Overcoming fear, uncertainty and doubt (FUD) in the secondary Cisco market

Yours truly makes a living selling secondary Cisco gear, so I'm very biased, but nonetheless ecstatic to present the results of a survey, that in my opinion, suggests the secondary Cisco market is finally overcoming the fear, uncertainty and doubt (FUD) that has been created by Cisco in order to try and dissuade companies from considering used or refurbished Cisco hardware sourced from suppliers (such as myself) who have chosen not to become Cisco registered partners. UNEDA - the United Network Equipment Dealer Association (an alliance of more than 300 pre-owned network equipment dealers worldwide) revealed in its most recent annual member survey, that over the past year:

186 (i.e. 62%) out of UNEDA's 300 members responded to the survey.
60% of members surveyed reported a decrease in the amount of counterfeit equipment they've identified and intercepted.
Together, UNEDA members sell more than $2 billion in pre-owned gear annually to over 10,000 customers.
97% of those surveyed buy and sell network routers and switches from Cisco, with Juniper in second place, followed by Nortel, Extreme, Foundry and Avaya.

The most popular Cisco equipment bought and sold on the secondary market:

2800 Series Routers

6500 Series Switches

3750 Series Switches

7200 Series Routers
66% of members responding to the survey reported an uptick in their business in 2008.
More than 86% of members polled plan to add staff in 2009 in keeping up with projected business expansion.
50% of those polled cited an increased supply of, and demand for, pre-owned network equipment as the top trends driving business expansion over the past year. An increased need for alternative maintenance and a growing demand for spares due to delayed product upgrades and network migrations rounded out the top-four factors driving continued market growth.
40% of the respondents reported an increase in business from larger enterprises over the past year, including financial services companies and first-time equipment buyers/sellers.
42% of the UNEDA members surveyed cited a high percentage of repeat business, with customers buying gear and/or accessories more than 20 times throughout the year.

The vertical markets with the most activity in the secondary market last year are the following in ranked order:

Telecommunications Banking/Financial Services High Tech Municipalities/Government Education
Network expansions topped the list of primary uses for pre-owned network gear, followed by production network, network sparing, testing and disaster recovery implementations.
93% of those surveyed cited the ability to operate in a secure, safe trading environment as the major impetus for joining UNEDA.
61% named the ability to adopt business best practices as their main reason for becoming a member.

Expanding further on the results, John Stafford - vice president of the board of UNEDA and COO of Network Liquidators states: "The results of our second annual survey help validate the size and depth of the market for pre-owned networking gear. UNEDA members sold more than $2 billion in gear last year to all types and sizes of companies. While a large percentage of our sales come from transactions between UNEDA companies, more than 78% of our members sell to end-users and more than half do business with organizations that have a worldwide presence. "Despite OEMs posturing that only mom-and-pop shops buy from the secondary market, it’s clear from our members that larger enterprises increasingly are looking for better prices on equipment and maintenance. We’re seeing a big spike in sales to large companies with multiple locations as well as increased activity from non-traditional buyers, including financial services firms, banks and insurance companies. The economic downturn has brought more first-time buyers and sellers to UNEDA with nearly 40% of those polled citing an increase in this area." Stafford adds, "For the first time, UNEDA will have a Booth #264 at Interop Las Vegas and we plan to be there in force to explain our role in the networking industry and share insights into what we can do to save companies time and money. We’re confident that our unbeatable value—with savings up to 90% off OEM list prices—and the immediate availability of more than $500 million in inventory are compelling reasons to take a look at what UNEDA members have to offer. "Over the past three years, UNEDA has made major progress in validating our corner of the networking market. We’ve come a long way in overcoming the fear, uncertainty and doubt (FUD) that Cisco, in particular, is using to try and dissuade companies from considering alternative equipment procurement and maintenance solutions. In the future, UNEDA is working to become even more visible by enabling our members to use the association name and logo in their branding efforts while also creating a Good Housekeeping-type seal of approval to reinforce the extra efforts UNEDA members take to ensure product integrity and quality." Stafford concluded, "Our membership, which comprises large, global leaders as well as emerging entrepreneurial companies, all share a commitment to making the secondary market a safe and reliable avenue for pre-owned networking equipment. We work together to establish and uphold strict industry best practices, which gives our customers complete peace of mind when they buy from, or sell to, UNEDA members." Mike Sheldon - president of the board of UNEDA and president & CEO of Network Hardware Resale gave his opinion regarding recent market share gains by HP Procurve: "Cisco’s reluctance to accept the secondary market is at least partly responsible for the growing success of HP’s ProCurve line and the further eroding of Cisco’s market share. When their own customers can no longer afford new Cisco, they are opting for lower-priced options like ProCurve, unless they realize they can still find ‘like new’ pre-owned Cisco on the secondary market. UNEDA members go to great lengths to fully test, certify and warranty their pre-owned Cisco products, giving companies another viable channel for Cisco gear. "Over time, we think that Cisco’s relentless attempts to disparage the secondary market will cause the loss of even more valuable market share." Sheldon concluded with his take on the survey, "This landmark survey offers an important snapshot of a thriving market segment that is continuing to grow despite the downturn in the economy. Now more than ever, companies are turning to the secondary market and UNEDA member companies to stretch their IT dollars farther. The high percentage of repeat business underscores the fact that UNEDA members have become trusted, alternate sources for the most economical, top-quality networking equipment." Furthermore, Corey Donovan - UNEDA member and vice president of operations for Vibrant Technologies added: "The results of the UNEDA membership survey indicate a bright spot in an otherwise down economy as well as an awaiting marketplace solution for budget-challenged network managers and cost-conscious CIOs. "Concerns about counterfeit equipment, mostly throttled by OEM FUD, are clearly drowned out by UNEDA members' focus on highly ethical business practices, which has led to $2 billion in combined annual sales." Finally, going forward there are several challenges: UNEDA members will need to address Cisco SMARTnet issues that include exorbitant fees for inspecting and re-registering maintenance of secondary Cisco equipment as well as Cisco’s new key and unlock program for OS software, which has the potential to become a real problem for UNEDA members who resell used and/or refurbished Cisco equipment.

What's your opinion, do you think the secondary Cisco market has overcome the fear, uncertainty and doubt (FUD) created by Cisco? BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese | Twitter: http://twitter.com/BradReese

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