Refurbished equipment worries Asian firms

Quality is the biggest concern for Asian enterprises when considering buying reconditioned secondary market networking gear, but level of concern differs between countries, says refurbished equipment vendor.

When it comes to making the decision to buy refurbished networking equipment, Asian companies are most concerned about quality and where the products come from, said an exec from a company specializing in sales of refurbished networking hardware.

Mike Sheldon, president and CEO of Network Hardware Resale (NHR), told ZDNet Asia in an interview that quality is the number one concern for Asian enterprises when considering refurbished networking equipment.

However, the level of importance put upon quality differs from country to country, he noted. "[Perception of quality] is extremely important in Japan--my understanding is that they don't even buy used cars in Japan--but that's less true in Hong Kong," he said.

The quality of equipment is important for NHR, which has been in the secondary networking equipment market for 25 years. According to Sheldon, the company's products are predominantly Cisco-branded networking gear, although it does have products from other networking firms such as Juniper Networks and Brocade.

As NHR competes directly with networking giant Cisco, the only way it is able to compete is to "focus a great deal of time and money on quality", said Sheldon.

"Given how critical networking is to a company, there are very few people who would say, 'It's OK if [the refurbished networking equipment] doesn't work well because it's cheaper.' That would never be acceptable", he said.

To lessen those concerns, NHR keeps its failure rate to under 0.5 percent with rigorous testing of equipment as well as refurbishing those with missing components, noted Sheldon. Further reassurance comes in the form of free one-year warranties and add-on coverage that allows 24-hour support and next business day replacements, he added.

NHR sells both new and refurbished Cisco-branded equipment, said Sheldon. Two-thirds of the stock are older equipment bought from its customers, while the rest are new equipment purchased from Cisco resellers that are stranded with extra stock.

He explained that Cisco generally does not accept returns, so sometimes its partner networks are stuck with equipment from customers canceling orders or their business closing down. NHR then buys the stock at a lower price to resell.

While price is an attractive point for customers, Sheldon noted that availability of stock is the company's strong competitive advantage.

"The very largest customers probably have huge discounts from Cisco, but they can't always plan perfectly--sometimes they forget something or something gets delayed," he said. These companies then turn to NHR to "fill the gap" without having to wait weeks for pieces of equipment.

"It takes weeks and even months to get equipment from Cisco. We can deliver almost everything in a week," he said.

The company has four warehouses located in Amsterdam, Santa Barbara, Dallas and Singapore, said Sheldon.

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