Cisco and UNEDA Should Talk

So with all the buzz around Telepresence and all of the next-generation visions and roadmaps, who’d have guessed that one of the most interesting debates around Cisco these days would be about gear that’s already been ripped and replaced? My colleague Brad Reese did a nice roundup of the various points of view in his blog from Wednesday evening. Basically the issue is an impasse with Cisco and the United Network Equipment Dealer Association (UNEDA) regarding used equipment and counterfeit equipment. Both parties say that the sale of used equipment has its place in the world. Both parties also say that counterfeit products need to be eliminated. So no problem, right? Well….. Wrong! UNEDA says it wants to establish collaboration with Cisco in eradicating counterfeit equipment, but Cisco, thus far, has declined such a dialogue. Valid statistics are hard to come-by, because counterfeiting is obviously illegal and secretive, which doesn’t make measuring the activity level any easier. But Cisco reports that it is finding numbers of black market boxes that look like Cisco devices and are packaged like Cisco devices, but are clearly not Cisco products. Duplicate serial numbers and/or MAC addresses are among the primary clues. Often, the devices are not recognized as counterfeit until they get plugged into a network and fail to work – at which point somebody is already left holding the bag. The investigations typically reveal that these products did not come from the authorized distributors, but from somebody who had an extra device sitting on a pallet somewhere. Yes, there are exceptions. But by and large, the gray market channel is much easier for the counterfeiters to penetrate because any controls are dependent on the knowledge, honesty and savvy of the individuals making the transaction. Cisco’s advice is to do business only with the authorized channel. So Cisco is taking a talk-to-the-hand approach with the used equipment dealers who are not part of that authorized channel, including UNEDA. Maybe that’s because UNEDA is a voluntary association instead of a top-down managed company that can truly enforce its decisions across the whole organization. They can build consensus among the members and throw them out of the association if they fail to comply with mandates, but that doesn’t exactly hit the bottom line of the offender. Perhaps Cisco is concerned that anything it does to help UNEDA members identify counterfeits will eventually fall into the wrong hands, and be used to manufacture counterfeits that are even harder to identify as fakes. That’s a legitimate concern. So the help-us-help-you-by-sharing-information approach being offered by UNEDA could easily boomerang on Cisco. It sounds good on the surface, but there are a lot of complications and risks. I can see why Cisco has to tread carefully here. But I also believe that opening dialogue can be a constructive step. That dialogue does not have to disclose serial numbers or other information that Cisco uses to separate the genuine from the counterfeit. So the secrets can be kept safe and the refurbished equipment program kept intact. Don't expect any immediate miracles. But maybe there’s a way for both sides to gain some ground through discussion. Balancing Cisco’s interests with the interests of the authorized channel leaves the unauthorized channel with very little leverage – especially in view of counterfeiting and some of the unfortunate actions that have taken place in the used equipment dealer community-at-large. But while dialogue does not always lead to conflict resolution, conflict resolution always begins with dialogue.


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