Upscale Network Resale
There is a significant amount of used network equipment available. Could it be the right choice for your enterprise in certain situations?
The IT budget is thin. I have to do more with less money, which begs the question, "Do I always need to buy new network gear?" There is a thriving market for overstocked and refurbished network routers and switches.
Another question is, "Can I get maintenance when the OEM no longer provides it?" Both of these questions can be answered by a network equipment reseller, to the advantage of the enterprise.
I interviewed Michael Lodato, SVP of Sales and Marketing, and Chris Stone, Senior Director of Supply Chain Management at Network Hardware Resale (NHR). NHR describes itself as "the world's most trusted source for pre-owned, refurbished, and new networking equipment."
NHR has grown significantly over the past 10 years to become a $235 million company in annual revenues, with warehouse support locations in Santa Barbara, CA, Singapore, and Amsterdam.
Here are some questions, with answers from Mike:
What is the advantage of buying refurbished or overstocked equipment?
"The initial attraction is that the cost will be significantly lower than buying new systems.
"Another advantage that is often not realized by the enterprise is the speed by which we can fulfill an order. When purchasing new systems, there can be a waiting period of several weeks because the VAR has to go back to the OEM to fulfill the order. In the case of NHR, we have a huge inventory of parts and systems in stock, valued in excess of $200 million across three worldwide locations that enable us to guarantee next-day delivery to any location worldwide.
"A third advantage is that we carry and support parts and systems that are beyond end-of-life or no longer available from the OEM."
In many cases, the equipment is used. How reliable is it?
"NHR thoroughly tests the equipment before it is placed into inventory. The network equipment we sell is designed by the OEM to function for 30 or more years before a hardware failure. New equipment has about a 3% chance of failure after delivery and initial operation. NHR's testing reduces this to less than .5%, making the equipment six times less likely to fail than when it arrives as a new product. The end result is that we have a lower return rate than the typical OEM, and the enterprise experiences a higher success rate for its network implementation."
Are there any issues with counterfeit parts or stolen equipment when buying used parts and systems on the open market?
"This was an issue that NHR has worked hard to eliminate. Through our efforts, we presently do not often run into problems [of] acquiring counterfeit parts or stolen systems. About 300 companies that resell network equipment have created an organization, the United Network Equipment Dealers Association (UNEDA), to combat the acquisition and resale of questionable parts and systems. UNEDA has four goals:
* Promote industry best practices
* Create a safe environment for cooperative sales and marketing efforts
* Ensure the highest standards of product quality
* Eradicate the presence of counterfeit, fraudulent, and stolen gear in the secondary market.
"NHR buys and sells parts and systems with members of UNEDA. If the company [being dealt with] is not a member of UNEDA, then we perform greater due diligence before agreeing to conduct business.
"The enterprises we sell to probably do not know of UNEDA's existence. A prospective buyer may do well to [first] determine that the reseller they are considering is a member of UNEDA. Membership does not guarantee that the systems and parts are acceptable, but it is very unlikely that the buyer would receive stolen or refurbished systems with counterfeit components."
What do you look for to detect counterfeit and stolen equipment or parts?
"As part of our counterfeit abatement program, NHR has a four-point operational procedure in place that involves: stringent vendor approval and ranking procedure; rigorous testing and quality control; knowledge share with trusted vendors, authorities and partners to drive industry standards; and counterfeit-, cannibalized- and stolen-hardware-awareness training for all operations and sales staff.
"Backed by a 10,000-photo counterfeit detection library, we look for serial numbers that would indicate it is stolen, inspect logos for falsifications, inspect solder joints for poor assembly, and investigate a large number of other indicators that would alert us to a problem."
There is a significant amount of used network equipment available, especially with today's economy. As enterprises shrink or close locations, perfectly acceptable equipment becomes available. It is also the case that enterprises may over-order equipment that becomes surplus. The resale market is valued at about $2 billion.