Second hand Cisco reseller scouts Middle East

The company that claims to be the world's largest reseller of pre-owned networking equipment from Cisco is increasing its focus on the Middle East after recording a sharp upturn in sales from the region during the first six months of the year.

More than 25% of the US$170m sales that US-based Network Hardware Resale (NHR) expects to earn from selling pre-owned and new-surplus networking kit this year is set to originate from the EMEA theatre. And while only a small chunk of that figure will stem from the Middle East, the rate of growth is rapid enough for the company to explore the viability of increasing its exposure to the region.

"If you look at the growth from a percentage point of view then we see a huge increase and we are seriously thinking of setting up a Middle East team in Amsterdam," confessed Robert Wolthuis, EMEA general manager at NHR. "If that works well and the business continues to take off then we are considering moving that team to the Middle East and setting up an office there the year after next."

NHR has been in business for more than 20 years, selling pre-owned, used and refurbished networking hardware from Cisco, and other vendors such as Extreme and Juniper, to end-users of all sizes, government entities and telecommunications services providers.

The privately-held outfit, which claims to hold US$100m worth of inventory, typically purchases equipment from a variety of sources, including systems integrators holding leftover stock at the end of a project or telcos and ISPs with surplus or used kit. It then crosschecks serial numbers to ensure the products it buys are not counterfeit or stolen and puts the hardware through a rigorous testing process prior to resale. More significantly, it trades on the premise that it is able to heavily undercut market prices. "We have a huge stock of pre-owned equipment and what's interesting is that we can offer that at a huge saving," said Wolthuis. "If you typically look at the list price of Cisco, we can offer the product at a 75% to 90% discount, and we offer a one-year warranty with it."

The company admits its focus on the Middle East was limited last year, but reckons a threefold increase in sales - albeit from a small base - since January, coupled with strong interest from Middle East firms who visited its booth at this year's CeBIT fair in Germany, have whetted its appetite.

Existing Middle East sales have primarily come from the UAE and Saudi Arabia, and the company expects these two markets to form a central part of its plans moving forward. 65% of the firm's global revenues originate from end-users while the remaining chunk is the result of shipments to IT resellers, but Wolthuis believes this ratio is likely to be more skewed towards resellers in the Middle East and regards the channel as a potentially important client base.

"We have had a lot of interest from resellers in the region and that's also the nature of the Middle East markets as far as I can see," he said. "They have the relationships with certain companies so we'll absolutely go through those relationships to sell. The revenue growth that happened during the first half of the year came mainly through resellers."

The prospect of a provider like NHR expanding in the Middle East market looks likely to be dismissed as a major threat by authorised Cisco partners with established customer bases in the region. A senior management figure at one reputed Middle East Cisco distributor insists the visibility of secondary Cisco equipment dealers in the region remains low and disputes the suggestion that the discounts firms such as NHR profess to offer could damage the authorised channel: "Even if they can, the serious Cisco tier-one and tier-two players that do projects would never buy from these channels because there is the matter of warranty and Cisco SMARTnet support involved," said the source.

Cisco's regional channel manager for the Gulf region, Adrian Taylor, admits the vendor is not averse to customers purchasing refurbished equipment, but advises them to only do so from authorised Cisco sources. He insists the networking goliath places customer satisfaction at the top of its agenda and insists that belief is shared by partners that have invested significant resources in training, support, management and network and systems engineering talent.

"Furthermore, Cisco authorised partners are held to the same high ethical values and customer service standards that Cisco subscribes to," stressed Taylor. "Consequently, Cisco recommends that customers look to purchase equipment only from Cisco authorised partners and resellers. Our partners have access to genuine Cisco equipment, whether it is new or refurbished, and are able to offer the total Cisco solution - technical product solutions, support solutions, and financing solutions."

Taylor says resellers or customers which are offered refurbished hardware should "strongly consider" the option of purchasing pre-owned Cisco equipment made available through the Cisco Certified Refurbished Equipment programme, which is offered via Cisco Capital and authorised reseller partners.

"Cisco Certified Refurbished Equipment is Cisco hardware that has been fully refurbished to Cisco factory specifications and is backed by the same warranty, maintenance and support options as the equivalent new Cisco product," he explained. "Cisco Certified Refurbished Equipment is a price competitive and trusted alternative in those cases when buying new Cisco equipment is not an option. It provides unmatched performance, quality, support and value to customers considering purchasing product from a lower-priced competitor or purchasing used Cisco product from a broker or private party."