The Upshot: EMC Hits the Auction Circuit to Buy Back Equipment

The recent flood of routers, switches and servers into the used equipment channel may be more of a problem than networking and Internet infrastructure companies want you to believe. It may be enough of a problem, in fact, to cause those firms to buy back their own used product when their failing customers start to liquidate.

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Case in point: The equipment auction held last Friday by Digital Broadband, the Massachusetts-based DSL-provider now under Chapter 11 bankruptcy protection. Storage systems company EMC (EMC Quote) showed up there and bid $290,000 to buy back two high-end storage servers that it had originally sold Digital Broadband. The servers were worth as much as $3.5 million, according to investment research firm Fechtor Detwiler, one of whose analysts, Jack Whelan, attended the auction.

An EMC spokesman says buying used equipment at auction from customers is a mutually beneficial practice: For the customer, it's a safeguard against the possibility of "improperly handled systems" holding important and sometimes confidential data. Meanwhile, EMC gets to refurbish the system and sell it again. ...