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Can I buy used Cisco hardware?
Used Cisco hardware is available through a variety of channels.
High demand for these products is thanks in part to a tremendous
product expansion and overall Cisco reputation. This growth has
resulted in a nearly $12 billion secondary market for
Cisco. The secondary market provides thousands of
sellers of used equipment and connection for customers of all types.
Who, what, where, when and why of pre-owned Cisco equipment
Who provides used Cisco equipment?
Independent Cisco re-sellers (Secondary Market)
Independent Cisco re-sellers typically offer a broad selection of
Cisco products. They obtain used and new-surplus/surplus equipment
from other sources. The breadth and depth of their inventories
typically exceed current product availability through Cisco; and
prices are usually very competitive and often well below new prices
(potentially up to 90% off list pricing). A quality re-seller
maintains an extensive testing and refurbishment process that is
backed by a warranty. Warranties may range from a product lifetime
to only a span of 90 days. Alternatively, there are third party
maintenance options that can provide both software and hardware
support at discounts ranging from 30-50% less than SMARTnet.
User-to-user Cisco re-sellers
Companies (buyers) source used Cisco equipment directly from other
users. These re-sellers are typically end users who sell products
through auction sites like eBay. Due to exponential growth and
demand, there is a large volume of Cisco equipment for sale on these
auction sites which provokes the old adage: buyer-beware. While
price points can be enticing, there are risks due to unpredictable
pricing, threat of sub-standard devices, no testing procedures, and
lack of warranties and/or poor packaging. It is recommended that
buyers research the product(s) and seller before making a
transaction. It is wise not to rely solely on a seller's rating, but
it may provide legitimate feedback from the experiences of other
buyers.
Cisco Authorized Value Added Resellers (VARs)
VARs are authorized Cisco partners, and generally sell new hardware
through Cisco’s distribution channels. They also have access to
Cisco’s Certified Refurbished product line. This refurbished
equipment is certified, and is “re-licensed” by Cisco. SMARTnet
maintenance is also available through the same authorized channels.
There are two disadvantages that the VARs face when selling the
Certified Refurbished product: (1) availability is confined to
distribution stock, and (2) the expected savings of a refurbished
purchase may be nominal compared to what the potential buyer may
find on the secondary market.
What is pre-owned hardware?
Pre-owned Cisco, or Pre-owned IT hardware for that matter, is
hardware originally purchased by an end-user and resold to another
party. There are a few industry standards to classify the condition
of the hardware that is being sold. These standards can include:
Used
This is hardware that has been pulled from a working environment.
The best description is the hardware you are currently using.
Refurbished
This is hardware that has been taken from a used stasis and tested,
cleaned, completed and repainted. The end product you will find from
a quality reseller.
New Pull
Hardware that has never been used but is not in the original
package.
Factory Sealed or New in Box
New hardware that has never been opened. It’s in the same condition
as if it shipped direct from Cisco.
New Open Box
This describes hardware that is in its original packaging, but the
box has been opened. The serial number of the machine will match the
label on the box, it has all the accessories and it’s never been
used. Often times a re-seller will power on test the machine to
insure that it is in proper working condition.
Certified Refurbished
This is the “re-man” brand from Cisco that we covered above.
Gray Market
Ah, the ambiguous “gray market”. We’ll discuss this OEM FUD favorite
a little bit later.
Where does it come from and is it safe to buy?
Pre-owned equipment typically comes from several sources:
Lease Returns: Leasing of network equipment is big business.
Because of this a large quantity of Cisco equipment hits the
secondary market once its lease term matures. Most lease terms range
from one to three years, the equipment is usually still current and
in high demand with corporate IT departments. Reputable re-sellers
partner with leasing companies and purchase it directly from them
when it comes off lease.
Internal IT Refreshes:
When manufacturers declare equipment end-of-life, end-of-service, or
retired, many customers upgrade or replace hardware – even if the
existing devices have many years of useful service remaining.
Secondary market providers acquire the equipment and refurbish it to
like-new condition, passing the value on to customers looking for
used equipment that performs like new but costs significantly less.
OEM Trade-In Programs:
The OEM often uses a trade in program to offer higher discounts on
new hardware to customers. The hardware
that is traded in is redistributed to the secondary market buy the
OEM.
Manufacturing Overruns/Stock Rotations:
Products that have never been used and are still in their original
packaging. Independent resellers purchase excess inventories of
equipment in bulk from distributors, corporate users and government
organizations.
Bankruptcies/ Corporate Liquidations:
Large quantities of Cisco products enter the secondary market at
tremendous discounts as the result of mergers, acquisitions,
bankruptcies and corporate liquidations.
Canceled Orders:
Equipment that was previously sold to a customer that could not be
returned.
Customers Like You: Used
equipment reaches the secondary market from customers like you when
they upgrade to new equipment or de-install network gear that no
longer meets their needs.
How long does it take for new Cisco technology to reach the
secondary market?
A large percentage of hardware that reaches the secondary market is
generated by end of lease terms. The typical lease cycle is 2-3
years, but it is not uncommon to see a new Cisco product available
on the secondary market within a few months after initial launch.
This potentially could provide a budget break to IT Departments who
properly leverage the secondary market. The secondary market is
stocked with current and recent generation hardware, but especially
so during a slow economic climate due to mergers, acquisitions,
bankruptcies, and liquidations.
Why buy pre-owned?
In today’s economy and given the inherent longevity and reliability
of Cisco equipment, the question is not why buy pre-owned, but why
not? When you purchase used Cisco equipment from a trusted and
reliable used hardware reseller, you gain these key
benefits:
Cost savings:
Depending on the generation of the hardware, savings can range from
50-90% off the Cisco list price.
Availability (parts and equipment):
Maintaining your network no matter how new or antiquated is crucial
to the entire enterprise. The availability of the secondary market
is a major ally when a hardware or network component goes down; the
impact on the entire enterprise is immediate and can adversely
affect business and productivity. Some businesses still operate 5500
series chassis which were introduced in the Clinton administration!
Resellers have a vast array of hardware and components available to
them.
Speed of delivery:
Rapid access to replacements from a reliable used-equipment vendor
that can ship overnight or provide service within a couple of hour’s
gets you back up and running in no time.
In House Spares:
Often times having a spare on a storage shelf is a better cost
alternative to a Cisco SMARTnet contract or even a 3rd party
maintenance contract.
Quality:
A re-seller that provides rigorous testing detailed refurbishing and
extended warranties can argue that they are providing a more quality
product than that of a new unopened machine. These refurbished
products have already been in the trenches and proven their
dependability in a live network setting.
More Options:
Most used equipment re-sellers offer both current and
previous-generation hardware as options for the same project.
Better Fit:
Newer does not always mean better. Sometimes, proven equipment is a
better choice for your business and your application. What’s more
when new releases come to market, you may not need the new features.
Why pay for them if you don’t need them?
Compatibility:
Replacing an existing network component with the same model means
there are no questions about compatibility – you already know it
will work with the systems you have in place.
Minimal depreciation exposure:
Just as it makes sense to purchase a quality used car (and let
someone else take the depreciation hit), purchasing quality used
network gear can minimize your exposure to depreciation.
Better warranty:
While it may seem counter-intuitive, you can often get a better
warranty through a reputable independent re-seller than you can
through the OEM.
Improved customer experience:
Likewise, you’ll often get better, faster and more personal customer
service from a leading independent re-seller than from the OEM.
Is it safe to buy pre-owned equipment?
The secondary hardware market brings together thousands of different
types of re-sellers and buying organizations. Buyers include small,
midsize and large businesses, Internet Service Providers,
telecommunications and utility companies, non-profits, local, State
and US government organizations, military institutions, higher
education, schools, and any organization whose network
administrators are looking to reduce network costs. Used equipment
provides a viable alternative to new - if you buy from an
established vendor with a comprehensive refurbishment process and an
excellent warranty. In many cases, re-sellers offer better
after-sale support and more robust warranties than manufacturers or
authorized re-sellers.
Used Equipment: Separating Myth from Reality
Misperceptions about used network gear and the secondary market
abound. Here are some of the myths about the secondary hardware
market – and the reality. The myth: before buying, many customers
were told by the OEM that used/pre-owned equipment is:
Broken
Obsolete
Unreliable
Abused equipment
Sold by the previous owner because it didn’t work
Stolen
Counterfeit
Gray market equipment
Not intended for the US market
Not eligible for SMARTnet® support
Not maintainable
Not covered by technical support/TAC support
Without a warranty
The reality: reputable re-sellers only sell used equipment that’s in
good condition, refurbished to like-new condition, backed by a
warranty and rigorously screened for authenticity. In many cases,
the leading independent re-sellers’ testing procedures for detecting
counterfeit goods are more rigorous than OEMs, VARs or distributors.
Most secondary marketers put products through extensive testing to
ensure performance and authenticity. They also work with
anti-counterfeiting organizations to keep counterfeit equipment out
of the secondary market. They work diligently with Federal
organizations like the FBI and ICE, a division of Homeland Security,
to report stolen equipment. You can learn more about Ioncom
Australia’s testing and anti-counterfeiting alliances here. As for
warranties, most secondary market suppliers offer warranties that
are either longer or more robust than those offered by manufacturers
or authorized distributors/re-sellers. Some offer lifetime
warranties which can include the repair or replacement of hardware
within days instead of the typical weeks or months that OEMs offer.
Learn more about Ioncom Australia’s Forever Warranty here. Finally,
most reputable re-sellers offer extensive support performed by
highly trained technicians who work with used equipment every day.
Pre- and post-sale support encompasses maintenance, repair and even
software support. Again, the caveat – if you’re going to buy used
equipment, make sure you work with a re-seller who is financially
stable and has a comprehensive refurbishment processes and an
excellent warranty.
What is the difference between used Cisco equipment and gray market
equipment? What is the gray market?
Gray market products are legitimate products that are sold outside
the designated OEM sales channel . It is not counterfeit equipment.
OEM’s try to marry the terms Gray Market and secondary market to
cause confusion and doubt. That could not be further from the truth.
Used equipment is simply hardware that has been repurposed.
Why is there a gray market?
Primarily, gray market equipment exists due to a lack of control by
the OEM over their distribution channels. There are a variety of
ways that this equipment can reach the secondary market:
Distribution overstocks
– Manufacturers have too many products to sell within a short amount
of time and can’t sell their entire inventory.
Geographical price differences
– Hardware intended for one region may be sold in another region
where the manufacturer may charge a higher price.
I’m concerned about counterfeit products – How do I make sure the
hardware I buy is authentic?
Counterfeiting is becoming a growing challenge as more OEMs move
their manufacturing overseas. All manufacturers are dealing with the
challenge of counterfeiting, including luxury goods, clothing, small
electronics, etc. While most re-sellers are legitimate, reputable
and have strict anti-counterfeiting policies, others are not. AGMA
estimates that counterfeit products account for some 10 percent of
the overall IT hardware market. Fortunately, heightened awareness
and better access to information are having an impact as
organizations join together to ensure the integrity of the secondary
market. Keep these tips in mind when shopping for used gear:
Only buy from reputable re-sellers who are members in good standing
with anti-counterfeiting and trade associations.
If it’s too good to be true it probably is. New equipment at
exceptional discounts should raise a red flag. A discount of 50-90%
is standard for pre-owned equipment but not for new equipment.
Buyers should be extremely cautious about buying networking
equipment on eBay as it is very difficult to determine its origin.
Why does my Cisco representative discourage me from buying used
equipment?
There is the short term fear of losing commission and revenue but
more importantly the long term fear of losing repeat business to a
secondary supplier. The fear of losing future business to a
pre-owned hardware supplier is a legitimate one. Especially when
your sales strategy has been centered on the concept of regular
refreshes. Is it not funny that the features he/she was selling you
on eighteen months prior are now no longer relevant? They discourage
you because ultimately, they fear you will see the value in
implementing a secondary market buying strategy to replace or
supplement new hardware purchases.
How do I know if a piece of used Cisco hardware is counterfeit?
While visual inspection is not always an option – and it’s important
to work with a credible source – look for these indicators that a
product may be counterfeit:
Screws:
Shiny with imprecise lines and a sandcast appearance.
Welding:
Inconsistent, messy.
Serial Number Sticker:
Sloppy letter spacing, serif typeface (instead of sans-serif), bar
codes are not flush with the sticker edge.
RJ45 Connectors:
Flush instead of finely extruded connectors with two (rather than
multiple) metal attachments.
Board Points:
The points on the main board are copper rather than silver.
Packaging:
Inconsistent type, no seal identifying weight, low-resolution
printing.
Holograms:
Missing holograms may be an indicator on newer cards. Especially if
the card includes copper solder points, no embedded numbers or a red
LED holder. Refurbishment Process
How much can I expect to save by purchasing used equipment?
Typical savings are:
50-90% off OEM list price for refurbished equipment
40-60% off OEM list price for new/factory-sealed/unused/new surplus
equipment
Pricing in the secondary market is ruled by the principles of supply
and demand. There are situations where pricing for a particular
product could see a short term spike. In 2009, after Cisco had
drastically scaled back production schedules, the ASA5500 firewall
routers saw a large increase in price due to the high demand and
limited supply. The shortage lasted around 3-4 months.
What types of organizations purchase used Cisco equipment?
Used IT hardware has been a booming business since the late
1960s. Today, the secondary Cisco market is estimated at $12
billion 5 worldwide, serving organizations across the
spectrum:
Fortune 500 companies
Small and mid-size businesses (SMBs)
Government
organizations
Telecom and utilities
Universities
K-12 school systems
Non-profits
Isn’t new equipment better than used?
Depending on the type of equipment you need for your network, the
newest hardware may not suit your current infrastructure. In some
cases, pre-owned equipment may actually be better suited to your
needs by standardizing your current networking environment and
reducing your costs. Benefits of purchasing used equipment from a
reputable re-seller include:
Quality control programs, maintenance programs and warranties
mitigate risk.
Warranties are often longer and more comprehensive.
Proven compatibility with existing parts/components.
Used hardware has a superior functionality-to-price ratio.
Used hardware is proven and tested.
Reputable re-sellers offer established technical skills.
When is the best time to buy?
There’s never been a better time to buy used/refurbished equipment. According
to a 2006 study, the used hardware market for all IT products was
over $300 Billion 5 Worldwide. Inventory is at an
all-time high because of the current economic environment. If you’re
looking to reduce core networking costs and divert capital to other
aspects of your IT infrastructure or business, used networking
equipment is an effective strategy.
What qualities should I look for in a reseller?
Reputable resellers share certain characteristics and credentials.
Look for:
A good reputation and proven track record. Companies that have been
in business for a significant period of time
A defined quality process for both the testing and refurbishing of
hardware
A detailed warranty that guarantees their products
A defined anti-counterfeit position and process for identifying it
Required accreditations and certifications
Membership in good standing with trade associations
References and customer list
What do the experts think of the secondary market?
Many OEMs actively create obstacles for buyers of used equipment due
to the rapid rise in demand and the emergence of thousands of
resellers. Here are some expert assessments of the secondary
market:
“Providers of secondary network equipment answer a market need for
quality products at reduced costs. Network managers increasingly
understand the viability of having an alternate procurement channel.
The secondary equipment market is also providing a strong challenge
to OEM maintenance and support in terms of quality and cost.”
- Eric Goodness, research vice president, Gartner Inc. 1
“Put the secondary-market gear in operation when you have a
problem," says David Willis, chief of research at Gartner…"Same-day
service costs about 20 percent more than next-day, so this strategy
could cut your maintenance costs...”
- Gartner, April 2, 2007 2
“Who's buying used gear? Better to ask who isn't. The customers of
secondhand equipment range from small businesses operating on tight
margins to Fortune 500 companies and global telcos.”
- InformationWeek, July 7, 2007 3
“It's a big deal for Cisco since probably 20 percent of their
overall revenue comes from SMARTnet, and support and maintenance.”
Resales are “totally legitimate, totally legal. Cisco hates it but
there's nothing they can do about it.”
- Mark Tauscheck, senior research analyst, Info-Tech
itbusiness.ca, May 29, 2007 4
What is the difference between certified pre-owned, Cisco authorized
refurbished, clean serial number, new in box, new open box,
refurbished and used equipment?
Certified Pre-Owned:
Sold directly by Cisco or a Cisco-authorized VAR.
Cisco Authorized Refurbished:
Equipment restored to Cisco CARP standards.
Clean Serial Number:
The serial numbers does not appear under a Cisco SMARTnet contract.
New in Box (NIB):
Product is in same condition as if it came directly from Cisco.
New Open Box (NOB):
The box has been opened and the product is nearly the same as a new
in box product. Sellers should indicate if the inner static bag has
been opened to test. All accessories and packaging are in the
package (like if purchased new).
Refurbished:
Equipment has been restored to good cosmetic and working condition.
Used:
Equipment has been removed from a working environment and resold
(e.g. directly to a user site). The product is operational;
however, it comes with no guarantees in terms of cosmetic condition.
What is the difference between a maintenance contract and a
warranty?
The difference between a maintenance contract and a warranty are: A
warranty describes the conditions under, and period during, which
the producer or vendor will repair, replace, or otherwise compensate
for, the defective item without cost to the buyer or user. Often it
also delineates the rights and obligations of both parties in case
of a claim or dispute. A maintenance contract on the other hand goes
the extra mile. The primary difference between a maintenance
contract and a warranty is the Service Level Agreement (SLA). A
maintenance contract is a predefined commitment to perform a service
event within a certain time period. In the networking environment
there are two primary SLAs that are offered, 8x5 Next Business Day
(NBD) and 24 Hour by 7 Day by 4 Hour response. Maintenance contracts
offer varying levels of advanced hardware replacement options from
8x5 NBD to a 4-hour onsite spares. The options are all available
24x7, where our warranty is limited to 8x5. If there is a component
in the networking environment that goes down, and it is critical to
the environment it will require rapid hardware replacement no matter
what time of the day or what day of the week, that’s what a
maintenance contract offers. A Warranty is going to ensure that the
equipment that you buy from us is always backed, and after verifying
that the hardware has failed a replacement will be sent, but if the
hardware is critical to the operation of the network environment, a
maintenance contract can ensure that you have expert assistance
immediately.
Are service and support options available if I purchase pre-owned
products?
A variety of services and support are available on pre-owned
products. Historically, OEMs deliberately made it difficult to
purchase pre-owned equipment by not honoring software upgrades for
products bought without maintenance contracts. To counter this
deterrent, many secondary market sellers oblige with comparable, and
sometimes discounted services. Options may include asset
management, installation/de-installation, maintenance contracts,
network monitoring, on-site consulting, pay-as-you-go support and
return material authorization (RMA) programs, technical support and
warranty programs.
Do independent resellers offer return policies?
If a purchase is contingent on a company’s return policy, it is best
to research the reputation of the seller, determine whether the
seller has an established return policy and if so, familiarize
yourself with the stated policy. In many cases, reliable resellers
usually offer a return policy that covers hardware failures or
malfunctions upon receipt. It is wise to determine whether the
provider has established processes for detecting and troubleshooting
faulty products, offers flexible shipping options and, if necessary,
the form of reimbursement (e.g. Refund as original payment).
What warranty options are available for used equipment?
Depending on the vendor the warranty can range from 30 days to
Lifetime*. *Lifetime – the actual terms of a lifetime warranty vary
by provider. Typical definitions include:
One year advanced replacement
Five-year non-advanced replacement warranty
Warranty extends until the product is deemed EOL/EOS by Cisco
True lifetime warranty
Do Cisco secondary market resellers offer installation services?
Some secondary market resellers do offer installation (and
de-installation) services. Typically, top tier resellers offer
installation.
What forms of payment do secondary market resellers accept?
Most resellers accept several different payment options.
Automated Clearing House (ACH)
Pre-Payment via: Company Checks, Cashier’s Checks or Wire Transfers
Credit cards (American Express, Discover, MasterCard, VISA)
Credit terms for qualified buyers.
PayPal secure payments.
1Sue
Hetzel, United Network Equipment Dealer Association Announces
Results of First Annual Survey Revealing Aggressive Growth in the
Market for Pre-Owned Networking Gear, BusinessWire, July 11, 2007
2Phil
Hochmuth, Cisco takes on ‘grey market’ equipment sales, Network
World, April 26th 2007.
3Andrew
Conry Murray, Used Tech Gear: Notes From The
Underground, Information Week, July 7th, 2007.
4Jeff
Jedras, Cisco still trying to defend its aftermarket turf, itbusiness,ca,
May 29th, 2007.
5Trends
in Secondary Computer Hardware 2006 to 2009, AME Research BV, 2006.
Contact Information
Telephone:
Mobile:0404399109
Address:
Level 1, 420 Oxford Street, Bondi Junction
New South Wales 2022
Australia
Email:
General Information:
cisco@ioncomaustralia.com
Ioncom Australia
Australian ABN: 40 331 166 166
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