June 2010

Used Cisco Buyers Guide

Why Buy Pre-Owned: UsedCisco.com Buyer’s Guide 2010 – Part 1

By: UsedCisco.com


What is pre-owned network hardware?

Pre-owned hardware is any equipment which is not sold as new directly from the manufacturer or channel partners. Many vendors, companies and auctions use varying terminology, including “re-certified”, “used”, “refurbished”, “new-in-box”, “new-open-box”, “UC Certified Pre-Owned™” and “the secondary market”. While they are often used interchangeably, many factors dictate what exactly is being sold.

An incredible array of organizations from both the public and private sector are buying pre-owned. These organizations include global public commercial enterprises, small businesses, ISP’s, telecoms, non-profits, local & US government, military and educational institutions of all kinds.

Although many manufacturers have down played the market’s growth, tremendous demand has given rise to a nearly three billion dollar market, with thousands of sellers, companies and eBayers. Finding a reliable vendor can be a daunting task for any network administrator looking to reduce costs.
This uncertainty and lack of knowledge is exactly what led us to create a small FAQ back in 2000, when the market was in its infancy. Since then, our guide has seen nine revisions and over 54,000 downloads.

An overwhelming majority of the customers we’ve surveyed mention the same fact – they just didn’t know pre-owned was a real, safe and viable option. Significantly lowering networking costs seemed like an unattainable goal, until they discovered the pre-owned market through research and experimentation.

In this guide, we’ll present you with critical information you need to make the switch, become a pre-owned evangelist and start saving instantly.

In an article titled “Second-Hand IT” from www.cio.com it states, “A CIO.com (CIO Research Reports) survey found that the majority (77%) of companies surveyed buy second-hand or pre-owned IT equipment, including PC’s, servers and networking hardware, and close to half of the respondents expect to increase their spending on pre-owned IT products in the next 18 months.”

Where does pre-owned hardware come from?

Trade-in programs & network upgrades

Companies of all sizes continually upgrade and de-install network infrastructure to meet the changing needs of their customers, employees and suppliers. Manufacturer trade-in programs are often inadequate and offer customers little financial incentive for prolonging their hardware’s lifespan. Thus, millions of dollars of useful pre-owned network hardware enters the secondary market annually.

Off-lease equipment

Equipment leases typically range from one to three years, leaving the lessor with functioning pre-owned hardware well before the end of lifespan.

Excess inventory

Distributors, enterprise, government and military institutions purchase large quantities of equipment in bulk. Their inventory often exceeds their needs, resulting in warehouses worth of unused pre-owned equipment. This was evident during the dot-com bust, when CIO’s flush with venture capital cash irresponsibly stocked up in massive quantities. While network managers today attempt to manage spare inventory thriftily, spares for redundancy and disaster recovery are still an executive priority. This leads to the annual sale of huge lots of unused equipment simply because they were not needed.

Auctions and liquidations

A tremendous surplus of new and pre-owned equipment emerges from companies burnt in bankruptcy, such as Lehman Brothers, Washington Mutual, General Motors, Conseco and Circuit City. Businesses undergoing mergers, acquisitions, relocations and downsizing also result in large quantities of unnecessary equipment. These are sold in volume at high discount to the secondary market.

According to Government Procurement Magazine, “Gartner Group estimates that the secondary market for networking equipment and accessories has grown over the past several years from a handful of providers to more than 400 companies with an estimated collective revenue of $2 billion to $3 billion.”

How do I select an appropriate vendor?
While the terminology for pre-owned varies from seller to seller, the important factors to consider are not the seller’s choice of words, but rather their reputation, experience, processes and policies.

When considering a seller, ask these questions…

Regarding credibility:

  • Is the seller’s online presence professionally designed & developed?
  • Is online business conducted securely (SSL certificates, 3rd party certifications)?
  • Are phone numbers, email addresses, and a physical address displayed?
  • What customer references, testimonials or case studies are provided?
  • What processes are in place to avoid counterfeit goods?
  • What is the financial condition of the business?
  • Is the seller’s customer base local, regional or international?
  • How long is the seller in business?

Regarding product quality:

  • What is the origin of the equipment?
  • How are products tested and re-certified?
  • Does the seller guarantee genuine equipment?

Regarding level of service & support:

  • What types of warranty options are available?
  • What happens in the event of a part failure?
  • What is the turnaround time for a replacement?
  • What pre and post-sales support options are available?

Regarding technical knowledge:

  • Are certified Cisco engineers available in-house?
  • Is the seller an active voice in the industry, publishing content via blogs, articles and guides?

What service and support options are available?
Manufacturers often create obstacles to discourage sales of pre-owned products. Cisco has been specifically criticized for not honoring software upgrades for products purchased without SMARTnet, their proprietary maintenance contract program.

To compensate, secondary market sellers have made great strides by providing comparable services at almost half of manufacturers’ current rates. Sellers offer included warranty periods and next-day faulty hardware replacement, as well as optional maintenance contracts, consulting services and various tech support packages.

Warranty periods
A free 90-day warranty is standard, similar in length to most manufacturers’ warranty periods. Many vendors include a free one-year warranty and a select group of sellers are now offering a free two-year warranty. Extensions for longer periods are also usually available at a fee.

Many sellers offer protection covering hardware failure and malfunction. Verify processes are in place for identifying and troubleshooting faulty hardware, arranging for next day replacement and when requested, allow refunds or accept trade-ins for credit.

Tech support
Support options vary from seller to seller. Two main types of support are:

  • Pre-sales support – Network analysis and design, complex configurations, part search, part identification and compatibility
  • Post-sales support – Troubleshooting, installation, upgrade walkthrough, integration
  • On-site support – Wiring and cable runs, physical installation, testing, consulting

Support packages vary based on time, usage and complexity.

  • Maintenance contracts – Pre-paid, hourly time blocks, optional 24 x 7 phone and email support, next-day hardware replacement
  • Hourly phone / chat support – “Pay as you go” support
  • Partner/reseller level contracts – On-site consulting, complex custom configurations

UsedCisco.com Buyer’s Guide 2010 Part 2 will be seen in the July 2010 issue of PowerSource Online Industry Guide.

About UsedCisco.com
Founded in 2005, UsedCisco.com is the world’s largest online network hardware outlet, offering thousands of network hardware products at significant savings off list price. Our inventory includes the most popular Cisco switches, routers, firewalls, VoIP and wireless products, as well as thousands of hard-to-find modules, memory and cables. Each unit is fully tested and certified as functionally new and carries a free, two-year warranty.