Why aren't Cisco software updates free?

HP, Microsoft, and other are offering free updates to purchased and embedded software... Why not Cisco?

When you purchase a Cisco router, say an 1841, you pay your $700 to your local VAR who orders it from Ingram Micro and delivers it to you within in a few weeks. A few months ago it was 15 weeks, but Cisco has dramatically improved lead times on many products since this summer. Your router comes with IP BASE installed, for the sake of argument let's say its version 12.4(18). If you want to upgrade from IP BASE to IP ENTERPRISE BASE you pay an extra $275 for the entirely new software feature set. But Cisco, unlike almost every other software company and an increasing number of networking hardware vendors (like HP - see HP Warranty Info) does not offer updates to the software you already own without the purchase of add-on SmartNet maintenance on each device.

Even if you purchase a software upgrade (the aforementioned $275 for enterprise base) all you get is that initial release, and all future updates are available only to SmartNet customers. The obvious answer is that Cisco is trying to force buyers of their equipment to purchase SmartNet, which just so happens to be one of its most profitable businesses. But the real thrust of my question is that with their competitors beginning to offer these updates for free (and better/longer warranties as well...), the TCO of Cisco equipment versus other manufacturers is changing rapidly for the worse.

Savvy IT professionals are now evaluating the TCO of networking over the entire useable life of the equipment including maintenance/warranty expenses, power consumption, and residual value at the end of their expected use. Calculate the TCO of a mid-range router or data-center switch from one vendor with a standard long term advance-replacement warranty and free software updates to the Cisco switch with multiple years of SmartNet (and a likely higher initial cost) and the math gets very ugly very quickly.

The only (partial) saving grace to this equation is the (generally) high resale value of Cisco equipment compared to every other vendor, due to the vibrant secondary market for Cisco equipment. For the time being, buy that low TCO non-Cisco switch and after 3 hours or 3 years it's worth virtually nothing on the resale market, while the comparable Cisco switch will still be worth 30-40 cents on the dollar 3 years later.

But interestingly - and surprisingly from our vantage point in the secondary market - Cisco and their Brand Protection "agents" are trying desperately to destroy this last advantage too. If Brand Protection had its way there would be no customers for secondary market Cisco, all of them having been irrationally scared into buying only new equipment, which means there would be no value to Cisco equipment either moments after purchase... and the TCO of Cisco equipment just completely blows up.

Cisco's lead over its competition is so great, and its legions of trained engineers so loyal, that if Cisco was even modestly interested in evolving its software and maintenance policies to a more consumer-friendly stance the many would-be competitors of theirs would not stand a chance. As it stands, there are many reasons to consider alternatives, and Cisco seems oblivious to the challenge.

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