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Mike Sheldon is president and CEO of Network Hardware Resale, one of the largest dealers of used Cisco network gear. His outfit sold more than $138 million in products last year in a market that Cisco estimates to be around $200 million to $300 million -- but Sheldon says could be more like a $2 billion-plus market.
Sheldon spoke with Network World Senior Editor Phil Hochmuth about the state of the used-Cisco market, where customers should and shouldn't buy used gear, and why he's Cisco's biggest fan -- even if the feeling isn't mutual. The following is an edited transcript.
We're the largest player in the Cisco secondary market. We did about $138 million in sales last year. We'll grow again about 20% this year. The market is probably in the billions — two-plus billion. There are virtually no public companies in the space, so it's very hard to get a true read on the size. The market also is quite developed in Europe and Asia. It's a very sophisticated and professional market. The products we sell are sourced primarily from Cisco's own customers as well as through a broad network of secondary-market VARs . . . who have connected to buy and sell equipment. We deliver, almost in every case, within 48 hours. Our effective inventory is vastly larger than Cisco's [suppliers, such as Ingram Micro or Tech Data] . . . Our prices are very good. Obviously, that's the headline. In general, our prices are about half what Cisco would charge, sometimes higher, or sometimes lower.
[Cisco] does a decent job painting the authenticity and quality of the product as low. I would say that's simply not the case for companies like Network Hardware that have very large operations. Our facility in Santa Barbara is 80,000 square feet and employs over 100 people who do nothing but receive and inspect and test the equipment. Every piece of gear we touch is physically inspected, which is not true of new equipment. We have rigorous testing methodologies in place to not only ensure it's authentic — that's a given — but also that it functions, and basically looks, as new. So the market is healthy and growing. Cisco's installed base of equipment is probably in the billions of units. But most of that is eventually going to find its way through our market at greatly reduced prices. Unless Cisco were to take it all back, which has its own logistic and economic challenges and which I don't think they would want to undertake. There's no stopping the market.

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Comments (31)
The Value of NetworksBy Alexs on August 21, 2007, 3:59 pmWith the ever-increasing demand for improved network performance, companies are opting to leverage the value of their existing networks for trade-in value on the...
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It's all about the services!By Jeff Emerson on August 8, 2007, 2:59 pmCisco understood the market problem. You can buy a gigabit switch just anywhere. What Cisco offers are services. Be they real or virtual. They charge 4000$ for the...
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Looks like we are being noticed...By Anonymous on June 4, 2007, 3:55 pmEventually, even an industry giant must look down to see who is tugging at their pant legs. We're tugging hard, but let's hope they don't notice too much and allow...
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Cisco Third Party EquipmentBy Jon Shamebers on May 16, 2007, 12:54 pmAside from savings, recycling Cisco equipment and recycling genuine cards is environmentally responsible. Entry level clients become Cisco customers in the long...
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CiskoBy Evans on May 9, 2007, 4:22 pmCisco sucks. Their products have gone from being innovative Internet hardware to bug filled crap and their support has got to the point that it's laughable. No one...
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