Buying factory refurbished equipment is a great way to get a bargain on an otherwise expensive item. Many companies buy their equipment exclusively as refurbished. When many people think of the term "refurbished" they think of old, used, torn apart, rebuilt equipment. However, that is not generally the case at all when it comes to electronics!
Basically, an electronics item can be classified as refurbished if it meets ANY of the following criteria:
Customer Return - Most major retailers have a 30-day return policy for their products and many consumers, for whatever reason, return products within that time period. These are fully functioning items, that are the same as new, but because the box has been opened they must be sold as refurbished. Most of the time, if there is nothing wrong with the product, stores will just reduce the price and resell it as an open box special. However, if there is some sort of defect present in the product, many stores have agreements to return the product to the manufacturer were it is inspected and/or repaired, and then repackaged for sale as a refurbished item.
Shipping Damage - Many times, packages can get damaged in shipping, whether due to mishandling, the elements, or other factors. In most cases the product in the package may be perfectly fine, but the retailer has the option to return the damaged boxes (who wants to put a damaged on box on the shelf?) to the manufacturer for full credit. The manufacturer, then, is obligated to inspect the products and repackage them in new boxes for sale. However, they cannot be sold as new products, so they are relabeled as refurbished units.