How to keep computers out of landfills and recyclers out of prison
Could a circular economy solution among suppliers fix Eric Lundgren's predicament?
The Washington Post reported earlier this month that an e-waste recycling innovator in California faces a 14-month prison sentence for attempting to extend the lifespan of personal computers. Eric Lundgren is caught up in competitive dynamics that often keep the electronics industry from performing more sustainably. But there are solutions.
Product life extension — keeping products and materials in use by refurbishing and recycling them — is broadly promoted as a key to a sustainable and "circular" economy. It’s a very appealing idea, but as Lundgren discovered, significant barriers are in practice.
We’re not legal experts, but we’ve spent many years researching how electronics manufacturers can adopt more sustainable and circular business models. High-end computer manufacturers regularly employ strategies to help control or manage the secondary market for their products.
Not surprisingly, the computer manufacturer that tried to make money with high relicensing fees soon was forced out of the market altogether, in part because customers were unwilling to buy expensive high-end computers that had little resale value.
In our study, the manufacturers provided both the hardware (high-end computers) and the software (operating system). In Lundgren’s case, the scenario is more complex because one company (Dell) is offering the hardware while another (Microsoft) provides the software. These supply chain partners have conflicting incentives regarding the secondary market of refurbished products.
So who should take the lead to craft a circular economy solution here?
The most obvious solution is for Dell to negotiate an agreement with Microsoft to make it easier for refurbishers to do at large scale what Lundgren has piloted. Making it easier to restore operating systems would support the refurbished market and provide economic and brand-enhancing benefits to Dell.
Many organizations are focused on promoting a more sustainable and circular economy. In our opinion, they should focus their efforts on identifying channel conflicts such as this one and work with the supply chain partners that are likely to benefit the most from new and innovative business models. Typically, these are the Dells — the brands clearly associated with the final product.