Mainframes in the secondary market

Mainframes in the secondary market

Dave Christensen Mainframe news

The primary mainframe market is dependent on a healthy secondary market.

We exist in an economy that is dependent on secondary markets.  Whether it is the resale of your home or a collectible Atari console on Ebay, the secondary market is not only a staple in our economy, it is in the driver’s seat.   Looking at the largest secondary market, housing, we see the secondary market is selling nearly twelve times as many homes as the primary market.  This same market dependence applies to business-class technology, including mainframes.

New mainframe sales represent a primary market in which the manufacturer produces and sells to the first buyer.  The first buyer is considered the “primary buyer”.  At any point, when the primary buyer decides to sell their mainframe, it becomes a secondary market asset.

At this point, third party dealers and other potential buyers negotiate with the primary buyer to purchase the mainframe.  The original, primary issuer (manufacturer) is no longer involved in the transaction process.

What would happen to the mainframe market if machines could no longer enter a secondary market?

Like housing, mainframe prices would be far less flexible and the only options for the end user would be to buy “new” or move to another platform altogether.  Both of these options are costly and not always the best or most desirable option for many end users.

End users have several things to consider when shopping for a mainframe. For some, the production environment budget constraints are a big concern. Others maybe be looking for an economical development machine, or a machine to have for disaster recovery.  Some end users are converting off of the mainframe and are in search of a short term solution until they can transition their applications to their new environment.

Secondary IT markets exist because the value of an asset changes in a market economy.

These changes are primarily driven by technology improvements, however, not everyone demands the latest, greatest new thing.   In fact, several end users are dealing with legacy applications that cannot take advantage of the most current technology.  Third party dealers are, almost by definition, economically efficient.  Each party benefits from the exchange.  Economic efficiency means that resources are driven to their most valued end.  Secondary markets have historically reduced transaction costs, increased trading and promoted better competition in markets.

In order to maintain a competitive marketplace, the end user community needs to support the 3rd party resellers wherever and whenever they can.

Read more on why secondary market is good.

View our secondary mainframes and parts.

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