Cisco fights fakes via used-equipment remarketing

Due to its dominance and ubiquity, Cisco is victimized by counterfeit equipment more than any other network products vendor.

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The company is taking strong measures to counter counterfeiters, such as by educating suppliers and distributors and establishing international investigative teams to hunt them down. But another, less obvious weapon in the vendor’s anticounterfeit arsenal is Cisco’s remarketing operations.

While not a direct combatant against the counterfeiting foe, Cisco Capital Remarketing nonetheless plays a valuable support role for the vendor in its fight against fakery. 

Cisco pitches its remarketing arm as a lower-priced alternative for purchasing Cisco switches, routers and other equipment, and as a trusted counterpart to used equipment brokers. Cisco’s remarketing operations, a business unit within Cisco Capital since 2000, also helps the company protect its intellectual property.

“We are a competitive and trusted alternative when buying new Cisco equipment is not an option,” says Benson Chan, senior manager of worldwide business development for Cisco Capital Remarketing.

Cisco officials would not break out revenue generated from remarketed equipment vs. new products. But the company resold 410,000 units last year, they say.

Cisco usually offers used equipment at 25% off the list price of new gear but with the same warranty. Equipment ships in 24 hours direct to the user or to 40,000 authorized resellers.

Brokers often undercut this price, Cisco admits, but it’s rarely a deal since the product has not undergone Cisco inspection, software updating or certification, Chan says.

So buyer beware.

“We won’t allow it to go into [Cisco’s] SMARTNet [maintenance program] unless Cisco inspects it,” he says.

That’s par for the course for any vendor, analysts say. (Read about how Nortel, Extreme and Foundry are fighting fakes.)

“Recertification is critical if [customers] want to put the equipment back under contract,” says Steve Schuchart of Current Analysis.

Schuchart, a former network architect at a $2.2 billion retailer in the Midwest, says he always bought network equipment new or “unmanaged” — easily discarded if it’s no longer working or required.

For network professionals considering used Cisco gear, Chan says that only Cisco has access to the hardware and software revision history of a product. Cisco maintains a database of engineering change orders (ECO) a Cisco product goes through during its life cycle.

Indeed, if a used Cisco product that’s in seemingly workable condition fails in a network — as was the case recently at a bank — it may be because it is a counterfeit or wasn’t checked against the ECO database and is not up to date on software or hardware revisions, Cisco says.

“I’m amazed at how many of our products fail or need to be revised” when they arrive at Cisco Capital Remarketing, says Senior Director Frank Atter. “So we can’t put them back on the market. It’s a significant amount of risk.”