San Francisco, California January 17th, 2006: If you've ever strolled down the streets of New York, you’re familiar with the enterprising street vendors offering imitation Gucci handbags and fake Rolex watches at a fraction the price of retail. Don’t be surprised if you’re offered a Cisco router on your next stroll down Canal Street. While clear statistics specific to the network hardware market are not available, according to a white paper by AGMA and consulting company, KPMG, counterfeit products account for nearly 10% of the overall IT products market. So whether it’s luxury goods or high-end data networking, illicit manufacturers have seized the opportunity to flood the market with fake merchandise.
Third-Shift
Recently, there has been an explosion of counterfeit hardware that has hit the market. While these items can be poorly made knock-offs, in some cases are actually made by companies licensed by Cisco and other companies to manufacture their hardware. Only the discerning eye of an experienced reseller can hope to detect the physical subtleties between the Cisco original and fake. Companies in China, for example, already have the experience, manufacturing capacity, and technical know-how to produce Cisco's products. And sometimes they run extra shifts or a "third shift" to produce a surplus of product, which they distribute illegally on the black market. The result has been a surge in the level of counterfeit products available on the US market. Often, these products can be traded unknowingly to either the buyer or seller. That is until a problem arises.
These counterfeit products have a dramatically higher failure rate due to lax manufacturing controls. Buyers often find out they've been duped when exercising a warranty. Naturally, Cisco will refuse to honor a warranty on counterfeit product hence the end user is stuck with a lemon. Sometimes users will find out an item is counterfeit when they attempt to register a serial number, only to discover that what they have is a duplicated number, which has already been assigned to another buyer.
Gray-Market Deals
While savvy buyers will sometimes be wary of fire sale pricing on new Cisco hardware, counterfeiters have become increasingly smarter and have started marketing these products as "used" and leaking these products to the secondary market. Following the dot-com bust, buyers became accustomed to buying new out-of-box equipment at liquidation prices. This created a new channel for counterfeit sellers to slip their wares into the gray market with less scrutiny. By selling a new "counterfeit" item, as used, deeply discounted prices are less likely to raise a red flag for buyers.
Safe Tips
Most buyers don't realize they have counterfeit Cisco hardware until it's installed and begins to have issues. Excessive network outages and failures are often a signal that something in your network is a fake. This begs the question of how to protect yourself from buying counterfeit equipment.
1. Be wary of anything being sold from China. Sometimes Chinese sellers will even use fictitious names and pose as an American company. Typically English language skills can be a tip-off. If it sounds like an ad or email was written by Borat, don't buy.
2. Develop relationships with trusted vendors. Companies that have a long-standing reputation and extensive client base will most likely only buy from trusted sources. By working with someone you know and trust, you are less likely to encounter issues with fake gear.
3. Make sure your vendor checks serial numbers in the vendor database for EVERY piece they purchase.
4. Use your eyes, and look for anything unusual. Inspect the item carefully for irregularities in logo size, packaging materials, holograms and chip sets.
About Author:
Peter Gilberd has a collective 10 years experience in IT sales. He is currently the President for Townsend Assets Group (TAG), a leading reseller of pre-owned data networking and telecom equipment. For more comprehensive information on the process of selling used hardware, refer to TAG's Buy-Sell Used Cisco page.
