Magic Quadrant for North America Information Technology Asset Disposition

The IT asset disposition (ITAD) sector is rapidly evolving to accommodate the dynamic requirements of user organizations, from the rise of the mobile workforce and its concomitant growth in mobile devices; to on-site data sanitization driven by more stringent requirements for data security; to the growing influx of end-of-life systems driven by the accelerating migration to Windows 7. The sharp focus on the two primary risks associated with ITAD — data security and the disposition of e-waste — combined with more strict and comprehensive legislative mandates and penalties for non-compliance, is forcing IT asset managers to more closely evaluate their ITAD processes and providers. Moreover, executives responsible for ITAD are coming to realize that the combination of longer refresh cycles and the rising costs of proper disposition of IT assets is driving ITAD's cost-revenue equation toward break even at best.

Source: Gartner (November 2011)

Market Overview

The overall ITAD market consists of a few large players (for example, the OEMs IBM, HP and Dell, as well as the large, recycling-centric Sims Recycling Solutions), a relatively small number of midsize independent providers, and a very large population of smaller, often local ITAD providers. This first revision of our initial 2010 coverage of the ITAD market has expanded to include five new vendors (Apto Solutions, EPC, HOBI International, ROUND2 and Sims Recycling Solutions). While these vendors are not new to the ITAD space, over the past year they have appeared on our radar, in terms of client inquiries and our own ITAD research, and all qualify under our inclusion criteria (see below).

We are also increasingly seeing a bifurcation of ITAD players into those that focus on the refurbishing and remarketing of IT assets, and those whose heritage and core business is the physical recycling of IT assets and their component parts. The former typically derive a significant majority of their revenue from remarketing, and focus their sales efforts on customers disposing of younger (three to four years old, for example), and generally higher-value assets. The latter — those with a recycling heritage — tend to see IT assets for their recycling potential first, and as potential remarketing revenue second.

This Magic Quadrant examines ITAD providers based in North America (many of which have an international presence) that Gartner believes have the approximate size, capabilities, certifications and delivered track record to justify consideration for our clients' shortlists (assuming they meet the clients' individual requirements). Client perceptions of how these vendors can best serve their needs can vary considerably by region and country.

ITAD service providers have become an important link in the overall life cycle management of IT equipment. Indeed, the number and complexity of legislative mandates — often country/region-specific — that cover the secure and environmentally proper disposal of IT equipment are growing rapidly, and the consequences of non-compliance are quickly gaining board-level attention (see "Hype Cycle for Data and Collaboration Security, 2011" and "Hype Cycle for Sustainability and Green IT, 2011").

Market Definition/Description

Gartner divides ITAD services into three broad categories: core disposition services, acquisition services (the acquisition of used or secondary equipment from ITAD vendors and partners), and ancillary services. Full-service ITAD vendors typically offer most of the disposition and acquisition services and many of the ancillary services. Organizations should evaluate and identify their own specific ITAD priorities and business requirements and map them against each prospective vendor's ITAD service offerings.

Disposition services: The following activities are generally associated with the removal and disposal/disposition of IT assets, and are listed in typical chronological order. Most ITAD vendors offer some/all of these activities at varying degrees of efficiency and cost. Users should clearly understand and prioritize their own specific requirements against these comprehensive ITAD services to optimize the negotiation of an effective ITAD contract that meets the user's financial, geographic, security and risk requirements.

While all of these core services must be done to properly dispose of IT assets, many (such as deinstallation, collection and on-site packing) are often accomplished using internal resources. The three most critical services to get right and on which organizations should focus special attention are data sanitization, transportation logistics and recycling. In these three areas are concentrated the greatest risk in the ITAD process, and they should thus be delivered by an experienced, well-vetted ITAD vendor.

• Deinstallation: Includes all activities associated with the physical removal of hardware and/or software (software harvesting, for example; see below) from the existing site, in preparation for packing and shipment. This activity can be labor-intensive, and may require specific packaging to preserve the condition and/or any remaining remarketing value of the asset. While offered by most ITAD vendors, we find that deinstallation activities are typically handled by in-house personnel as part of their standard asset management process.
• Collection and bin rental: Weather-proof bins (or a lockable storage area) are often used to segregate and accumulate IT assets for disposal, and should be easily secured to prevent theft. In addition, it may be necessary to provide a staging area or storage room for asset packaging and shipment.
• On-site packing: If space is available at the customer's site, on-site packing provides a higher degree of security and protection for re-sellable assets than transporting unpackaged equipment to an alternative, off-site packing area. However, packing must be done properly to minimize the risk of in-transit damage and consequent impact on the equipment's resale value (indeed, to minimize this risk, many organizations have the ITAD vendor do the on-site packing). It is at this stage that security ID tags or serial numbers should be assigned for chain-of-custody tracking and control.
• Transportation logistics: There can be significant security and cost advantages to having the ITAD vendor handle the transportation logistics from the customer's site to the processing facility. Users should have a clear understanding of the vendor's precise transportation process and logistics. For example, is the vehicle sealed and tracked? Will the asset shipment go straight from the user's site to the vendor's, or will there be subsequent collections from other clients, or will there be an overnight stop en-route? Does the ITAD vendor use its own vetted employees and truck fleet, or multiple third-party carriers? If the latter, does the carrier specialize in IT-specific assets, and have its employees been through rigorous and routine background checks that extend beyond initial hiring? Depending on the answers to these types of important chain-of-custody questions, different logistic risk profiles will emerge.

Organizations should be aware that offloading transportation logistics to a third-party ITAD vendor will not necessarily absolve them of ultimate chain-of-custody risk. Specifically, even if the title to the assets passes to the ITAD vendor at the customer site (at the beginning of the chain-of-custody), the customer can still be held "joint and severally" liable for any security breaches or the consequences of improper recycling. In general, ITAD contracts should have clear risk-of-loss language and clearly state when the title passes to the ITAD vendor.

• Theft protection (in-transit insurance): Although in many cases retired equipment may only have a minimal scrap value, insurance coverage is still important to manage security and environmental compliance liabilities. However, it is unlikely that standard transportation insurance will cover any consequential business losses associated with disposal fines or data loss/exposure.
• Data sanitization and hard drive destruction/shredding: Whether used equipment is deinstalled for redeployment within the enterprise, for external refurbishing and resale, or for ultimate disposal, component recovery and recycling, data sanitation or actual hard drive destruction is a critical activity to ensure compliance with both internal and external privacy and security requirements. The specialized software and appliances used in this process are often most efficiently and effectively done by an experienced ITAD vendor, which should provide certification that the data was in fact sanitized to common industry standards (such as NIST 800-88). To minimize chain-of-custody security risks (that is, the risk of loss during transportation from customer site to ITAD vendor facility), a growing number of users (especially in the financial and healthcare sectors) are requiring data sanitization to be performed on-site, before the asset is removed from the customer's premises. Organizations not requiring on-site data sanitization should, at a minimum, utilize data encryption to minimize chain-of-custody security risks.
• Remarketing/resale: One of the primary functions of all ITAD vendors, remarketing/resale is the main source of revenue for most organizations and for many ITAD vendors. Indeed, it is the critical denominator in the core ITAD cost-benefit equation, and often determines whether the vendor writes the client a check or an invoice (this obviously also depends on the equation's numerator: the extent and cost of the ITAD services being rendered). The user's remarketing revenue will depend on many factors, among them the type, age and condition of the asset, the ITAD vendor's remarketing network, experience and contacts, the percentage returned to the client (typically in the 60% to 70% range), and general market conditions. Many ITAD vendors specialize in remarketing, and have been known to eschew older, low-value equipment that requires compliant recycling. Other ITAD vendors that have a recycling heritage will tend to view IT assets for their recycling value first, and remarketing/resale value second.
• Recycling and component recovery: This critical "de-manufacturing" function reclaims any serviceable components and recycles any raw materials from the asset, in compliance with local and national regulations. An important ITAD component that should minimize risks to brand equity, this and data security are the two core drivers of a formal ITAD process. Indeed, the growing visibility of corporate social responsibility — especially within large multinational organizations — is driving requirements for zero landfill and zero incineration solutions, and for data on recycling to appear in the annual report.

Acquisition services: As a natural outgrowth of their asset disposition business, many ITAD vendors also offer their customers the opportunity to acquire used equipment, often to replace assets that have been disposed. As with the traditional disposition services above, users should clearly understand and prioritize their own specific requirements against these acquisition services provided by the ITAD vendor.

• Trade-in management: Management of replacement assets as part of the standard asset life cycle.
• Service provisioning: Services associated with both warranties provided as a part of the acquisition and support services provided independently of the acquisition.
• Systems imaging: Systems imaging service for server and PC assets.

Ancillary services: These services are considered ancillary to the core ITAD business of asset disposition, and not all ITAD vendors offer them all. Users should consider each as an optional service that may or may not add material value within their specific environment.

• Software harvesting: Specialist software tools can help identify software licensed with the asset that needs to be maintained and resold with it. The tools can also help to identify any other software that can be removed so the licenses can be redeployed elsewhere within the customer organization. If required, the ITAD vendor may also help ensure that any remaining data is backed up and returned to the end user prior to the secure deletion of all data on all storage media.

• A key prerequisite to the extraction of any real value from such software harvesting is typically a robust software asset management (SAM) discipline (for example, can the user accurately identify the licenses associated with the assets being removed, and can they be reassigned?). Gartner believes that any active software licenses should be harvested as a standard SAM process prior to final asset disposition via an ITAD vendor. However, as some software vendors require documentary proof that their software has been removed or destroyed, certification from the ITAD vendor can be important to prevent licensing disputes.

• Warranty look-up and provisioning: Determining the remaining OEM warranty and/or providing extended warranty coverage.
• Lease return management: Assisting clients in lease return logistics (for example, proper deinstallation to ensure ongoing maintenance eligibility, packaging, condition assessments, shipping and data cleansing). This is an often over-looked area that can incur significant additional costs at the lease's end of term. Thorough lease return preparation can minimize/eliminate costly lessor chargeback fees (for example, for the refurbishment of damaged assets, missing parts and additional data sanitization) that can easily run to 7% to 10% of the asset's original purchase price (and that are rarely budgeted as part of the original lease analysis).
• Donations of usable equipment: Helping clients to prepare assets for charitable donations (such as packaging, value determination, shipping and data cleansing). Do not underestimate the paperwork requirements of both donations and employee sales (see below), which can be significant and, if not executed properly, can expose the benevolent donor company to material liabilities. In addition, the operating system should be reinstalled by an authorized OEM (often the ITAD vendor), and the recipient must understand the limitations of both the received hardware and installed software. As charitable donations can often have tax implications, organizations should ensure that legal and tax departments are involved as well.

• Some ITAD vendors are beginning to offer full life cycle services to recipients of such charitable donations. Specifically, in addition to the front-end preparation and delivery of the refurbished asset, the ITAD vendor can also relieve the receiving charitable organization from the responsibility for its ultimate removal and disposal, making the entire transaction significantly more attractive and beneficial.

• Sales to employees: Helping clients prepare assets for sale to employees (such as packaging, value determination and data cleansing). As for asset donations (above), ensure that the proper paperwork is executed, as failure to do so can expose the organization to material liabilities.
• Redeployment: Internal redeployment of client assets (for example, deinstallation, inventorying, data cleansing, packaging, shipping, unpacking and installation).

Inclusion And Exclusion Criteria

Gartner's Magic Quadrant research process involves primary industry research with direct client references — from Gartner client inquiries and those supplied by ITAD vendors¹ — and each vendor's representation of its organization. The analysis involves weighting both sources of information, with a heavy emphasis on client feedback. As a result, many of the individual categories have "client reference" criteria factored into the scoring. Gartner considers client feedback to be one of the most critical measures of a vendor's success. In addition to the many ad hoc, vendor-specific discussions during the normal course of client inquiry, a minimum of three detailed customer reference questionnaires and one-on-one interviews per vendor were conducted as an integral part of the research for this Magic Quadrant.

Gartner evaluates ITAD vendors on their ability to execute and their completeness of vision. When the two sets of criteria are evaluated together, the resulting analysis gives a view of how well the provider performs a spectrum of ITAD services compared with its peers, and how well it is positioned for the future. This evaluation is a snapshot in time. The competitive nature of the ITAD vendor market over time affects the relative position of evaluated companies.

In addition to understanding vendor positions in this ITAD Magic Quadrant, you must conduct your own due diligence, and check the provider's references. Gartner recommends you also ensure that your business culture is synergistic or — at a minimum — compatible with the ITAD vendor's culture. Among the most critical success prerequisites for a long-term partnership with an ITAD vendor are the provider's ability to work within your specific business culture, and its ability to work with your people to effect the process change essential to a successful ITAD program.

A broad range of providers offer ITAD services. This ITAD Magic Quadrant cannot and does not include all vendors within the ITAD sector. Many ITAD vendors focus only on parts of the end-to-end ITAD process. Companies considered for evaluation in this Magic Quadrant research are those that also act as advisors, and provide implementation services that encompass most or all levels of an ITAD solution, as outlined above. Further, providers were also evaluated in more detail using a combination of quantitative and qualitative criteria. Note that vendors — assuming they meet the inclusion criteria — cannot elect to be excluded from a Magic Quadrant.

Quantitative Criteria for the 2011 ITAD Magic Quadrant

• ITAD vendors that demonstrated ITAD product and service revenue derived from clients in North America.
• Current annual direct ITAD product and service revenue of $10 million.
• Offerings in each major category of disposition, acquisition and ancillary services.
• Robust ability to dispose of multiple asset classes (such as PCs, servers, storage, mobile devices, network/telecom assets).
• Must have attained industry certification in disposal and data security.

Qualitative Criteria for the 2011 ITAD Magic Quadrant

• Gartner analysts' interactions with enterprises,¹ which reveal interest in specific ITAD vendors, or the ITAD vendor's current and potential market impact, as measured by the frequency of its appearance on shortlists.
• The ITAD vendor demonstrates depth and breadth of ITAD service capabilities.

Vendors Added

• Apto Solutions.
• EPC.
• HOBI International.
• ROUND2.
• Sims Recycling Solutions.

Vendors Dropped

• Converge: Acquired by Arrow Electronics in April 2010, Converge has subsequently been merged into Intechra, which Arrow acquired in December 2010.

Evaluation Criteria

Ability to Execute

These rating criteria focus on the vendor's operational viability, financial health, breadth and depth of product coverage, service functionality, customer base, and overall customer satisfaction with the services offered and with service quality and responsiveness.

Product/Service: Core IT asset disposition products and services offered by the vendor that compete in/serve the specific ITAD market. This includes current product/service capabilities, quality and feature sets and skills, whether offered natively or through OEM agreements/partnerships, as defined in the Market Definition and detailed in the subcriteria.

Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall ITAD vendor's financial health, the financial and practical success of the specific ITAD business unit (where appropriate), and the likelihood that the individual ITAD business unit will continue investing in and offering its ITAD products and services, and will advance the state of the art within the organization's portfolio of ITAD products and services.

Sales Execution/Pricing: The ITAD vendor's capabilities in all pre-sales activities and the structure that supports them. This includes deal/RFP management, pricing and negotiation, pre-sales support, and the overall effectiveness of the sales channel.

Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and ITAD market dynamics change. This criterion also considers the ITAD vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the ITAD vendor's message to influence the ITAD market, promote the brand and business, increase awareness of its products and services, and establish a positive identification with its product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word-of-mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable ITAD customers to gain real operational value with the products and services evaluated. Specifically, this includes the ways customers receive technical or account support. This can also include ancillary services (see above), customer support programs (and the quality thereof), availability of vendor user groups, service-level agreements and so on.

Operations: The ability of the ITAD vendor to meet its goals and commitments. Factors include the quality of the organizational structure, including ITAD-specific skills, experiences, programs, systems and other vehicles that enable the vendor to consistently operate effectively and efficiently.

Source: Gartner (November 2011)

Completeness Of Vision

These rating criteria focus on the vendor's specific vision relative to asset disposition services, degree of certification, global reach, and the degree and pace of service innovation and product development.

Market Understanding: Ability of the ITAD vendor to understand its customers' requirements and to translate those into specific products and services. ITAD vendors that show the highest degree of vision listen to and understand their customers' current requirements and future needs, and can shape or enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling ITAD products and associated services that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates and partners that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

Offering (Product) Strategy: The ITAD vendor's approach to developing and delivering new asset disposition products and services that emphasizes differentiation, functionality, methodology and feature sets as they map to customers' current and future requirements.

Business Model: The soundness and logic of the ITAD vendor's underlying business proposition.

Vertical/Industry Strategy: The ITAD vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The ITAD vendor's strategy to direct resources, skills and offerings to meet specific customer needs both within the "home" geography of North America and globally, either directly or through partners, channels and subsidiaries, as appropriate for that geography and market.

Source: Gartner (November 2011)

Leaders

Leaders in the ITAD market execute well against their current robust vision, and are well positioned for the future. The vendors in the Leaders quadrant register the highest scores on Ability to Execute and Completeness of Vision. These vendors typically have wider geographic coverage, both within North America and globally. Significant weight is placed on geographic coverage through direct, owned and operated facilities (vs. indirect coverage through partners), with special emphasis on North America. While this Magic Quadrant specifically evaluates the North American ITAD marketplace, our research indicates that many North America-based multinational enterprises place significant value on a robust international ITAD presence.

Vendors in the Leaders quadrant are also characterized by comprehensive sales organizations, financial stability, a clear and consistent commitment to the ITAD market, comprehensive customer support, broader service portfolios, and greater market presence.

The following vendors are in the Leaders quadrant: Dell, HP, IBM, Intechra, Redemtech and TechTurn.

Challengers

Challengers exhibit strong operational capabilities, have good service offerings and execute quite well overall. However, they often have less of a geographic presence, are less differentiated, or do not yet have enough resources or commitment to the market to be recognized as leading innovators and agents for change in this market segment.

The following vendors are in the Challengers quadrant: EPC, HOBI International, ROUND2, Sims Recycling Solutions and U.S. Micro.

Visionaries

Visionaries have a solid vision for service offerings, service quality and a clear development plan. However, they are still not fully market tested with a significant base of enterprise ITAD customers. Visionaries are still sorting out market positioning, market messaging and how to expand market opportunities.

The following vendors are in the Visionaries quadrant: Apto Solutions, Cascade and CloudBlue.

Niche Players

Niche Players are often strong in one or more specific elements of execution (such as equipment remarketing, data sanitization or environmentally sound handling of e-waste). However, they usually lack a comprehensive vision and/or resources. Users should consider Niche Players when there is a strong match between the vendor's offering and an organization's particular ITAD requirements (for example, geographic fit and a close match between the vendor's specific services and the user's ITAD requirements).

The following vendors are in the Niche Players quadrant: Asset Recovery, Insight and PlanITROI.

Vendor Strengths and Cautions

Apto Solutions

Headquartered in Atlanta, Georgia, Apto Solutions was founded in 2001, is privately held, and currently has about 75 direct ITAD employees. ITAD is Apto's core and only business, and Gartner estimates Apto's annual revenue to be in the range of $25 million to $30 million. While only about 10% of Apto's revenue comes from ITAD products and services delivered outside North America, its European ITAD business is executed through its own personnel working directly with partners. Apto's 155,000 square feet of ITAD processing capacity are spread over its three facilities in Atlanta, Texas and California, and are either Responsible Recycling (R2)-certified (the Atlanta facility) or will be by year-end 2011.

Apto does over 90% of its data sanitization at one of these three facilities, to Department of Defense (DoD)/National Institute of Standards and Technology (NIST) standards, using its proprietary Netswiper program. One of Apto's strengths is the diversity of asset classes it handles regularly, covering the full range of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in fax machines and printing/imaging systems.

Strengths

• Apto's enterprisewide capabilities can handle assets from desktop systems to data center equipment, storage systems, telecom and so on.
• Apto has good technical and remarketing expertise to process and sell complex systems (such as high-end storage, telecom and servers).
• Users indicate that Apto has an efficient, secure process, and can facilitate sales to employees.

Cautions

• Only about 10% of Apto's ITAD service revenue is derived from ITAD services delivered outside North America.
• Client feedback indicates that Apto's reporting can sometimes lag, although its online portal gets generally favorable reviews.

Asset Recovery

Asset Recovery, headquartered in Saint Paul, Minnesota, was founded in 1987. It has just under 100 employees, and Gartner estimates its current ITAD revenue to be in the range of $15 million to $20 million. We believe that Asset Recovery's revenue is well diversified, and estimate that just over half comes from remarketing, about a third from asset management services, and the remainder from recycling. Though Asset Recovery indicates that it can provide global ITAD services through an extensive partnership network, virtually all of its ITAD revenue is derived from ITAD services delivered within North America, and much of that is concentrated in the mid-west.

Asset Recovery's single, 135,000 square foot owned and operated processing facility in St. Paul is R2 certified, and Asset Recovery is International Organization for Standardization (ISO) 14001 certified and National Association for Information Destruction (NAID) AAA certified for computer hard drive sanitization operation (includes mobile and plant-based physical hard drive destruction). It is also a Microsoft Registered Refurbisher.

Strengths

• Users report good remarketing revenue for retired assets; this is likely due to Asset Recovery's experienced staff (with 20+ years average experience) and its extensive, vertically integrated remarketing network (for example, end-user, Internet, wholesale and specialty dealers).
• Asset Recovery has invested heavily over the past year to significantly improve its online asset tracking, processing and reporting system.
• Customers indicate that Asset Recovery's lean size and long experience in ITAD (a 24-year history and track record) make it a flexible and innovative ITAD partner.

Cautions

• Asset Recovery's relatively small size, lack of international presence and regional, mid-western concentration can make it a problematic choice for organizations looking for a global ITAD solution.
• Asset Recovery's single St. Paul processing facility can make nationwide transportation logistics more costly.

Cascade

Cascade was founded in 1999 and is headquartered in Madison, Wisconsin. One of the smaller ITAD vendors in this Magic Quadrant, Cascade has about 70 employees and current ITAD revenue of $10 million to $15 million (Gartner estimate). Cascade is focused primarily in North America, with its 58,000 square feet of owned and operated ITAD processing capacity spread over two U.S. facilities (42,000 square feet at its Madison headquarters and 16,000 in Indiana). Both U.S. facilities have been e-Stewards and ISO 14001 certified. While Cascade supplies ITAD services to many diverse industries, it has extensive experience in the regulated healthcare industry, supporting compliance requirements (such as the Health Insurance Portability and Accountability Act [HIPAA]/Health Information Technology for Economic and Clinical Health [HITECH] Act). Cascade covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in mainframe servers, enterprise-class storage systems and telecom equipment.

Strengths

• Clients report that Cascade has strong chain-of-custody processes, and uses its own vetted security staff and vehicles for most of its transportation logistics.
• Cascade has a strong commitment to environmentally sound asset disposition and recycling: it was an e-Stewards founder and both of its U.S. facilities are now e-Stewards and ISO 14001 certified.
• Customers report Cascade's Web portal to be an efficient, customizable online tool to track and report on asset status and billing, and that Cascade's relatively small size makes it highly responsive to customer requirements.

Cautions

• A regional U.S. ITAD player, Cascade's ITAD coverage is largely limited to the U.S. and Canada.
• As a relatively small ITAD player, Cascade may be limited in its ability to perform on certain projects (especially if they require global support), and it is selective (based on available resources) about which projects it performs for clients.

CloudBlue

Headquartered in Georgia and founded in 2001, CloudBlue is privately held and had 2010 revenue in the range of $25 million to $30 million and over 200 employees (Gartner estimates). It generally targets large, Global 2000 companies with robust security and environmental compliance requirements.

CloudBlue has a national network of both owned and operated processing facilities (eight) and secure logistics facilities through partners (eight) that enable it to securely minimize transportation logistics and consequent costs (it deploys its own employees and GPS-tracked trucks for pickups within 300 miles of any CloudBlue facility). Six of CloudBlue's eight U.S. processing facilities are certified e-Stewards locations (the two newest — Puerto Rico and San Francisco — are in the process of becoming e-Stewards certified).

CloudBlue's international strategy is centered on an extensive partner network, and while it has only one owned and operated processing facility outside the U.S. (in West Sussex in the U.K.), it currently has ITAD processing partnerships in Canada, Mexico, South America, France, the Netherlands, Dubai (United Arab Emirates), South Africa, and throughout Asia/Pacific.

Strengths

• CloudBlue's North American network of owned and operated, e-Stewards certified processing and partner collection facilities (eight of each) can minimize logistics and shipping costs.
• Within roughly 300 miles of its facilities (about 80%+ of its transportation logistics), CloudBlue generally uses its own vetted personnel and transportation fleet for good chain-of-custody security.
• Customer feedback indicates a good Web portal, which can generate tailored, ad hoc reports to view asset disposition status across multiple geographies, asset types and date ranges.

Cautions

• Customers indicate that they would like to see CloudBlue's "green" reporting (for example, quantifying the environmental impact of proper environmental recycling) incorporated into its online Web portal.
• Multinational users have said they want to see a greater direct CloudBlue presence globally, especially in emerging markets in Asia/Pacific (we estimate that roughly 10% to 15% of CloudBlue's gross ITAD revenue is derived from its international business — generally U.S. companies with international locations).
• Some customers indicate that when customizing its portal for particular customer requirements, CloudBlue could expedite the process better.

Dell

Founded in 1984 and headquartered in Texas, Dell is a $62 billion (in terms of revenue) global technology company that sells and supports computers and related products and services. ITAD services are a relatively small part of its global business, which Dell provides exclusively through the use of a global network of Environmental Partners (EPs). Although the large majority (90%, a Gartner estimate) of Dell's total ITAD revenue is generated in North America, it has partner capability in all major geographies except for Latin America (where it is building a presence in Brazil) and the Middle East.

Through Dell's partnership with Environmental Resources Management (ERM), its recycling partners undergo a comprehensive initial audit, annual audits, and periodic on-site spot checks to ensure compliance with Dell's formal disposition policies. Additionally, Dell itself is ISO 14001/9001 and Occupational Health and Safety Assessment Series (OHSAS) 18001 certified. Based on many data points from Dell customers and vendor partners, Gartner believes that Dell's ITAD processes, standards and audits are at least as robust as those required by the two leading certification bodies, e-Stewards and R2.

Dell covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in tablets, PDAs and point-of-sale systems.

Strengths

• Dell has a robust and globally consistent ITAD network of regularly audited partners that execute a consistent, high-quality portfolio of ITAD services. The core strengths of Dell's global ITAD approach are robust audit protocols and corrective action activities, a high degree of data destruction due diligence, and detailed and transparent volume tracking.
• Dell has a solid reputation for being among the world's "greenest" IT companies, and its global export and disposition policies are among the world's highest-quality ITAD standards.
• Several users give Dell high marks for its responsiveness and process quality and consistency.

Cautions

• Dell's Asset Recovery Services is a "captive" services organization, and its primary target market for its ITAD services are Dell customers in all global regions. While its primary underlying objective remains to facilitate the deployment of new Dell solutions, products and services, it is looking to leverage its robust partner network by growing its ITAD business with non-Dell equipment unrelated to any sale of new Dell systems.
• While customer experience indicates that Dell's ITAD project managers typically win high praise, its Asset Recovery Services needs a robust, customer-facing, front-end Web portal to enable customers to have the same detailed, accurate online tracking, reporting and billing information that is available to the project managers.
• A few field reports indicate inconsistent customer experiences with Dell's disposition partners (inaccurate asset tagging and tracking, for example); these have typically been directly resolved by Dell.

EPC

EPC was founded in 1984 as a local PC reseller, and formally entered the ITAD business in 2001. Headquartered in Missouri, since 1998 it has been a wholly owned subsidiary of CSI Leasing, a large, privately held, independent technology leasing company. EPC currently has just under 200 employees, and ITAD revenue in the range of $20 million to $25 million (Gartner estimate), derived entirely from ITAD products and services delivered within North America. It owns and operates seven North American ITAD processing facilities, totaling about 307,000 square feet (it does have partnerships with CSI Leasing subsidiaries in Mexico, Latin America and the U.K.).

EPC indicates that it is in the process of having its facilities certified by e-Stewards, and expects all seven to be certified by the end of 2011. EPC covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in the following asset types: tablets, point-of-sale systems, mainframes and telecom equipment.

Strengths

• EPC's fleet of Data Destruction and Recycling Vehicles (DDRVs) deliver an efficient, mobile on-site device shredding service that can deliver complete destruction services for most types of data storage devices to any site in North America.
• To minimize chain-of-custody risk, EPC uses its own vetted staff and locked and sealed trucks on dedicated runs, unless mutually agreed to otherwise with the customer.
• Customers indicate that EPC staff in general are very responsive, flexible and competent.

Cautions

• EPC delivers all its ITAD services in the U.S., and has a minimal international presence (limited to its 25,000 square foot facility in Ontario, Canada, and partnerships with CSI subsidiaries in Mexico, Brazil and the U.K.). It is currently evaluating partnerships in the Asia/Pacific region.
• Customer feedback indicates that EPC could be more timely in its reporting and process turnaround.
• Clients indicate that EPC's online customer service system can be difficult to navigate and asset searches are overly complex.

HOBI International

HOBI was founded in 1992, is privately held, and is headquartered in Batavia, Illinois. It currently has about 250 employees and revenue in the range of $20 million to $30 million (derived from mobile devices and IT assets in a ratio of roughly 2:1). Its 160,000 square feet of owned and operated ITAD processing capacity is split between its two current facilities in Batavia and Dallas, Texas, both of which are R2 certified. HOBI is planning to add another 25,000 square feet of capacity when it opens its new Phoenix facility by year-end 2011. Transportation logistics are handled by third-party carriers that HOBI has vetted at both the corporate and employee levels. HOBI covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in enterprise-class storage systems.

Strengths

• While HOBI is a full-service ITAD service supplier, its Mobile Device services group has a strong focus on the resale and recycling of cellular assets, processing over four million mobile phones annually (its clients include three of the four major U.S. wireless operators and four major device OEMs).
• HOBI developed its own robust NIST 800-88-compliant erasure technology (HOBI Shield) for traditional hard drives, as well as for mobile phones and tablet devices.
• Customer feedback indicates that HOBI's key strengths are its responsiveness, flexibility and management accessibility.

Cautions

• While HOBI does not currently offer ITAD services outside the U.S., it is focusing on developing a presence in South America and Europe.
• Customer feedback indicates that HOBI needs to expand its U.S. coverage in terms of physical ITAD processing facilities (it is due to open a third facility in Phoenix by year-end 2011).

HP

HP's Asset Recovery Services is a global ITAD services offering within its financing arm, HP Financial Services, and offers integrated, prepackaged services covering a broad range of ITAD requirements of both small and large organizations. HP has an extensive network of global ITAD service partners, as its direct ITAD processing services are limited in the U.S. to its 250,000 square foot facility in Andover, Massachusetts, and in Europe to its 84,000 square foot facility in the U.K. and its 90,000 square foot facility in Germany.

Similar to IBM's Global Asset Recovery Services, HP's Asset Recovery Service is a "captive" services organization, and its primary target market for its ITAD services are HP enterprise and small or midsize business (SMB) customers in all global regions. Like that of its parent Financial Services organization, HP's Asset Recovery Services' primary underlying objective is to facilitate the deployment of new HP solutions, products and services, though it also does some business in non-HP equipment that is unrelated to any sale of new HP equipment (data center liquidations, for example).

HP's ITAD services are part of a more comprehensive end-to-end portfolio of services that span hardware, software and finance, regardless of equipment type or age.

Strengths

• Multinational users report that HP's robust worldwide coverage, with many locations operated directly by HP personnel, is a strong positive.
• As with all OEMs (such as IBM and Dell), being a supplier of new IT equipment, HP's ITAD services can be leveraged with new equipment acquisitions (in fact, proper disposal of replaced equipment is a requirement under the European Union's Waste Electrical and Electronic Equipment [WEEE] directive).
• HP handles all types of IT equipment, including non-HP assets in infrastructure replacement scenarios.

Cautions

• As a large OEM supplier of a wide range of IT infrastructure and services, HP's ITAD services are primarily targeted at its own equipment, often as lease returns to HP Financial Services. While HP Asset Recovery Services does dispose of non-HP assets, it is generally in the context of replacement with HP hardware.
• While HP's size and economies of scale should consistently deliver lower disposition costs, some customers report that its pricing can be less competitive than that of other ITAD vendors.
• Customers indicate that HP's third-party transportation logistics can be of inconsistent quality.

IBM

In March 2009, in an effort to better leverage its capital resources (especially real estate), IBM divested its entire Global Logistics division to Geodis, a large, global logistics company and a division of the French national state-owned railway company, SNCF. About 10% of this divestiture was the global ITAD processing facilities of IBM's Global Asset Recovery Services (GARS, part of IBM's Global Financing [IGF] division), which IBM had established in 1981 to process and handle equipment coming off lease, and which currently is one of the world's largest reverse logistics organizations. Though Geodis owns and operates these global ITAD facilities, they run on IBM's IT infrastructure (for example, SAP inventory management, sales order system and front end, all well integrated with GARS), and IBM's own employees are on-site to ensure that IBM's ITAD processes are consistently applied (IBM employees average 20% to 25% of the ITAD workforce at most Geodis facilities).

Through its principal ITAD partner Geodis, GARS has full remanufacturing capabilities and a broad, global network of distribution channels that can optimize residual value (RV) and asset value recovery. Geodis' 21 global ITAD processing facilities enable GARS to deliver globally consistent, end-to-end ITAD services (such as data sanitization and environmentally secure disposal), remarketing and logistics capabilities for both IBM and non-IBM IT hardware (for example, despite IBM's divestiture of its PC division to Lenovo in 2005, PC disposition remains a significant portion [about 30% of revenue] of IBM's GARS business).

Through its GARS business, IGF focuses its Asset Recovery Solutions offerings on IBM clients, and has the capability to support customer engagements for the disposal of IT equipment where it is part of an integrated offering. While GARS will deliver ITAD services for non-IBM equipment, its fundamental charter is to support the overall interests/objectives of the IBM company. In this context, it typically does not target non-IBM equipment without some positive implications for IBM business.

Strengths

• Multinational customers indicate that IBM's significant global service reach and locations are a distinct advantage. IBM regularly audits the many global facilities of its principle ITAD partner, Geodis, as well as those of its other global ITAD partners, for compliance with IBM's own ITAD processes and standards.
• The core value proposition underlying IBM's IGF and GARS offerings is end-to-end management of the asset life cycle. Typically, the stronger the IBM relationship, the greater the synergy and customer value.
• Customer feedback indicates good integration/coordination between IGF asset management and GARS ITAD services.

Cautions

• As a large OEM supplier of a wide range of IT infrastructure and services, IBM's ITAD services are targeted primarily at its own equipment, often as lease returns to IGF. While IGF's GARS business does dispose of non-IBM/Lenovo assets, it is generally in the context of replacement with IBM hardware.
• Customer feedback indicates that IBM's GARS could improve the quality/accuracy and consistency of its billing/invoicing.
• Customers report that IBM can become complacent, especially when dealing with small accounts and low volumes.

Insight

Insight's ITAD operations are a very small part of Arizona-based Insight Enterprises, a large, $4.8 billion publicly held (listed on Nasdaq as NSIT) global provider of hardware, software and IT services, with capabilities in high-performance systems, networking and communications, and enterprise software.

Insight's IT Asset Disposal services are part of its Lifecycle Services practice, which focuses on the total technology life cycle, from assessment and acquisition through deployment and maintenance to end-of-life and technology refresh. While Insight's ITAD business is among its fastest growing businesses, it represents a very small portion (Gartner estimates it to be well under 1%) of Insight Enterprises' revenue, and is about 90% based in North America.

While Insight's ITAD business has only a small team of direct employees, it has access to Insight Enterprise's 1,000+ general field technicians for direct ITAD services, as well as the resources of its partner network. Although Insight Enterprises owns a 500,000 square foot distribution facility where it does most of its acquisition and stand-alone ancillary services, it does not directly own nor operate any ITAD-specific processing facilities, and its standard disposition services are performed either by Insight directly or through its partner network.

Strengths

• As part of a $4.8 billion organization, Insight's ITAD business has access to deep, global resources, and is less at risk from the vagaries of the ITAD market than some of its independent competitors.
• A significant majority of Insight's ITAD customers also take advantage of its integrated Lifecycle Services practice, which covers asset assessment and acquisition through deployment and maintenance to its ITAD-specific end-of-life and technology refresh services.
• Client feedback indicates good chain-of-custody procedures and a flexible Web portal.

Cautions

• Insight's relatively modest ITAD revenue and its limited investment in owned and operated ITAD-specific facilities and personnel indicate that stand-alone ITAD is not a core focus for Insight. Compared with other, independent ITAD vendors which have ITAD as their core business, Insight's greater diversification means its ITAD services piece is one of many offered as part of its holistic Lifecycle Services practice (as mentioned above, for organizations looking for such an end-to-end asset management solution, this can also be considered a strength).
• With only about 10% of its ITAD revenue derived internationally, Insight is strongly focused in North America.

Intechra

Founded in 1987, Intechra was acquired in December 2010 by Arrow Electronics, an $18 billion global provider of products, services and solutions to users of electronic components and enterprise computing solutions. This Intechra acquisition, along with its April 2010 acquisition of $30 million ITAD vendor Converge, has established Arrow and Intechra as a major, long-term independent force in the ITAD market. While Arrow does not break out its ITAD-specific revenue, Gartner estimates that the combined 2010 ITAD revenue and employees for Intechra and Converge were in the range of $80 million to $100 million and 400, respectively.

Its four owned and operated ITAD processing facilities total about 600,000 square feet, and are all R2 certified and located in the U.S. (Reno, Nevada, Dallas, Texas, Columbus, Ohio and Hartford, Connecticut). As a solid supporter of security and environmental standards (it is ISO 9001/14001, OHSAS 18001, R2, Recycling Industry Operating Standard [RIOS] and Green Recycling and Asset Disposal for the Enterprise [GRADE] certified), Intechra's customer focus is on large Global 2000 organizations that have significant security and environment requirements and standards.

Intechra's international presence is exclusively through partnerships, and is less robust than its North American network (it currently derives less than 5% of its revenue from ITAD products and services delivered outside North America).

Strengths

• Arrow Electronics' major global presence, resources and infrastructure gives strong support to Intechra's long-term viability, and will doubtless over time enhance its relatively weak international ITAD business.
• Intechra has been an early and strong supporter of environmentally responsible ITAD recycling in general, and R2 specifically (all four of its U.S. facilities are R2 certified).
• Intechra has a strong chain-of-custody process, and as it typically uses its own personnel and transportation logistics (for example, owned and operated truck fleets near its facilities), it can minimize ITAD logistics' cost, time and risk.

Cautions

• In comparison with others in the Leaders quadrant, the lack of a complete global footprint (less than 5% of Intechra's ITAD revenue is derived from ITAD services delivered outside North America) may be an issue for international organizations with significant global ITAD requirements looking for a single ITAD provider. We believe that Arrow intends to leverage its significant global presence, resources and infrastructure to enhance Intechra's global ITAD reach over time.
• Some customers indicate that Intechra could be somewhat more proactive in delivering services and understanding customers' specific requirements.
• Customer feedback has noted that some of the third-party logistics carriers that Intechra uses for more remote locations have occasionally delivered substandard service.

PlanITROI

Founded in 1991 and headquartered in New Jersey, PlanITROI has a single, 44,000 square foot, R2 certified ITAD processing facility in New Jersey. It is a relatively lean, independent ITAD vendor, and Gartner estimates its revenue to be in the $20 million to $30 million range, with about 75 employees.

PlanITROI's business model targets large, Global 2000 organizations with high residual asset values and/or high turnover, and is based on a relatively small number of significant customers. Its strong focus on remarketing vs. recycling IT assets (PlanITROI refurbishes and remarkets nearly 90% of assets it receives) means it is less interested in low RV assets (scrap, for example) that need to be recycled. To minimize/hedge its exposure to the volatility of the commodity resale market, PlanITROI is shifting its revenue mix toward ITAD and asset management services.

PlanITROI covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in point-of-sale systems and telecom equipment.

Strengths

• PlanITROI's business model is focused on refurbishing and reselling used IT equipment through its extensive domestic retail channel, to maximize customer return on assets.
• Customers like the flexibility, personal touch and executive availability that PlanITROI's relatively small size facilitates.
• Customer feedback indicates strong reporting capabilities, and assistance in the financial planning of current and future asset values.

Cautions

• Although PlanITROI does have a global presence, its international business represents a relatively minor (about 15%) part of its revenue, and it has no owned and operated facilities outside the U.S. (its international operations are delivered exclusively through partners).
• PlanITROI's single, modest (44,000 square foot) ITAD processing facility in New Jersey can make nationwide transportation logistics more costly.
• PlanITROI's strength is in refurbishing and remarketing assets that still have some remaining RV. As such, organizations with a preponderance of older assets with low/no RV may not find PlanITROI to be the optimal choice.

Redemtech

Founded in 1998 and headquartered in Columbus, Ohio, Redemtech is a wholly owned subsidiary of Micro Electronics, and is one of the largest independent (that is, non-OEM) ITAD vendors, with a relatively strong global presence. Gartner estimates that Redemtech has current ITAD revenue of over $70 million and employs more than 400 people in the U.S. It provides ITAD services directly in the United States through its three owned and operated e-Stewards and ISO 14001 certified processing facilities in Ohio, Virginia, and Nevada (410,000 square feet of total U.S. capacity). Redemtech was recently named North America's largest Microsoft Authorized Refurbisher.

Redemtech covers all major global geographies with a blend of owned and operated facilities, and an innovative franchise model. It owns and operates two facilities in Canada (with a total of 41,000 square feet), one in Mexico (20,000 square feet), and two in the U.K. (35,000 square feet in total). The U.K. facilities are ISO 14001 and 9001 certified (the larger one is also e-Stewards certified), and the Canadian and Mexico City locations are scheduled for e-Stewards and ISO 14001 certification by April 2012.

Redemtech's franchise model is an innovative alternative to generic ITAD subcontractors, and seeks to provide consistent ITAD service delivery via its proprietary Retrac system, a common global process control platform. All international Redemtech franchisees must be licensed to use the Retrac system, must fully adopt Redemtech's own ITAD operating procedures, become e-Stewards certified, and are exclusively branded as "Redemtech" in their local markets. Through its Retrac process control system, all customer business rules, inventory, reporting, accounting and Web services are managed centrally from Redemtech's corporate headquarters in Ohio. Redemtech performs routine security, operational, safety and environmental audits on all franchisee facilities worldwide, including downstream recycling subcontractors.

Strengths

• It has consistent worldwide service capabilities via its e-Stewards certified franchise partners, which use Redemtech's audited ITAD processes and standard control platform.
• Customer experience with Redemtech indicates a generally open, responsive and flexible management team and customer service.
• Redemtech's Serious Good program (end-to-end corporate and employee donations; includes final asset disposition) gets high marks from clients.

Cautions

• Some customer feedback indicates that Redemtech could accelerate the turnaround of asset processing, refurbishment and re-sale.
• Clients indicate that Redemtech's default process of discovery (that is, the initial determination if the asset has any remaining market value) can be overly costly, as all serial number assets typically go through the process, regardless of age, condition etc.
• Some client feedback indicates that Redemtech's pricing can be high.

ROUND2

ROUND2 is a privately held ITAD services supplier founded in 2005 as an efficient electronic waste recycler and headquartered in Austin, Texas. Excluding partners, it has just under 400 employees, of whom about 100 are dedicated to ITAD. Gartner estimates that the revenue ROUND2 derives directly from ITAD is in the range of $15 million to $20 million, and comes exclusively from operations throughout the U.S. ROUND2 currently owns and operates four ITAD processing facilities in the U.S., totaling 754,000 square feet (Dallas and Austin, Texas, Grove City, Ohio, and the recently opened [August 2011] 258,000 square foot facility in Atlanta, Georgia). The three facilities in Texas and Ohio are currently R2 certified, and ROUND2 expects its new Atlanta facility to be R2 certified by 4Q11. Moreover, it is planning further North American expansion with facilities on the west coast (100,000 square feet, 4Q11) and Ontario, Canada (25,000 square feet, 1Q12).

ROUND2 covers the full gamut of IT equipment (for example, desktops, laptops, printers, servers, storage and network kit), with a secondary competence (typically delivered as an "as requested" or "custom" offering, with limited direct service) in smartphones and mobile phones.

Strengths

• ROUND2's core strength (and the source of most of its revenue) is as a provider of integrated and customizable recycling services, and it is focused on environmentally responsible, closed-loop solutions for manufacturers and generators of post-consumer electronics, paper and plastics.
• ROUND2 has a relatively unusual approach to data security in that its default, standard operating procedure is to physically destroy all data-containing devices. It preserves the asset's residual value by replacing the destroyed device with low-cost commodity drives.
• ROUND2 does not charge for recycling any IT assets (except for cathode-ray tubes), regardless of age or condition, and limits transportation logistics fees to "pass-through" billing. Clients indicate a high degree of responsiveness and flexibility.

Cautions

• While ROUND2 has a strong heritage as a world-class recycler, it is relatively new to the end-to-end ITAD services business, and is now competing with many of the vendors for which it has been downstream provider.
• ROUND2 is almost entirely U.S.-centric and currently derives virtually no revenue from international ITAD business (it does have a relationship with U.K.-based RDC).
• Some customer feedback indicates the need for an online Web portal for asset tracking and better billing systems and reporting detail.

Sims Recycling Solutions

Founded in the U.K. in 2002 as a wholly owned subsidiary of $7 billion Australian-based Sims Metal Management (New York Stock Exchange: SMS; Australian Stock Exchange: SMG), Sims Recycling Solutions has its North American headquarters in West Chicago, Illinois. It is the world's largest electronics recycler, with over 49 global operations locations (totaling over 3 million square feet) processing over 475,000 tons of electronic waste annually. Sims entered the ITAD business in 2005, and currently has global ITAD revenue of $650 million (financial year 2011 [ending in June]), about two-thirds of which is derived from outside North America. It has among the world's largest and most comprehensive networks of owned and operated recycling facilities; all 12 of its North American facilities (10 in the U.S. and two in Canada) are R2 certified.

Strengths

• Sims' core strength is its global scale and reach as a single-source global supplier of recycling services, with over 3 million square feet of owned and operated processing capacity worldwide (of which about 1.5 million square feet is in North America). Indeed, many of its wholesale customers are other ITAD vendors.
• Sims has strong environmental recycling processes, and its parent, Sims Metal Management, has been consistently recognized by Corporate Knights as one of the world's top 100 most environmentally sustainable companies.²
• Multinational customers indicate that Sims' international reach and its recycling process consistency are significant pluses.

Cautions

• Sims' North American operations and revenue are highly focused on its core recycling business, with ITAD services (such as on-site services, refurbishment, remarketing and asset management) representing about 20% of current revenue (still a robust $40 million to $50 million [Gartner estimate]). That said, it is investing heavily in the ITAD services side, and expects its ITAD business to grow rapidly.
• While Sims is working on developing a robust asset remarketing organization, it currently sells through wholesale brokers.
• Customer feedback indicates that Sims needs to improve online access to status tracking and reporting information.

TechTurn

Founded in 1999 and headquartered in Austin, Texas, TechTurn is a major U.S.-based ITAD player that delivers both wholesale (indirect, through OEMs and third parties) and retail (direct to consumers) ITAD services. It has revenue in the range of $40 million to $50 million, and about 200 employees (Gartner estimates).

TechTurn's U.S. ITAD logistics operations are centered around its two owned and operated ITAD processing facilities in Austin, Texas (120,000 square feet) and Richmond, Virginia (80,000 square feet); these are enhanced by its partners' 12 North American facilities. All 14 of these facilities are R2 and ISO 14001 certified. TechTurn's modest international ITAD services business (roughly 10% of its revenue) is delivered in Europe through its two U.K. and German partners, and in Asia/Pacific by its Australian partner.

While about two-thirds of TechTurn's revenue is derived from its indirect (wholesale) channel (for example, major OEMs and independents such as IBM, Unisys, EDS/HP and Dell), TechTurn is increasingly focusing its efforts on growing its higher-margin, direct (retail) channel.

Strengths

• TechTurn's broad experience as a major supplier of wholesale ITAD (as a subcontractor to many major OEMs and independent ITAD vendors) gives it solid credibility as a direct, retail ITAD supplier. In addition to major, Global 2000 organizations, TechTurn also caters to smaller enterprises, which are often overlooked by other ITAD vendors.
• In addition to back-end ITAD services, TechTurn offers a suite of forward asset management services that can help stage and deliver assets into the enterprise.
• Client feedback indicates that TechTurn has highly responsive staff, and a robust remarketing network that can maximize asset value recovery (for example, it is able to reuse/re-market over 80% of the approximately 1 million assets it processes annually).

Cautions

• While TechTurn has a robust, well vetted global network of partners, of the 18 global facilities it utilizes for ITAD services, it owns and operates only two in the U.S. TechTurn's recent partnerships show strong promise for a more robust global ITAD services presence. Some multinational customers would like TechTurn to enhance its Asia/Pacific operations.
• Customer feedback indicates that TechTurn's third-party logistics can be costly and the carriers occasionally less than cooperative/professional.
• Customer feedback indicates that TechTurn's on-site data sanitization offerings could be made more robust, and some customers have had issues with financial tracking (for example, quarterly reconciliations and year-end closes).

U.S. Micro

Headquartered in Georgia, U.S. Micro was founded in 1995 by its current CEO, Jim Kegley. With about 110 employees, U.S. Micro's revenue (in the range of $35 million to $40 million [Gartner estimate]) comes from relatively few, high-value customers. Its unique business model is focused on minimizing chain-of-custody risk by performing an efficient data sanitization of virtually all PC assets (desktops, laptops) on the customer's premises, using only U.S. Micro employees (indeed, title typically passes to U.S. Micro as the asset leaves the customer site).

U.S. Micro is heavily focused on the refurbishing and remarketing of customer assets, with only about 10% being recycled (currently through its partner, the Georgia-based Recycletronics [a division of Molam International, and now also through its own new, state-of-the-art Las Vegas facility).

U.S. Micro has a hub-and-spoke approach to transportation logistics, using its partner Ceva Logistics' 70 U.S. locations to consolidate customer assets and then bulk-ship them to its 124,000 square foot processing facility in Atlanta, Georgia. To further minimize national transportation/logistics costs, U.S. Micro has just opened a large (130,000 square foot) processing facility in Las Vegas. Both facilities are expected to be R2, ISO 14001 and SOC 2 (formerly SAS 70) certified by 1Q12.

Because of U.S. Micro's unique strategy of only using its own fully vetted employees for its end-to-end ITAD service offerings, it is exclusively U.S.-based, with less than 5% of revenue derived from ITAD products and services delivered outside North America.

Strengths

• It has a strong chain-of-custody process: U.S. Micro's standard process includes robust, on-site data sanitization for all PC assets, and taking titles to the asset on-site, at point of removal. It also uses only trained U.S. Micro field technicians to perform all on-site services, regardless of location.
• With U.S. Micro refurbishing and remarketing about 90% of the assets it receives, it has developed an efficient and cost-effective remarketing network that customers indicate can deliver a consistently fair return.
• Clients indicate that U.S. Micro's standard on-site real-time asset tracking system (Enertia), Web portal and customer service deliver consistently efficient, high-value end-to-end asset management.

Cautions

• U.S. Micro's geographic coverage is currently limited to North America (the U.S. and Canada), with limited service in Mexico, Latin America and Europe delivered on an ad hoc basis. While neither U.S. facility has yet been certified for R2, ISO 14001 or SOC 2 (formerly SAS 70), this is anticipated for all three by 1Q12.
• While U.S. Micro's strategy of delivering its end-to-end ITAD services exclusively with its own vetted and trained employees has enabled it to build a consistently strong, high-value reputation in the U.S., it will likely be a challenge to replicate it globally.
• Customer feedback indicates that U.S. Micro needs a more comprehensive, high-level, end-to-end program management function to coordinate its disparate functions (for example, sales, operations and services) and deliver better overall, high-level project visibility.