Everything in our industry seems to be heading downward – declining commodities values, shrinking device weights and less gold in each piece of equipment.
Add that to a decreasing pace of innovation – what percentage of the general public could name the differences between the iPhone 6, 6s and 7? – and greater consumer acceptance of refurbished technology products. In addition, the industry is beginning to see a maturing of the scrap electronic space, which includes noticeable over-capacity and thus the closing of facilities.
However, these factors of downsizing have created one area that’s actually expanding: revenue opportunities in repair and reuse.
Traditional scrap electronic processing facilities, which up until now have only recovered material values, are beginning to create partnerships with organizations that specialize in repair, reuse and remarketing of high-quality technology. Devices that can be repaired and refurbished to a cosmetically like-new state are significantly more valuable per pound than electronic materials that undergo the traditional recycling process. This activity is more “valuable” for the environment because it does not destroy the considerable embedded carbon footprint of these devices.
Revenue generation from material recovery is complex and typically must be done on a medium-to-large scale in order to be profitable. This complexity ultimately inhibits all but the very largest of firms from expanding their operations to include repair and refurbishment.
Given the fundamental differences between material recovery firms and reuse organizations, it is vital that long-term partnerships are created. The partnering process typically takes six to 12 months of process integration and knowledge sharing between the two entities.
Driving hard towards reuse and repair
So how do you start moving down the path of refurbishment? Diverting hard drives from material recovery to reuse is a good starting point.
The most common form of repair for electronic devices is part replacement — for example, replacing a failed hard drive with one that has been tested and has proven to be in working order.
Device upgrades are also done on a replacement basis. For instance, a spinning hard drive (HDD) is replaced by a solid state drive (SSD) with noticeable improved function. It’s also important to note that the cosmetic condition of the device needs to not fall short of the “almost as good as new” visual inspection. Many used devices can be cosmetically upgraded during the repair process.
Once a device is fully repaired, software is required for its operation. High-value refurbishment often requires licensing of third party intellectual property. Microsoft recently completed its one-year free upgrade to the Windows 10 operating system (OS). There are approximately 100,000 different computer models with over 300 million active devices now running the new Windows 10 OS. The Microsoft Authorized Refurbisher (MAR) and Microsoft Registered Refurbisher Program (RRP) make available the most advanced and most widely used software licenses to refurbishers. Both the Windows 10 Professional and Home versions of the OS can be installed on fully repaired devices.
Taking advantage of these kinds of licensing agreements maximizes value for both material recovery firms as well as refurbishers. Material recovery firms, in fact, can see a 300 to 400 percent increase in their per pound revenue with a successful reuse partnership.
That type of revenue growth is a big deal for any company in any industry. It’s a particularly enormous opportunity in these declining days of electronics recovery.
Willie Cade is founder of the Electronics Reuse Conference and founder and CEO of PC Rebuilders and Recyclers (PCR&R). The Electronics Reuse Conference (formerly known as ICRS) will be held Oct. 24-26 in Houston.
The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in a future Op-Ed, please send a short proposal to news@resource-recycling.com for consideration.
