2023 Market Conditions & End of Lease Returns

Market Conditions

As we turn the corner into Q2 of 2023, it’s likely everyone is weary of hearing about supply chain constraints and market conditions as we’ve been constantly reminded of these issues for the past three years. As of right now, most of the OEM’s we work with (Dell, HPE, Cisco) have rebounded when it comes to production and meeting demand. In some cases, we are actually experiencing a “whiplash” effect where these manufacturers now have an excess of inventory they are trying to find homes for - which in turn has a trickle-down effect in the technology market. We’ll explore some of these effects below.

   

Hardware Availability = Customer Upgrades

All the large hardware refresh projects that customers had to put on hold due to product constraints can finally move forward.
   

Customer Upgrades = Increase in End-of-Lease Returns

Throughout the first quarter of 2023 we have seen a significant uptick in end-of-lease returns on enterprise hardware. Now, obviously not everyone leases their data center equipment, but this is a solid indicator of where the market currently sits. Hardware availability can also create opportunities for net-new leases for finance organizations.
   

Increase in End-of-Lease Returns = Increased Secondary Market Supply

In contrast to what we have been experiencing over the past 2 years where the pricing for used hardware skyrocketed (similar to what has happened in the used car market), we are experiencing a re-balancing in the technology market due to increased availability of used hardware. As a result, it becomes increasingly important to have partners with specific market knowledge to capture the highest return on re-marketed equipment.

   

V3 = Solution

Many of our customers have found that going the consignment route is the best path for getting the highest residual value for their retired IT assets. Here at V3, we take a unique approach when it comes to remarketing assets for our customers. We drastically broaden the market of potential buyers by bringing the assets down to the component level. This allows the most valuable and marketable items to sell faster and also allows us to offer custom configured solutions, which also brings a higher resale value. Another advantage of consignment is that it protects against market fluctuations, since the goal is to capture the “long dollar”. Plus, V3 does all the heavy lifting!

   

At V3 Distribution, our first order of business is helping you with yours.