Counterfeiting isn't just a software problem. The networking hardware aftermarket -- selling and buying used Cisco equipment, for example -- has been under siege by counterfeiters for about the last two years.
Cisco hardware -- in Cisco's ideal world -- is always acquired from a Cisco partner. Partners range from a small shop that is merely officially authorized to sell common parts all the way to a Gold Certified Partner with at least eight Cisco Certified Internetwork Experts, other staff members who are climbing the Cisco certification ladder and a sales volume commitment to Cisco that they must meet.
But reality is a good deal different from what Cisco would like to see. Cisco holds a huge share of the routing and switching market, and its products retain value for many years in the thriving telecommunications aftermarket business. Handling refurbished Cisco equipment has been fun and profitable for many years, but counterfeiters are an increasing problem.
As a network architect, I see it all the time. Yesterday evening, for example, during some troubleshooting with a customer, we determined that the company's 2004-vintage Cisco 2650 router just wasn't up to doing all the work we were throwing at it, so the decision was made to replace the unit with a new Cisco 2821.
The customer's Cisco 2650 contained a single-port T1 data card that isn't compatible with the 28xx series, so we had to source a second-generation board, the WIC-1DSU-T1-V2, for that role. My company is an authorized reseller, and we typically use Comstor, which is the smallest of the three Cisco product distributors, as a source for our equipment. I logged into my Web account and looked up the card: $1,000 list, $691.49 with our authorized partner-level discount of about 30%.
I am an alumnus of an Omaha-based aftermarket shop that handles Cisco, Juniper Networks and Extreme Networks routers and switches, as well as Adtran, Paradyne Networks and Kentrox communications gear. The aftermarket dealer community runs a sort of virtual warehouse where people buy and sell equipment at wholesale rates, so I decided to look there. I found a good supply of the cards starting at $325 for refurbished, with new-in-the-box equipment in the $550 to $600 range, which is a price consistent with Cisco Gold Partners dumping inventory to meet their volume commitment.
China counterfeiters flood market
The aftermarket dealers had a 60-day love affair in 2004 with a flood of cheap Cisco products in brand-new boxes purchased unknowingly from what proved to be counterfeiters largely based in China. This was followed by six months of anguish, as product bought and sold cheap began to come back with mysterious maladies. The responsible dealers, which warrant their equipment for anything from 30 days up to three years, moved quickly to purge that stuff and anyone handling it from the channel.
The purging effort has included a Web site (since closed) dedicated to techniques for spotting the "Chisco" product, as the legitimate dealers have christened the counterfeit gear, tracking who is handling it and passing that information on to law enforcement. The shadowy U.S. distribution arm of the counterfeiters, under tremendous pressure from the aftermarket dealers, decamped to eBay.
I searched for the WIC-1DSU-T1-V2 on eBay. I found several offerings for this card new in its original box for between $150 and $175; these are obvious counterfeits. I saw an equal number of "like new" offers for about $145; these are probably new, boxed counterfeits taken out, tossed around a bit to simulate use, then placed for sale. The rule on eBay is simple: If the equipment is current and less than 60% of its list price, it is almost certainly counterfeit and should be avoided.
The legitimate aftermarket dealers are not a closely studied business sector, but from my own research I believe the sector does $1 billion or more in business annually. While researching this article I called several people I knew from my time at the Omaha aftermarket shop. No one was willing to be quoted for fear of the wrath of Cisco, but I did learn a few things. A source at one of the larger dealers told me that U.S. Customs has seized $65 million in counterfeit data equipment over the past 12 months. I believe they're making a dent in counterfeiting operations, but they're nowhere near stopping it. And that figure is the bill-of-lading price, not the manufacturer's list price, so we're talking about unwarrantable, untrustworthy equipment entering the market in a volume comparable to what the legitimate aftermarket dealers do.
What do you do?
So what do you do if you've got a tight budget and a need for some new networking equipment?
First and foremost, I'd send you out to find a Cisco partner -- a smaller one in your area that has the time and desire to work with you. Cisco has something called the Technology Migration Program. If you're retiring old Cisco equipment in favor of something new, your representative only needs to ask the inside channel account manager for a trade-in deviation, and you should get a lower price. The customer in the example above saw a $450 drop in the cost of his new Cisco 2821, and I put a few dollars in my pocket for taking the time to do this for him.
Even if budget dollars are very tight I'd strongly suggest you avoid eBay and go with a proper aftermarket equipment dealer. How do you spot a good dealer? The two things I would look for are a warranty and a track record. The larger dealers will offer a 90-day warranty on a purchase. Many mimic Cisco's Smartnet advance replacement service contract, allowing you to receive a one-year warranty for 10% of the equipment price, or three years for 25%.
When I say "track record," I mean not only should the business be established for a period of time, it should also have a history of product knowledge. Do they also handle other brands of routers and telecommunications gear search as Juniper, Extreme, Adtran or Paradyne? If so, they're likely one of the long-term players that will stand behind what you purchase from them.
Cisco negatively refers to any sale of its product outside of the official channel as "gray market," but the new gray market product direct from the sales channel and the refurbished gray market product from legitimate aftermarket dealers are merely the fallout Cisco faces from being a popular source of solid, long-lasting equipment.
But the counterfeiters are a genuine problem both in terms of Cisco's business and yours; Cisco never got paid for that stuff and subtle quality problems are very likely to bite the purchasers of that product in the long run. Be careful.