Copyright 1999 The Buffalo News
The Buffalo News
July 27, 1999, Tuesday, CITY EDITION
SECTION: YOUR MONEY, Pg. 1D
LENGTH: 902 words
HEADLINE:
WORTHLESS PCS;
USED PERSONAL COMPUTERS LOSE THEIR VALUE RAPIDLY
BYLINE: FRED O. WILLIAMS; News Business Reporter
BODY:
Cathy Charland of West Seneca sank
about $ 2,500 into her last computer -- but that was five years ago.
So
when time came to replace it with a machine that runs the latest software, she
figured she'd bite the bullet and sell the old system for $ 225.
Even
with that markdown, Ms. Charland didn't bite hard enough.
Six months
after listing the 486-generation AT&T computer as "for sale," she accepted $
60 for it, not including the monitor. "It was terrible," she said of the
experience. "It was only four or five years old, and it was an antique."
Welcome to the dark side of falling computer prices. While a dollar will
buy more and more computing power in a new system, unloading an old PC is sure
to be a wrenching experience.
No one seems to compile authoritative data
on computer depreciation rates, but dealers and shoppers agreed that resale
values fall steeply. Like Ms. Charland, many sellers find that machines costing
more than $ 1,000 when new fetch only a pittance just a few years later.
Now, as retailers' latest marketing strategy offers new PCs for nearly
nothing -- provided you buy a three-year Internet service contract worth $ 790
-- selling used equipment is likely to get even more difficult.
There's
not much sellers can do to improve their foray in the used computer market,
except to take a deep breath and make sure their pacemaker's fully charged. But
there are some alternatives, according to Western New York dealers:
Upgrade. If the system is five years old or newer, there's a good chance
you can keep most of it and improve its speed with an outlay of under $ 200,
without having to tinker under the hood yourself.
Buy used. Take
advantage of the steep depreciation rate and replace your used computer with a
somewhat less-used model. Off-lease machines two and three years old are
available starting around $ 200, using your old monitor and peripherals.
Donate. Bypass the used computer market entirely and donate the
equipment to a school, where recent models are in short supply, or a charity
that might make use of it. Buffalo offers Computers for Children, a
clearinghouse that takes used computers and refurbishes them before donating
them to schools. And don't forget to take a tax deduction for your charitable
contribution.
"Some schools are using machines that are over 10 years
old," said James L. Warner, co-founder of Computers for Children, whose Web site
is at www.computersforchildren.com
"If they (PC owners) give it to us,
we give them a receipt for the contribution," he said. The organization's phone
number is 843-8880.
However, much of the benefits of this option are
non-monetary. Donated equipment is still only worth a deduction equal to its
fair-market value, said Tim Hoelscher, a certified public accountant at Ernst
& Young in Buffalo. That means a used machine valued by the market at $ 200
will reduce your federal income tax bill by between $ 30 and $ 72, depending on
your tax rate.
Orion Research Corp. of Scottsdale, Ariz. offers a
computer Blue Book listing current market values. The book is available at some
computer stores or from the company, at 800-844-0759. Orion's web site --
www.bluebook.com -also accepts orders and provides access to price research
reports for $ 10.
Foisting old equipment on one's kids -- a favorite way
to dump an old car -- is less of an option with computers.
"If what you
want to do is play games, you need the latest equipment," said Jack Sheehan,
owner of Computer Challenge in the Town of Tonawanda.
The computer store
also sells two- to three-year-old equipment coming off corporate leases,
offering an alternative to a brand-new system for people who already have a
monitor, printer and other peripherals. A Pentium-class computer running at 120
mhz costs about $ 150, Sheehan said.
For about $ 170, Mr. Chips
Computers in West Seneca will upgrade a 486 computer to a Pentium running at 333
mhz to 366 mhz, owner Chris Caparella said. The store installs a new
"motherboard" and processor with cooling fan but leaves the hard drive, avoiding
the chore of copying programs and files to a new machine. However, she said, an
operating system upgrade of $ 90 can add to the cost, and pre-486 computers just
aren't worth trying to revitalize, she said.
Some dealers of new
equipment try to eliminate resale hassles in advance. Gateway's "Yourware"
purchase plan allows customers to trade in the equipment for the Blue Book
value, spokesman Greg Lund said.
"We take that amount and apply it
toward the purchase of a new computer," he said.
But while the plan
eliminates the chore of actually selling old equipment, it does nothing to
cushion the fall in price of the old equipment.
Many frequent upgraders
could save some money by simply hanging on to their present equipment longer,
Ms. Caparella said.
"We're seeing people who bought a computer a year
ago who want to upgrade," she said.
Laptops hold their value somewhat
better than desktop models, Ms. Caparella said, although depreciation rates for
small machines remain sharp.
Not even industry insiders are exempt from
the hard-hearted depreciation rates for used desktop machines. Ms. Caparella
said she sold her once state-of-the-art Tandy computer, worth $ 3,500 new, for $
50.
"As long as new technology continues to come out, prices (for old
equipment) will keep going down," she said.
GRAPHIC:
Illustration by Daniel Zakroczemski/Buffalo News
LOAD-DATE: July 29, 1999 
