How Sunset Park’s Ombligo puts old IT equipment back to work

The success of Sunset Park’s Ombligo is enough to demonstrate why Michael Dell is trying to get his company into cloud services or whatever else he can: There just isn’t money to be made in tech hardware like there once was.

Unless the way you’re making money is by helping laid-off tech products get refurbished, rebuilt and resold to other customers looking for a more cost-effective source of goods. That’s been the work of Harris Edelman’s company since 2004.

“As companies could afford to reduce the time between IT refresh cycles we witnessed the birth of a secondary market for ‘used’ and ‘out-of-service’ IT equipment,” Edelman told us, via email. “Ombligo maximizes the value of, and minimizes the risks associated with, the IT equipment lifecycle — from procurement to disposition.”

A decidedly unsexy niche in a gadget-obsessed world.

Edelman’s firm, like most in the sector, is privately held — so it’s hard to know this market’s size. One source, however, estimates the global secondary market for networking equipment alone to be around $2 billion. Ombligo repurposed nearly a million pounds of equipment last year, Edelman said.

Ombligo recently launched a new program where it places secure bins in buildings around the tri-state area, which allows staff to put old equipment in until Ombligo trucks come by to pick it up.

Ombligo either purchases used equipment from companies throughout the U.S. and Western Europe or it accepts hardware on consignment. After that, “The preponderance of the IT and AV equipment received is refurbished and sold with a warranty,” Edelman explained. “Equipment that has low or no value is considered for upcycling or dismantled and responsibly recycled.”

The company practices what it preaches in terms of upcycling. Staff desks are made in part from the repurposed server chassis.

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A part of the challenge in this business is earning the trust of buyers, Edelman said.

He described a testing process on refurbished equipment that has allowed the company to achieve what Edelman called a “very low” return rate (he cited 2 percent on hard disk drives, for example). Ombligo has also attained several certifications on environmental management, quality management and information destruction.

The longer shelf life of IT hardware is not the only trend that created opportunity for Ombligo. Edelman also cited NAFTA, which opened up markets in Mexico and Canada that he said were more interested in refurbished equipment when the company launched. A third major global development, the 2008 financial crisis, increased demand for less expensive equipment in the U.S.

Ombligo has 20 employees in its Sunset Park facility. It also has a satellite office in Oakland, Calif.

The company has been bootstrapped by Edelman, who told us he intends to turn part of the company over to employee ownership as it grows. Ombligo operates out of Industry City.