Profiting from pre-owned network hardware gear

Facilities-based Excel Telecommunications is making no secret of the fact it uses second-hand gear, allowing Network Hardware Resale (NHR) to feature Excel in a customer testimonial. A posting on NHR's blog says that "the gloomy economy seeds a buyer's market" - possibly one of the factors contributing to Cisco's dismal quarterly earnings report released last week.

NHR says Excel is leveraging "quality, pre-owned Cisco and Juniper equipment" along with NHR's hardware maintenance to meet growing requirements for network expansion and technical groups. Excel runs 11 switching centers distributed throughout the country and has invested "heavily" in Cisco and Juniper gear for its network, along with Cisco's maintenance contracts.

Interestingly, Excel turned to NHR after it encountered delays in getting critical replacement equipment from "traditional OEM procurement channels." NHR came up with replacement gear for Excel overnight at prices "up to 90 percent" off OEM list price.

Sweetening the pot, NHR's NetSure hardware maintenance program covers both Cisco and Juniper equipment even if the gear wasn't originally purchased from NHR; a swipe at the hurdles manufacturers throw up on getting service contracts when equipment is bought outside of official channels.

Excel estimates they're saving 60 percent over comparable Cisco SMARTnet coverage, and the company has saved over $750,000 in capital expenditures by buying "like new" equipment from NHR when compared to factory fresh gear.

NHR's release has opened up a window that Cisco and others might like to see closed. Companies with tighter budgets are more apt to turn to pre-owned gear rather than pay list (or even discounted) price for new equipment, especially if there is a large secondary market of pre-owned hardware. On the other hand, second-hand, more unique equipment in a growing market is less likely to be available - hence Acme Packet's predictions of 5 percent growth during 2009.

For more:
- NHR's release can be found here [1].
- How big is Excel? The company logged one billion minutes per month on its Veraz MGN Switch Network [2]