Wednesday, September 19, 2012

Fleets still see savings investing in used Qualcomm, used PeopleNet, used Xata systems.

It has been a very busy year in the trucking industry with many decisions finally being made about hours of service, EOBRs, and the value they bring to the industry and individual trucking companies. The added applications and functionality of the latest technology can not only greatly affect a trucking company’s bottom line but completely change the way it operates as well. With features like text-to-speech, navigation and route optimization, video playback functionality, access to Wi-Fi and internet, and automated logs, a trucking company can see drastic changes in not only the back office operational side but a direct impact of these features with a monetary value added to them. 

Take a look at what an average company may uncover as benefits by upgrading to a newer mobile communications technology:

·         Fewer out –of–route miles.
o   Text-to-speech functionality can actually save the driver time from pulling over to read an urgent message. By simply pressing a remote device on the dashboard of the truck, a driver can listen to the message without taking the focus off of the road. It is then possible to act upon that message with any urgency needed.
o   Navigation and route optimization can drastically reduce the miles being lost by taking a wrong exit, or even misjudging the correct road to take to a destination. Although this information is standard in most of the technology coming out right now at no extra charge, some companies see this as a value-added application and may charge a monthly fee for use.
·         Better quality of life for drivers
o   Less paperwork and data entry ensures that drivers can concentrate on managing minimal responsibilities easier and automating much of the information needed by dispatch. This greatly reduces errors, phone time, and even turnover.
o   Internet and email availability enables drivers to have information when they need it and not rely on ancillary devices and added costs.
o   Safety videos and executive level information can now be streamed or uploaded to the masses over newer on board communication devices. This can save time organizing group meetings with drivers and administrative personnel.
·         Reliability of newer technology
o   When an older system breaks down, it can be very frustrating. When a driver is relying on information and processes that are taken away, it can be blinding. Trying to fix older equipment that is teetering on the end of shelf life can be counterproductive and time costly. Newer equipment will have a higher success rate of operational ability as well as efficiencies in cosmetics and overall product design.

With constant changing FMCSA rulings, the inevitable mandates on Electronic On-Board Recorders (EOBR) seem to be likely enforced in the next two years.  With the addition of this added functionality and value of innovative mobile communications equipment in the market, there is an influx of used mobile communications equipment with a diminishing shelf life coming out of trucks.  The window for this equipment becoming obsolete is growing shorter proving legacy models to be defunct. This is good news for manufacturers and service providers of these new systems, as upgrading is definitely in the near future. For instance, the happy customers that have used Qualcomm OmniTRACS for the past ten plus years now will be forced to grasp on to the new technology and outlay capital for another system, as compatibility of the preceding wiring harnesses, separate  components, and even some mounts will not match up. PeopleNet customers however, actually have a backwards compatible OBC that can function with newer add-on components such as the BLU2 or Tablet displays. These may require different wiring harnesses and cable assemblies, but the added cost of the main component is not required unless investing in PeopleNet as a new customer.

The upgrading of fleets to newer technologies has flooded the secondary market with used equipment. For example, the supply of used OmniTRACS alone added from just a few of the top trucking companies in North America has created a saturation of tens of thousands of used Qualcomm systems into the market. This absolutely does not mean every system is operational and worthy of use by another company, however, this does diminish the value of used equipment greatly on the open market with so much equipment available. In fact, after quality control testing procedures have been performed involving large batches of used equipment, results have seen over a 65% failure rate (in some cases, even 100%). Unless a policy is in place to ensure success in purchasing used equipment, there is risk involved on the open market.

Fleets are still using equipment that was considered innovative ten to fifteen years ago. The three-piece OmniTRACS MCT equipment is so outdated with such a minimal amount of users, it holds no value in resale on the secondary market with virtually no demand. With so many units out there (most of which are non-functional), a recycling effort has begun to relieve a company of this equipment to ensure proper disposal. For more information on Pivot Technology Resources Equipment Recycling Program, please go to .
A fleet can still find much value in the secondary market before deciding to upgrade. Over the next two to five years, companies that are looking to get into used mobile communications systems have much to consider. Some questions when investing in any used Qualcomm OmniTRACS, Xata MobileMAX equipment, or even any used PeopleNet equipment, are listed below:

1.       Can the equipment fill a need at a cost equal to the specific reasons necessary?  
a.       Why pay full manufacturer’s pricing for new equipment to use for six months until an upgrade is decided upon? (a band-aid fix)
b.      Is there recourse if the used equipment is not functioning properly?
2.       Is there a warranty on the equipment to ensure satisfaction of performance and cosmetics?
a.       Is there a return process defined and accepted if the equipment does not perform or meet expectations?
3.       Does the equipment belong to any fleet that has not authorized the transfer?
a.       In many cases, eBay, Craigslist, and other advertisements will (unknowingly and knowingly) list equipment that has been blacklisted from the service provider as the equipment may have been lost in transit and claimed on insurance, stolen, or even shut off because of unpaid monthly services. Purchasing this type of equipment is leaving a company with junk.

As a breakdown, finding success investing in used equipment is simply reducing the risk involved. By defining warranty terms, the expectations of the equipment, and support policies and procedures, the secondary market can be a very substantial resource for saving money on quality used equipment.

Pivot Technology Resources was founded four years ago with the sole purpose of eliminating the risk of investing in used mobile communications and asset tracking equipment in the trucking industry. For more information on Pivot Technology Resources, please visit or call 800 679 0177 and speak with a representative.

Thursday, January 19, 2012

The truth about used Qualcomm and PeopleNet equipment.

In an article published in the May 23, 2011 issue of Transport Topics, the staff reporter (Dan Leone) was given a task of informing the general trucking community about the secondary market of mobile communications and asset tracking equipment. The headline, "Fleets Upgrading Communications Systems Create Secondary Market for Bargain Hunters", creates a positive scenario for a fleet saving money by investing in used equipment. However, upon reading further, the article is actually contradictory to what is expected (especially from the information gathered in the interview). 

Weeks prior to the article being published, Dan presented me with the idea that I may give insight to information about used Qualcomm, PeopleNet, GeoLogic, SkyBitz, and any other system that may have a demand out on the used market. In his research, Pivot Technology Resources seemed to know a lot about this market. As the owner of a very small company competing with very influential and powerful corporations like Qualcomm and PeopleNet, I was very excited and cautious of my verbiage, phrases, information, and any biased feelings I had for any of the service providers and manufacturers. I felt that there would be a political aspect involved, being that Qualcomm and PeopleNet invest large amounts of money in both advertising and sponsorship of events for Transport Topics, but didn't think that a company that has so much value to a trucking company like Pivot Technology Resources (especially in today's economy) could be discounted as a resource on the front page of Transport Topics.

The point of this blog is to provide information that was left out, or skewed in the publication and to inform potential investors to the risks and benefits of investing in equipment on the secondary market. Let's dispel these myths and bring truth to the forefront so that companies can make better decisions about whether investing in used equipment is a good move for their fleets.

After transfer fees, programming fees, activation fees, and variable costs associated with acquiring a used piece of equipment, the cost is too close to new. There is not much of a cost-savings buying used.

Every manufacturer of mobile communications and asset tracking equipment is different in their transfer processes and procedures. For instance, PeopleNet has imposed a $350 transfer fee imposed on the buyer of any used OBC. The only explanation I could get from Garland Jackson, Vice President of PeopleNet, was "this is the price that we have come up with to account for the costs associated with the transfer of a used PeopleNet OBC." This fee doesn't give you any kind of warranty either. If you would like a new warranty for a used OBC, they will gladly have you send in the unit to their support team to test and reconfigure, and offer you a new one year warranty. This will only cost you $470 per unit. This is by far the most extreme cost for any transfer fee in the history of used equipment by any mobile communications service provider in the market. In my professional opinion, this is surely to persuade a company to buy new equipment, thus adding new units to their sales numbers. 

As a past Qualcomm salesperson myself, I had used this method many times to win sales against the competition of private fleets trying to sell their used Qualcomm equipment. This was back in the days when Qualcomm had a $250 transfer fee on any used OmniTRACS system. Now, from my experience on the used equipment market, they simply impose a $25 fee to the seller and a $25 fee to the buyer. This angle makes much more sense to me as they still see a great percentage of these used systems pop back into another current customer's account with very little trouble and a very high success rate. They also see the benefits in the recurring monthly revenue associated with these systems.  

This brings us back to the question of cost-savings: Is it really beneficial to a company to invest in a used PeopleNet system? Quite frankly, if seeing an average of 50% savings on used components and wiring, and an average of 40% savings on a complete used system (after accounting for all imposed fees) is beneficial, the myth will be dispelled. Note that the equipment coming from Pivot Technology Resources would be considered of high quality, tested and cleaned, and supported with a new warranty...which brings me to our next myth...

All used equipment in the market is junk. There are too many problems associated with buying used. Buying new is the only option.

There are many horror stories of companies buying equipment from eBay or at auctions. They get the equipment and find out that it was once stolen, currently dead, broken, non-transferable, dirty, of low quality, or not even the type of component that was promised. Even buying from a private fleet may get you a good deal, but when you have a failure rate as high as 80 percent, how good is the deal then? You may have actually ended up severely overpaying and then adding labor costs to test, repair, and clean to a usable status on the back end. So the deal you though may have given you an 80 percent savings, has now swayed to just 10 percent. This scenario would deem going directly to the manufacturer and getting a refurbished unit with a warranty a good idea.

In the past, there has not been any centralized consolidated pool of equipment that has been conditioned to meet the expectations of a company that is looking to have the risk taken out of investing in the equipment from the secondary market. There has always been a factor being sacrificed in the equation. Here are the main factors involved:

  1. Availability - Can the equipment needed be found quickly with minimal time and energy searching?
  2. Activation - Can the equipment be transferred and re-activated with knowledge of the processes?
  3. Condition - Can the equipment be in a clean, working state, free of cosmetic defects? 
  4. Reliability - Can the equipment be held accountable for performance and longevity?
  5. Support - Is there someone to answer for any issues or problems regarding the equipment after the initial sale?
The elimination of risk is essential when investing in equipment represented on the secondary market. Some used equipment is junk. I have personally obtained shipments with 100 percent failure rate just based on cosmetics alone. With that said, I have seen equipment that was "still new in the box" that is considered junk because the cost to upgrade was now more than the cost to sell. But without the correct knowledge of the software, firmware, revisions in model types, compatibility of components, and other factors, a potential buyer can be misled into believing everything is perfect simply because it looks new in the original box. 

There is really not much of a secondary market, as the service providers only reactivate a small number of secondhand units each year.

In the May 23, 2011 article of Transport Topics the COO, Brian McLaughlin, stated in terms of reactivations for 2010; "we had less than 100 across the entire [PeopleNet] network. There just isn’t a large aftermarket pool of PeopleNet units out there.Spread out over the year 2010, Pivot Technology Resources actually reactivated 128 PeopleNet units alone, and this number doubled in 2011 to 255. These went out to accounts ranging from a single OBC to fifty complete sets. Take into consideration that this is not accounting for any other transfers from private sales between fleets either. Of course, "a small amount" is subjective to interpretation to what "small" really represents. Also factor in the estimated hundreds of units that were purchased back by PeopleNet during the shortages of OBCs. On separate occasions in 2010 and 2011, customers would have to wait up to five weeks before delivery of new OBCs on account of lacking inventory. 

PeopleNet is doing a great job controlling their units in the secondary market with extreme transfer fees, instilling fear in customers' eyes by owning used PeopleNet equipment without having the assurance of a factory warranty, and the overall lack of support when dealing with a customer supporting and investing in equipment from the secondary market. In fact, this victimizes everyone involved but PeopleNet. Take a look at a scenario: 
  1. In January of 2009, a company invests in new PeopleNet equipment to outfit their fleet.
  2. In October of 2011, the company cannot make it, closes their doors, and must sell the assets. The seller has newer, quality equipment that is less than three years old, has all components, and everything was functional and in good shape when de-installed. 
  3. In December of 2011, the company finds a buyer for the equipment after much time spent placing ads and trying to act like a PeopleNet salesperson.
  4. The buyers contact PeopleNet and find out that there is a $350 transfer fee associated with buying a system from a private seller and decide to back out because the seller would still like to get some of the original investment back for this quality equipment. Immediately, the equipment no longer holds as much value to anyone in need or the seller. 
  5. The seller ends up dropping his price to the ground. The buyers end up paying for the equipment and the transfer fee to save money by going with the used equipment.
Who is the big winner in this scenario? If you guessed PeopleNet you would be right! They essentially get another $350 in revenue for a unit that was sold two years prior without any added sales expenses, and still adds to the monthly revenue stream. Upon mere delivery of the equipment, the value drops to almost the sum of its parts on the secondary market. There are so many situations like above where a company needs to be able to sell their equipment:

  1. What happens when too much equipment is ordered? Do they buy the equipment back?
  2. When a company downsizes their fleet, what happens to the equipment taken out?
No manufacturer will buy their equipment back at full price and the company that purchased the equipment will pay the monthly fees for equipment on the shelf just as they would if the equipment is in use. If these are still under contract, why not provide relief in the form of an option to sell to another user without fees?

From my experiences with other manufacturers such as Qualcomm, GeoLogic, and even SkyBitz, there has been very little push back in regards to moving units around on the secondary market. The transfer process, ease of communications, willingness to provide support, and the minimal fees associated are virtually a non-issue to most customers. I feel there is a responsibility that these companies adhere to for their customers whether it effects new sales or not. They are not only providers of equipment, they are service and support providers as well.

In closing, many of my questions a potential consumer in the mobile communications and asset tracking market should be brought up on the front end as well as the back end in potential re-seller aspects, much like the initial decision on who they should go with as a provider of services: 
  1. How reliable is the equipment? What is your current failure rate?
  2. What is the average working shelf life of your equipment new? In other words, how long should the equipment last from date of purchase?
  3. How does your customer support handle issues with failures? 
Pivot Technology Resources represents the exact equipment the front end of the sale from any manufacturer or service provider will lead you to believe; the investment in our products is a good one. To learn more about Pivot Technology Resources, visit or call 800 679 0177.