Cisco's Worst Nightmare

from the hello,-gray-market dept

Fortune is running an article about the gray market for used IT equipment. With all the dot com and telecom companies going out of business, as well as big IT projects being scaled back (or shut down) at larger companies, there's a thriving market in used IT equipment. Sometimes, even the word "used" is misleading, since it's never been taken out of the box. There are a number of companies that buy up such equipment for pennies on the dollar and resell it for a bit more - making a profit and undercutting the original manufacturers by quite a bit. Most of the equipment makers are not happy. Cisco, for instance, has been actively fighting off gray market deals, telling potential customers that the equipment is unlikely to work. You have to wonder about a company that suggests its own used equipment will no longer work. At the same time, Sun seems to have done a better job embracing the secondary market. They're reselling some of their own equipment, and charging prices to recertify the equipment. They're also making good money selling service packages on resold equipment for pretty good margins.

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