NHR positions new support program as SMARTnet alternative 28 February, 2008 By Chris Talbot

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As a provider of pre-owned networking equipment, Network Hardware Resale (NHR) surpassed its projected annual revenue of $170 million (U.S.) by $6.7 million in 2007. The largest portion of its business is dealing in Cisco networking equipment, but the company also sells networking hardware from other vendors, including Juniper Networks, Extreme Networks and Foundry Networks. Mike Sheldon, president and CEO of Network Hardware Resale, estimated the networking equipment secondary market is valued at approximately $2 billion worldwide, and it's continuing to grow.

Contributing to that growth is a desire by some companies to spend less on networking equipment, but Sheldon noted that different customers have different reasons for buying on the secondary market. For instance, large service providers are mostly interested in finding legacy equipment they can no longer get from the networking vendors. While they may be price sensitive, availability is their top concern, followed by support of legacy equipment. Price is generally at the bottom of their priority lists, Sheldon said.

From an availability perspective, Sheldon said that for the higher-end networking hardware, Cisco builds to order, so the vendor doesn't have a lot of stock just sitting around waiting to be sold. Since NHR buys used networking equipment from various companies, it does have stock -- especially of equipment that networking vendors have discontinued and no longer support, he said.

"There's almost nothing I couldn't get a company in two days. Almost nothing," Sheldon said.

When dealing with SMBs, the priority is reversed. SMBs are very price-conscious. Support of legacy equipment and availability are their second and third priorities, Sheldon said.

"Overriding all of that, and I think the smaller the customer is the more important this is, is support," Sheldon said.

While NHR provides a certain level of support to its customers, those who want more advanced technical support can subscribe to the company's new NetSure program, which Sheldon compared to Cisco's SMARTnet support program.

"NetSure is an extension of our existing service and support," Sheldon said. NHR's traditional support model offers a one-year warranty on the hardware it sells, whereas other vendors may only offer 90 days, he added.

Businesses who need Cisco support would have to buy SMARTnet, "and that's expensive. On a standalone switch, it might be 15 or 20 per cent of the price of the product. And that's an annual cost," Sheldon said.

NetSure was designed to be more affordable while also reducing the subscription price for annual support as the hardware in question ages, he said.

"As equipment ages, the support cost goes down and down and down. Even on brand new equipment ... NetSure is pretty much always less than SMARTnet by something like 20 per cent, and on probably the vast majority of equipment people are actually using ... NetSure probably averages something like half or less the cost of SMARTnet," Sheldon said.

Through NetSure, NHR offers 24-hour technical support, which is staffed by the company's technicians, he noted.

NHR is positioning NetSure as an alternative to Cisco's SMARTnet, but Sheldon did note that SMARTnet does have certain benefits that NetSure can't provide -- the most notable of which is software updates. Businesses that require software updates on hardware need to go to the vendor, he added.

"There are some core data center pieces of equipment that for some customers require very frequent software updates. ... What we found in practice is that most customers, particularly the larger customers ... actually standardize on a given Cisco IOS division and roll that out everywhere and very infrequently update their software," Sheldon said.