LANs /

It's a jungle out there

Hunting for network gear on the internet can be a bear.

By Gary Kadet
Network World, 01/08/01

Buying network gear and WAN services over the Internet would seem like a godsend for busy network executives. Especially with new sites popping up all the time offering electronic marketplaces where you can trade anything from network hardware to telecom services to excess bandwidth.

But it turns out that buying routers, leasing T-1 lines or signing up for DSL over the Web isn't as easy as point and click.

Sample of online IT exchanges
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First, there's such a hodgepodge of sites that finding the right one for you can be a daunting task.

EBay, Tradeout.com and Dovebid.com are general-purpose auction sites where anything and everything is available, including network gear. Buy.com and Office.com are broadly focused sites that sell computers, peripherals and network hardware.

Band-X and Arbinec are bandwidth brokers. Demandline and Ubundle pool small-business requests into larger bundles to achieve

better rates for telecom and other services. Simplexity offers a neutral hub that brings buyers and sellers together for voice, data, wireless, Internet access and Web-hosting services. ITParade.com sells refurbished gear.

"All these sites are pretty much new, and this is a new business model," says Jeanne Schaaf, an analyst at Forrester Research. "They're all doing different things, and the markets are in flux.''

If you decide to do market research to determine who the major players are, information is hard to come by because nearly all these companies are privately held.

So how popular are these sites? Schaaf estimates that of the $137 billion spent in 2000 for voice, data, wireless and Web-hosting services, only 1% was spent online. And of the $1.37 billion, 97% was spent directly with the service providers, leaving only 3%, or $400 million, that was spent through third-party e-marketplaces.

Another wrinkle is that there are a variety of business models. Some sites are auctions, which means the seller puts an item up for bid and potential buyers keep bidding the price up. Other sites are reverse auctions, in which the buyer puts out a request for proposals and the potential sellers undercut each other. Some sites will help you develop an RFP, while others provide vast databases that let you make product comparisons online. Some sites act as brokers that handle the entire transaction; others, such as Telezoo.com, bring buyers and sellers together for offline deals.

How low can you go?

A fundamental conceptual problem with online buying is that it's based on the premise that getting the best price is the most important factor in your buying decision. But what if price isn't the determining factor? What if you're more concerned about service and support? What about product warranties? What about guaranteed delivery within a certain number of days? What about installation?

Then there's the question of why you would go to a third-party site when you can go directly to the vendor. Elias Shams, co-founder of Telezoo, has an answer. "We have built a database that allows the supplier of telecommunications to just dump their product specifications into it; hardware, circuits, DSL, routers and switches. Our search engine/database takes this information and standardizes it. It creates a uniform table that educates the buyer."

"The reason a buyer might come here, rather than to a main site like Cisco, Lucent or Nortel Networks is lack of time to do a true search," he adds. And he argues that vendor claims can be confusing to customers, but on the Telezoo site "you can make these comparisons with confidence."

Telezoo lets potential customers do comparisons that include pictures, performance details and pricing. Telezoo also offers a white paper search, an automated RFP generator � it even provides access to RFPs submitted by other companies.

Zevi Kremer, chief information officer of ePCX.com and a Telezoo customer, says he had trouble getting the attention of salespeople at major vendors such as Cisco, 3Com and Alcatel. "If you're a small company, they won't even return a call." Kremer placed an RFP on Telezoo for a fixed wireless deployment in developing countries, and the vendors started calling.

However, skeptics such as Thomas Nolle, president of CIMI Corp. in Voorhees, N.J., argue that when it comes to complex network implementations, online product comparisons are worthless.

"Where the process falls down is where you get into the comparison of Product A vs. Product B," Nolle says, "because a 3Com hub and an Intel hub are not necessarily the same product, and the metric that says they're different from each other doesn't indicate that the difference constitutes betterness, so to speak. It's just smoke and mirrors."

Nolle says the successful sites will focus on identifying the key vendors and distributors for a given product and providing some kind of retail exchange to help the customer locate a distributor with a satisfactory price that offers service locally.

Simon Yates, a business-to-business specialist at Forrester Research, agrees: "My basic view is that when it comes to the procurement of IT-related hardware, firms don't really see a lot of value. They can buy all their PCs direct from Dell or make a phone call to a local firm to send over a truckload of Compaqs."

He adds that when it comes to server hardware and communications equipment, customers prefer to go direct because they typically configure the

systems for their own requirements. "Having the wrong things arrive on the loading dock can be very expensive," Yates says.

Another obstacle for online sites is the established relationship that customers have with resellers. "Entrenched reseller relationships make it extremely difficult for online markets to gain traction.''

Then there are the generic problems associated with any type of online sale. You don't know if the e-marketplace will be out of business tomorrow, leaving your purchase in limbo. There's no easy way to verify the trustworthiness of the sites or of the other parties involved in the transaction, and there's no guarantee the information you're receiving from the e-marketplace on the going rate for products and services is totally accurate. There are always security concerns when you're putting important corporate information onto the Internet.

The bottom line is IT business-to-business sites may make things cheaper and faster, but approach with caution.

When asked why he made online purchases directly from vendor sites, one IT executive who declined to be named says: "In these times, mistakes are more costly than ever before. They carry more weight. It just comes down to a matter of the devil you know vs. the devil you don't."