developed specifically for this market.
For customers, the benefits will include knowing that the software installed on their refurbished computer is properly licensed and provides the same level of performance as they would expect when purchasing a brand-new machine. So when they turn their PC on, customers will get that out-of-the-box experience they expect from a new PC.
PressPass: What are the differences between this new program and the existing Community MAR program?
Shakeel: The Community MAR program has been available worldwide for some time, but it focuses on a certain segment of the market, specifically providing licenses to refurbishers that supply PCs to charities, nonprofits, and educational institutions. Some of the partners in Community MAR are the same large partners that we will work with in the MAR program, but many are small community groups serving their local regions.
The MAR program is a commercial program that doesn’t focus on any specific end-customer segment. It focuses on a partner type instead, which in this case is large refurbishers that are selling these PCs broadly in the market.
The MAR program is currently open to our major OEM partners worldwide and to other (OEM or non-OEM) refurbishers in North America. Over time, we hope the MAR program will grow into a worldwide program, at which point Microsoft will have two worldwide programs working in parallel: the MAR program to serve the commercial market and the Community MAR program to serve the needs of the charity nonprofit education market.