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Fireside Chat with the Xperts: Refurbished vs. Used X-ray Systems

When your budget demands a bit of belt tightening, new equipment may be out of reach.  And when researching the potential purchase of a preowned X-ray system you may be confronted with the choice between  a used system or a factory refurbished X-ray machine.  While both are less expensive that a new system, the cost can still vary greatly.  Here to help clear the air on the subject in this week’s Fireside Chat with the Xprets, are Creative Electron’s Dr. Bill Cardoso and David Phillips.

In their conversations, Dr. Cardoso and Mr. Phillips discuss the many risks associated with acquiring a used X-ray machine, both in terms of cost and perhaps most importantly, safety.  David then walks you through Creative Electron’s factory refurbishment process, demonstrating how we mitigate all those risks in delivering the highest quality used X-ray systems available.  Enjoy the video, and then reach out to us directly with any question.  Register for upcoming Fireside Chats with the Xperts and view our archives here.

Transcript:

Dr. Bill Cardoso:                                                                                                                                                                It’s 10:00 on Wednesday. So you know it’s Fireside Chat with the Experts. Today I have the pleasure to chat with a colleague and good friend of mine, our VP of customer care, Dave Phillips. Dave, welcome back.

Dave Phillips:
Thank you. Thanks for having me.

Dr. Bill Cardoso:
Yeah. So very few people know, Dave, that you had a very special onboarding process at Creative Electron, right? I think you’re one of the few guys, if not the only guy who started working, what, five minutes after each interview, is that what it was?

Dave Phillips:
Pretty close. So yeah, I think it was pretty much then you’d given me access and I got my emails. Yeah, it was pretty, it was a fast onboarding process.

Dr. Bill Cardoso:
All right you can do the job, here you go.

Dave Phillips:
2016.

Dr. Bill Cardoso:
You started the job with a full inbox, right?

Dave Phillips:
I did. After Griffin our COO had forwarded me all of the emails that he had received.

Dr. Bill Cardoso:
There you go. There you go. So Dave, today, I want to talk to you about something that you are very familiar with. That’s what you deal with on a daily basis for the past several years, which is the difference between a used X-ray machine and a refurb X-ray machine, refurbished, manufacturing.

Dave Phillips:
Absolutely.

Dr. Bill Cardoso:
Because a lot of times you see a car commercials, right? You buy a certified refurb or certify used a machine. And, lot of people think that’s just marketing BS from companies, right? And so I don’t to explore with you the… What are the pitfalls, right? What are the challenges and the risks that people can have as they just pick up a used X-ray machine on eBay? Which no question about it, it’s going to be cheaper than a refurb system, right?

Dave Phillips:
Right.

Dr. Bill Cardoso:
But what are the trade offs there?

Dave Phillips:
Yeah. So I mean, I hate to… I don’t hate to do it. The car dealer’s model has gotten a bad rap here or well they’ve had a bad reputation for a long time. But basically our business model is very similar in this same thing where you have new machines, we have used refurbished machines and then you have the open market, just like a car dealer.

Dave Phillips:
So the advantage of having what we talk about like that realm, we have a used machine, somebody has it listed on eBay, a business went out of business or and a broker bought it or the person they’re selling it privately they don’t have a use for it.

Dave Phillips:
So the pitfalls are you just like buyer beware, you have no idea unless there’s documentation to back this up that it’s been serviced, it’d be like going down to the used car lot and well actually buying it from a private party to start out with. And you don’t have an idea if it’s been serviced correctly. Maybe it broke down yesterday, right? It’s very… There could be a lot of issues with the system.

Dave Phillips:
And then alternatively, the system could be in great shape. But like you said, you really don’t know in that situation. Then I guess you’d go to the next level where we go to say, a broker got a hold of it. And he bought a lot of an SMT line. That broker usually has no idea he’s bought everything at pennies on the dollar. If the business was going out of business, maybe we’d say that we don’t know how the equipment was maintained on that. And where was it transferred to? What condition is it now? How used is it? And what year it is.

Dave Phillips:
And the broker’s main crux is to get rid of it at a highest profit they can or auction it off on that. Then we go to the scenario where maybe like I said, a business is selling it or you go to the scenario, the best case scenario, just like a certified, you go to a dealer that’s familiar with it. And that is refurbished the system.

Dave Phillips:
So either as Creative Electron, we’ve taken it in on trade for a new system, it’s available and we’ve gone through the system and make sure it works to specifications. Just like you’d check the engine component. So we check the X-ray source, does the X-ray source need to be replaced? Do we need to check the detector, which is basically the transmission. Make sure that detector is working properly, the imaging system, the camera.

Dave Phillips:
And then we also on all of our refurbished systems, we’re using the TruView image processor. So we’re upgrading to a Windows 10 image processor. Then the big thing is you have the original equipment manufacturer giving you a warranty and giving you a guarantee that, that works. That that system works and it’s certified and that we’re installing it.

Dave Phillips:
So it’s just like going to your Toyota dealer. I always like to use it with the FocalSpot or Verifiers or the TruView, It’s your Camry that might’ve had somebody turned it in or a lease return and they’ve gone through and actually checked everything to make sure it is in proper dish. And now they can give a warranty because they can certify it.

Dave Phillips:
So I think it’s a really valid point. I wouldn’t go out and necessarily, unless I knew the person, to purchase something without documentation that, that’s been serviced, that it’s been properly maintained.

Dr. Bill Cardoso:
And what’s also interesting is that often times this machines that we take as trades, right? Our current customers that we’ve been servicing them for a while. So we already have a long history with this machines, right?

Dave Phillips:
Yeah.

Dr. Bill Cardoso:
We know how long, what kind of usage the X-ray source has, what kind of usage detector has. We know what problems they had a new detector replaced recently, right, the damage. So we can assess. Because it’s our reputation on the line, right? We don’t want to go ahead and sell a refurb machine that’s going to break in a month. Doesn’t help us at all. Most of our business is referral based, right? So we want to make our customer happy so they can refer to their friends and families, right?

Dave Phillips:
Right.

Dr. Bill Cardoso:
And we can keep selling machines. So it reminds me of that, I’m sure you remember. We had a customer who bought… They had our systems. And they decided to buy an X-ray machine online, not ours, from another manufacturer. So they bought on one of these online websites. And when our team went there to do the preventive maintenance, right, inspection, a big chunk of the PM is safety, right? Make sure the locks are properly installed, properly operating and makes sure there’s no leakage coming out of the machine.

Dr. Bill Cardoso:
And we found out that the window, the glass window from that machine was leaking like a sieve, right? And we came to find that at some point in the history of that X-ray system, the lead the glass broke, right? And was replaced by nothing but a piece of acrylic from Home Depot, causing a tremendous amount of leakage through the front window.

Dr. Bill Cardoso:
Now who knows how long that machine had been leaking like that? We don’t know, because we don’t know the history, right? All we know is that this company bought the machine online, plug it into the wall and used it, right? Fortunately they didn’t use it for long before we were able to find the leakage the machine was creating. But that’s a risk, right? It’s one of those things where it goes like buying a car with no brakes, right? You got to make sure that all of those things, that interlocks work.

Dr. Bill Cardoso:
What does he mean the interlocks don’t work. It means that you can open the door and the X-ray source is going to be on, right? And so we do this for a living, right? And either brokers or online sellers, they don’t do anything wrong, right? Most of the time they are representing the product they’re selling to the extend of their ability. Meaning that less time I touched it, it worked, right? Think as is and run with that. So I think it’s important to take that extra step and find out if the system is actually operating. Or if you’re buying a very expensive boat anchor, right?

Dave Phillips:
Well, and think of this Bill, I think the other thing we can think of it this way with a refurbished system, it’s like… And I think most, everybody that’s on the thing they’re familiar with the a used Carfax reports. So it comes to us, we have the Carfax report and when it was serviced, and then we have a report once it’s refurbished and what we did to it on that. So, I mean, that makes a huge difference in that.

Dr. Bill Cardoso:
But why are refurb systems more expensive? What do you tell people who say, “Hey, I can find this for five grand less at eBay, why should I buy from you?”

Dave Phillips:
Yeah, $4,500. Right. Because again what… The point of this refurbished system is, usually what we see in these refurbished systems a lot of times is that either the X-ray source, which is the engine or the detector is close to its end of life. So we may need to replace those most likely. And especially the X-ray source, which is as I equate that is a light bulb, right? And it burns out and it’s had so many hours. So it’s your Camry with 400,000 miles on it. The body and everything, the integrity of the frame and the system may be fine, this is a led cabinet.

Dave Phillips:
But the X-ray source may not have a lot of hours left on it or as we use our tools as our line pair gauge for resolution, and we’re checking those systems, we find that the resolution isn’t up to par. And especially in that, and by replacing the X-ray source that’s 90% of fixing the issue on that. So, and that’s one of the major expenses in that X-ray system.

Dr. Bill Cardoso:
Now you talked about upgrading the computer, right? Of the system.

Dave Phillips:
Yeah.

Dr. Bill Cardoso:
Do you find that… Let’s say you buy a machine from another manufacturer. Do you find the cost, well, the cost to transfer a software license, for example, or to even buy a license if the computer dies, right? Let’s say you buy a machine with a Windows 2000 computer, right? The computer dies, what do you do with the machine?

Dave Phillips:
Well, so the nice thing is what we have the ability, not only if somebody bought another system, we have the ability to sell the image processor as a stand-alone for X-ray systems. So you can get a Windows 10 with our TruView image processor, and use that. And that has a license for that software, just like you have a license for Windows. So you can create, have a networkable PC and an image processor with the latest and greatest operating system that is able to network and keep your IT happy.

Dr. Bill Cardoso:
And we also know of companies out there that actually charge quite a bit of… X-ray companies that charge quite a bit of money to transfer ownership of the system.

Dave Phillips:
Absolutely, up to $15,000 before they even look at the machine and decide-

Dr. Bill Cardoso:
And that’s not a cost that you necessarily know about when you’re buying that machine, right? That’s all the tricky part, right?

Dave Phillips:
And as the buyer beware, and keep in mind that license transfer fee, once they do that, and then now you might have where you have a system that you’ve may have to spend 15 or $20,000 for a power supply, a new X-ray source up to $50,000, depending on what type of system.

Dave Phillips:
So that bargain system becomes a very expensive system in a heavy boat anchor. And you have to decide how much you’re willing to… Are you going to cut your losses? And hopefully the initial investment wasn’t that big. And that’s why again, like I said, a refurbished or certified system knows that you have some peace of mind in that sense.

Dr. Bill Cardoso:
Yeah, so-

Dave Phillips:
A lot of peace of mind to mind.

Dr. Bill Cardoso:
A lot of peace of mind, Well, you have somebody to call if something goes wrong, right?

Dave Phillips:
Yeah, absolutely. You could say they’re familiar. A broker’s going to say, “Hey.” Or especially in auction house where you pick it up, it’s like, you’re going to have to create your own a company. Say you’re in California, you have to pick it up in Ohio. Well, now you’re going to have to get a shipper with an LTL carrier.

Dave Phillips:
Now, maybe the system didn’t work. If you don’t create it correctly, it may not work so well when you get it on that. And I have seen Bill numerous and you can just, do searches where these brokers contact me and ask me for information. And they say the system works. And the only thing they’re going on is they showed me that the PC turned on and that they had a power light on the actual X-ray system. But they never say anything about, I said, “Well, do you see any light, can you show me a live X-ray image?” And they haven’t plugged that things in. All they’ve done is plugged two separate things in and told me that.

Dave Phillips:
And it’s like nine times out of 10, if it’s a very old system, there’s something wrong with it. And that’s just the way it is. And that’s why they’re 3,000, 4,500, $5,000 on that. And now you have to have-

Dr. Bill Cardoso:
Do we have, I mean, this other question we get from time to time, if you buy a used system, do you still have to register it?

Dave Phillips:
Do you still? Yes, absolutely. It’s going to be… You have to register it based on the state you’re in. And then any additional requirements for safety. And you have to have somebody come in and actually check it to make sure it’s safe. You can’t just wave your hand in front of it on that. So you need somebody to do a radiation survey. You need somebody to do a safety check, and then you need somebody in California, you need to have your operators trained on that. And then register system and then show proof of it.

Dave Phillips:
We’ve been where used systems, where the state comes in and then shuts it down because they didn’t have correct operator training. The interlocks weren’t checked annually. There wasn’t a radiation safety check. They did not have a radiation safety officer or program. So there’s a huge amount of things that need to be done. Yeah, things that need to be done to run it properly. Just as I go back to the car, you need to have a driver’s license to operate the car, you need to have a license for the car. It needs to be registered and everything.

Dr. Bill Cardoso:
Smog check, right?

Dave Phillips:
Yeah, Smog check absolutely, right? So it’s very similar on that and as we know, there were you get cars that are not running so great when you buy them. And the same with X-ray, they might be.

Dr. Bill Cardoso:
So what’s different from the installation process, right? When your team goes to install a new system, or it goes to install a refurb, are there any differences process?

Dave Phillips:
So from a refurb to a new installation, if we’d done the refurb, there’s really no difference because, it’s still basically a new system.

Dr. Bill Cardoso:
So you treat it as a new system, and of all everything, and all the costs.

Dave Phillips:
Right. So we do a factory acceptance test procedure on a new system and the same with a refurbished system. So we have that, radiation survey, safety interlock survey, system is operating to this specification when somebody purchased it. So the same, whether you bought a new or used system. Then it’s delivered, it’s obviously created correctly and transported with insurance, it makes a difference. Because we know that things happen like that.

Dave Phillips:
Then when it’s ungraded and we install it, we do the exact same test procedures over and then apply that. And then after all of that installation is complete and the system is deemed safe from being transited and ready. Then we do, the whole huge thing is we do the operator training and safety on that. So it doesn’t change in that respect, whether it’s a new or used system. So you’re getting the same service on that.

Dr. Bill Cardoso:
So can, can a refurb system be financed just like a new system?

Dave Phillips:
Absolutely. Yes.

Dr. Bill Cardoso:
Oh yeah?

Dave Phillips:
Yeah. Through leasing. We have a lot of leasing partners. And then what you can do is you have a set monthly payment and then you’re able to write that off as an operating cost. And then depending on how you structure the lease. Most of the lease I’ve seen, it’s the dollar buyout.

Dr. Bill Cardoso:
Dollar buyout yeah.

Dave Phillips:
Yeah, at the end. So you own the machine after two years, whatever, whatever range you have.

Dr. Bill Cardoso:
And then with the interest rates we have and all days, I mean, historical low interest rates, financing is a reasonable option I think.

Dave Phillips:
Oh yeah. And then there’s…

Dr. Bill Cardoso:
You get to depreciate the whole amounts right, in one year.

Dave Phillips:
Right. Yeah. It’s a full… Because every month you make that lease payments, it’s an operating cost, as opposed to differentiating the asset over time when you finance.

Dr. Bill Cardoso:
You can take the write-off in one year, right? So it’s very interesting option.

Dave Phillips:
Yeah.

Dr. Bill Cardoso:
So with the distinction between a used vs. a refurbished X-ray system, is there any circumstances where you would buy a used machine, used X-ray machine specifically?

Dave Phillips:
Is there any… Yeah, I guess if this was a customer that we had a customer directly with us and had dealt with us and then was either doing an upgrade that I knew all of the background in lineage of the service on that. And where, I guess, where we were creating another customer for us, I mean basically where I’d say this customer is selling it to this customer and we were facilitating that.

Dr. Bill Cardoso:
Of course.

Dave Phillips:
And I would say, “Yeah.” And state, I can tell you from what we know, that this machine has been serviced this way, this way and this way, and that. Then that we would continue servicing it.

Dr. Bill Cardoso:
Yeah. Now share with us, because I know you’d have to have this tough conversation, right? When somebody buys one of those used systems and they call you and say, “Hey Dave, come by and check it out and see what a great system I got.” And you have to tell them that you have to add an extra 50, 60 grands to get this thing working.

Dave Phillips:
Yeah. That’s just unfortunate. It’s like, well, you just try to be as diplomatic as you can say, “Unfortunately the system you bought is not what was either. If they told you it was working, it’s not representative of what they did.” Or if they bought it and they had no idea, then the conversation is, “Unfortunately this is going to, it’s going to need a new X-ray source or new engine, right? And it’s going to cost this much. And maybe we talk about cutting your losses and then maybe talk about maybe a new system or talk about a refurbished system. And then discuss that system that they have.”

Dr. Bill Cardoso:
Yes. Because we can… I mean, the reason why we take trade-ins, right? Your team supports hundreds, hundreds, and hundreds of systems worldwide. Oftentimes we can take parts, right? Or those systems…

Dave Phillips:
Oh Yeah. There’s like you said, maybe that system has some with us, has some nominal value on that. Because we want you to have, able to do whatever X-ray imaging you’re trying to do. So maybe that system that has a bad X-ray source, we can discuss that it has some nominal value to us, right? And for those parts or something like that. So it’s not completely worthless, but…

Dr. Bill Cardoso:
Yeah. Even if the engine is ceased, maybe we can use the windshield, right? On the new machine.

Dave Phillips:
Yeah. Sometimes it’s hard when they come off the second rack of a storage facility that we can… if they look like it’s been a total accident, yeah. And sometimes it’s hard to give a nominal value.

Dr. Bill Cardoso:
Yeah. I mean, X-ray machines do not deal well with a free fall, right? They do not.

Dave Phillips:
No, no, no. They’re glass in them, but sometimes I’m amazed, the glass is not broken.

Dr. Bill Cardoso:
Exactly.

Dave Phillips:
The machine is just trash. We’ve seen that too.

Dave Phillips:
It’s like, yeah, you get the cabinet has been thoroughly damaged. It’s like, “Why didn’t the glass break?”

Dr. Bill Cardoso:
Yeah. Now what refurb systems do you usually sell nowadays? What do you usually offer?

Dave Phillips:
So the biggest one, I think the biggest one is our FocalSpot, the Verifier series, which over 250 or so of those, and I have a picture on the website of, one on ours.

Dr. Bill Cardoso:
You want to show it? Can you show it?

Dave Phillips:
Yeah, let’s see if I can share it. There we go. Can you see that one?

Dr. Bill Cardoso:
Yeah. I can see it.

Dave Phillips:
Yeah. That’s one of our… This is the FocalSpot X-ray system. And this is where I came from before I worked for Bill was the Verifier X-ray system. And so there’s, like I said, 250 plus of these versions out there. And it’s a system that fits through a single door. The majority of them were at the time 90kV systems, but they also came in and 80kV system that the power stores. And they all had two, four inch image intensifiers and the majority, like I said, Windows XP and Windows seven.

Dave Phillips:
So all of these, we were able to put the Windows 10 on it, on that and upgrade the image processing and controls through when we upgrade the source, we can control it through a gooey interface. So like you said, it’s a good way to go. And that’s the majority. They’re very easy to use. They’re very mobile and they get great imaging and magnifications.

Dave Phillips:
And it just brings out more life out on them. They started 2006 all the way to 2013. So there’s another one, an older version a flat top. And then we also do the Faxitron CS-100. It’s a are very popular. And some of our other FocalSpot. And then we always have our TruView systems too. Some of the older-

Dr. Bill Cardoso:
Generations?

Dave Phillips:
Yeah. The real iterations of that. So we have quite a variety of those and a lot of it that are not shown here, but a lot of the Nicolet systems they’re getting to their 1991, they started and they’re getting to their end of life on those, and…

Dr. Bill Cardoso:
There’s quite a few things we can do with the Nicolets, right?

Dave Phillips:
Yeah.

Dr. Bill Cardoso:
I mean there’s a limit to how much you can upgrade those systems.

Dave Phillips:
Right. Absolutely, yeah.

Dr. Bill Cardoso:
We can use them and get the systems working, right?

Dave Phillips:
And how much do you want to upgrade or… There’s a limit to and how much do you want to put in a 1998 Camry, right? And…

Dr. Bill Cardoso:
Yeah. Because before you know, you’re buying a new Camry, right?

Dave Phillips:
Yeah, exactly. Where do you draw the line, right?

Dr. Bill Cardoso:
And that’s one of the conversations usually have, right?With your costumers is, is it worth? It’s one of those things where you are 80, 70, 80%, off the cost of a brand new machine.

Dave Phillips:
Right. That’s…

Dr. Bill Cardoso:
Well yeah,, you know.

Dave Phillips:
Well so where do you draw the line, right? And then, go back to the auto analogy. Is it a blown head gasket or which you’re right on the line, right? It’s like you have to open the engine up now or is it replacing a fuel injector? That’s a little different, right?

Dr. Bill Cardoso:
Yeah.

Dave Phillips:
But as I had a 2003 Camry and got to fix it, a blown head gasket, I opened Pandora’s box, right?

Dr. Bill Cardoso:
Yeah. That’s the other problem.

Dave Phillips:
That’s what I tell people. It’s like when you start cracking things open on that, it’s different. But the nice thing on these with the Verifier, great thing is, it’s an X-ray tube, it’s a light bulb, it’s seal. And they’re very reliable. So, and that gets you a one year warranty on that part of the refurbished X-ray systems.

Dr. Bill Cardoso:
Dave, thanks so much for your time. We appreciate you taking the half hour to chat with us. That’s a question we get a lot. What’s the difference between a refurb and a used? Should I buy a used machine out of eBay or online? Or should I spend a little bit more buy a refurb machine or jump up to a new system?

Dave Phillips:
Right.

Dr. Bill Cardoso:
Again thanks so much for those of you watching, thanks for joining us today. And we will be back in a couple of weeks another Fireside Chat with the Experts. All right. Have a good week guys. Bye bye.

Speaker 3:
Creative Electron.

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