July 2010

Cisco Buyers Guide

Why Buy Pre-Owned: UsedCisco.com Buyer’s Guide 2010 – Part 2

By: UsedCisco.com

How do I avoid buying counterfeit hardware?
China’s policies regarding intellectual property infringement and state-sanctioned piracy have become a growing global concern. Tremendous growth of the network hardware secondary market, as well as an upturn in Chinese manufacturing have combined to push these fears to new heights.

In 2005, the situation hit a peak when the term “Chisco” was coined – counterfeit Cisco equipment originating in China. According to a white paper by AGMA and consulting company KPMG that year, counterfeit equipment accounted for nearly 10% of the overall IT products market. Network managers shied away from pre-owned hardware simply because it was too difficult to identify counterfeit equipment.

However, a recent flurry of increased awareness and information has helped instill a confidence in the pre-owned market. In a 2009 survey, UNEDA, the United Network Equipment Dealer Association reported only 40% of respondents noted the identification of counterfeit equipment as a tough issue, down from 50% in 2007.

In this guide we present the latest information available, made public by a handful of resellers and industry sources determined to combat counterfeiting and prove the legitimacy of the secondary market. “Our organization, along with many others, have kept this information private for fear of tipping off counterfeiters and assisting them in perfecting their efforts, “explains Steven Dale, Web Director at UsedCisco.com.

“We’ve decided to adopt a new strategy. By disseminating this information, we feel the benefits will outweigh the perceived risks. This is similar to the controversy that initially surrounded the practice of publicizing network security vulnerabilities. The first whistle blowers were frowned upon until it became clear that their information forced manufacturers to react quickly.

The net result was a level of quality that never would have been reached otherwise. It’s an external constant, a system of checks and balances. Here too, vendors, customers, and especially manufacturers must react to these challenges rather ignore them.”

Counterfeit Cisco Indicators

  • Screws
    • Genuine – Dull screws, fine lines
    • Counterfeit – Droopy & shiny screws; lines are imprecise and seem sand cast.
  • Welding
    • Genuine – Clean, precise
    • Counterfeit – Inconsistent, messy
  • Serial Number Sticker
    • Genuine – Sans-serif typeface (font), tight letter spacing, inconsistent typefaces between multiple stickers
    • Counterfeit – Sloppy letter spacing, serif typeface, bar code not flush with sticker edge
  • RJ45 Connectors
    • Genuine – Finely extruded connectors ( 1/16” to 1/32”), multiple metal attachments
    • Counterfeit – Flush connectors, two metal attachments
  • Points on Board
    • Genuine – Silver points on main board generally indicate genuine
    • Counterfeit – Copper points on main board generally indicate counterfeit
  • Packaging
    • Genuine – Consistent typography, high quality materials
    • Counterfeit – Absence of a seal on back identifying weight, low resolution printing

According to an ITworld.com report titled U.S., Canadian Agencies Seize Counterfeit Cisco Gear, “ICE and CBP seized more than 74,000 counterfeit Cisco networking products and labels with a retail value of more than $73 million.”

Qualifying sellers
For most buyers, visual inspection before purchase isn’t an option. This fact alone emphasizes the need to buy solely from credible sources which require proof of original ownership for all incoming inventory. In situations where goods bought from eBay or other questionable sources are suspected as counterfeit equipment, a basic understanding of identifying factors is critical.

Buying secondary network hardware is not a risky endeavor for the educated buyer. Here are a few tips you need to help locate a qualified reseller.

Be vigilant about who you purchase from. Make sure you use a reputable reseller — this includes getting the company’s history in business, references and warranty replacement policies. Avoid buying via eBay, deal directly with resellers who have a long and good standing history in the industry and a written replacement policy guaranteeing the authenticity of their products.

The best indicator of a fake is consistently going to be price. A 50% to 95% discount off list price is standard for certified pre-owned equipment. However, a red flag should be raised if you are being quoted similar discounts for new equipment, sealed in the manufacturer’s box.

Make sure you are being quoted a fair and realistic price. Expect a reasonable discount, but too big of a discount is a sure sign of trouble. Remember the old adage, ‘If it seems too good to be true, it often is.’

Contrary to popular belief, refurbished or reconditioned secondary market technology presents no greater risk than new equipment. Quality control programs and warranties or maintenance initiatives offered by most providers mitigate the risk.

For more information on selecting an quality vendor and avoid purchasing counterfeit equipment, see How Do I Select an Appropriate Vendor?

According to an article Good Stuff Cheap from CIO.com, “In two years, we’ve driven out about a quarter of our operational costs,” says the CIO of Tenneco Automotive, a $3.5 billion auto parts manufacturer in Lake Forest, Ill. “I told a CIO about that, and he thought I was joking. I’m not … A large part of that savings has been leveraging the secondary market.”

How much will I really save?
While market conditions affect pricing daily, you can generally expect to save between 50% to 90% off list price. Here is a cost-benefit analysis for three sample networks.

Qty Part number List price Pre-Owned Price SAVINGS
Small office: 1-10 users        
1 Cisco 1721 Router $1,195 $54 95%
1 Cisco PIX-501-BUN-K9 Firewall $595 $145 76%
1 Cisco WS-C2950-12 Switch $895 $87 90%
PACKAGE TOTAL (all quantities) : $2,685 $286
  TOTAL $ SAVED : 2,399
Small office: 1-10 users        
2 Cisco 3745 Router $12,000 $325 97%
1 MEM3745-128CF 128MB Flash $700 $62 91%
1 MEM3745-256D 256MB DRAM $2,000 $133 93%
2 Cisco WIC-2T Card $700 $91 87%
1 Cisco PIX-515E-UR-BUN Firewall $6,995 $670 90%
1 Cisco PIX-515E-FO-BUN Firewall $3,000 $400 87%
2 Cisco WS-C3560G-24PS-S Switch $5,595 $3,158 44%
1 Cisco CISCO2811 $2,495 $1,125 55%
10 Cisco CP-7940 IP Phone $545 $100 82%
PACKAGE TOTAL (all quantities) : $57,230 $6,064
  TOTAL $ SAVED : 51,166
Large office / datacenter: 100+ users      
2 Cisco 7206VXR/NPE-G1 Router $22,000 N/A — 
1 Cisco PIX-525-UR-BUN Firewall $12,995 $500 96%
1 Cisco PIX-525-FO-BUN5 Firewall $5,000 $432 91%
2 Cisco WS-C6509 Switch Chassis $9,995 $261 97%
2 Cisco WS-SUP720-3BXL Engine $40,000 $14,075 65%
3 Cisco WS-X6348-RJ-45 Switch $12,995 $75 99%
1 CISCO2821 Router for IP gateway $3,895 $1,239 69%
1 Cisco MCS-7825-H1 MCS $9,000 N/A
100 Cisco CP-7960 IP Phone $645 $139 79%
PACKAGE TOTAL (all quantities) : $278,365 $97,968
  TOTAL $ SAVED : 180,397

Prices are Based on UsedCisco.com pricing as of March 2010. Unavailable items (N/A) are calculated as list price in total analysis.

How does buying pre-owned help save the environment?

The problem
Rapid technological change, low initial cost and even planned obsolescence have fueled a high rate of turnover for network hardware appliances, creating a fast-growing problem around the globe.

According to an EPA study in 2005, 1.5 to 1.9 million tons of e-waste are created annually. Accumulated e-waste is often processed in poorly managed facilities in developing countries, leading to significant health risks and causing a major negative impact on the environment.

The United Nations warns that people could be exposed to health risks at both ends of the short life span of networking equipment. Chemicals such as brominated flame retardants and heavy metals, including lead and cadmium contaminate water supplies, emit harmful gases that contribute to global warming and pose serious health risks to factory workers worldwide.

The problem is growing at an alarming rate overseas, as lower environmental standards and working conditions in China, India, Kenya and elsewhere have led to an exponential influx of e-waste, often entering through illegal channels. The majority of e-waste ends up being broken down by ill-equipped laborers working under hazardous conditions.
A typical router or switch may contain more than 2 percent lead by weight and up to 38 separate chemical elements.

After many delays, The European Union’s Waste Electrical and Electronic Equipment (WEEE) regulations governing the safe disposal of IT equipment were finally passed into law. The new legislation went into effect July 1st, 2007, and since countries like England have reported mixed results, stating businesses have an increased awareness of the e-waste problem and regulations, but are still unsure how to act.

Under these new laws, electrical and electronic producers, rebranders and importers must pay for the responsible disposal and recycling of their goods. The first of its kind, but certainly not the last, the WEEE directive is setting the stage for future legislation. Similar regulations are now being considered in the United States, as Congress debates a number of e-waste solutions.

In 2005, members of Congress formed an “e-waste working group,” hoping to jump-start a federal recycling system. The head of that group, Rep. Mike Thompson (D-Calif.), proposed a bill called the National Computer Recycling Act, requiring a fee assessment for retail sales of certain electronic devices to help fund a national recycling program. The bill is still under review.

In the interim, thirteen states have agreed to e-waste laws, including California, Washington, Maine, and Minnesota. Support among other states is growing, in addition to new research initiatives. In September 2007, the Green Chemistry Research and Development Act was proposed, looking to authorize $165 million over three years for research into products that reduce or eliminate hazardous waste. This bill also awaits a Senate vote.

While e-waste awareness has finally attracted government attention, the simplest solution is often the most easily overlooked – prevention. Reuse has become a focal point in the effort to combat e-waste, primarily in the consumer space where organizations are spearheading change well ahead of legislation. Many electronic consumer manufacturers, including Apple, Dell, HP, and Sony have recently established trade-in and recycling programs.

Gartner estimates one in every dozen computers used worldwide is a “secondary computer,” and nearly 152.5 million used systems are shipped annually. The research firm predicts that both the home and professional markets for secondary PC’s will continue to see growth in the next several years, fueled by better performance, longer system life and recycling legislation that would give companies greater incentives for reuse and recycling.

Buying pre-owned hardware is not only a cost effective way to reduce IT costs, it is also perfectly aligned with e-waste reduction. Organizations of all kinds can benefit from reuse, in ways that tangibly affect the bottom line and help save the environment.

Gartner analyst Simon Mingay estimates the energy from manufacturing, distribution and use of information and communications technology emits approximately 2 percent of total global carbon dioxide, equal to the emissions from the entire airline industry.

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.