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Cisco takes on 'grey market' equipment sales
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Call Cisco a victim of its own success; as its dominance in corporate routing and switching grows, so goes the vigorous aftermarket for Cisco gear, a sub segment that's reached a point the vendor can no longer ignore.
Used gear or "grey market" competition was among several issues in Cisco's sights at its annual Partner Summit in Las Vegas earlier this month. Cisco is pointing to aftermarket numbers as making a visible dent in its equipment revenue. It estimates that the grey market sales take US$200 to $300 million in revenue away from Cisco, approximately seven per cent of its total switch and router revenue in its last fiscal year.
"The largest used equipment broker in North America (Network Hardware Resale) has over 50 account managers calling on (Cisco) customers in (the) U.S. (and) did $140 million in sales in calendar year 2006," said a statement on the Partner Summit section of Cisco's Web site. Aftermarket Cisco brokers "have penetrated the government channels and have been on the GSA schedule ... (and) are effectively selling against Cisco in the Government space."
Cisco says used gear brokers are winning on the small side of the SMB market, a nut Cisco has tried, unsuccessfully, to crack many times before.
"Cisco does not have an effective offering in the sub-100 market space," the company adds, "and our competitors (including aftermarket brokers), are doing well there."
DOES GREY GO BLACK?
To counter this, Cisco's Brand Protection group is revving up an international brand protection campaign, with a simple message for Cisco partners and customers: genuine Cisco gear only comes from Cisco and its partners.
"We're going to be stepping that up in our fiscal year '08, where we'll be putting much more emphasis in overall communications to end-users and the channel," said Philip Wright, director...