Summary
There are multiple reasons why Cisco has no reason to sell used networking gear.
Analysis
Used networking gear would have to sell at a much lower gross margin than what new Cisco gear would sell for (60% or more). Margin preservation is a high priority for Cisco.
Furthermore, a large theme of Cisco's business model is getting consumers to upgrade their networking gear, due to the new applications that faster technologies would enable (Cisco's telepresence videoconferencing for one). Becoming a reseller in the aftermarket is a direct contradiction of this, and Cisco in fact would be actively opposed to a market for used networking gear gaining too much traction.
Many metro-area networks (MANs) are overdue for upgrades, particularly in the United States, and Cisco stands to earn about $50 Billion in revenue during these upgrades. The sooner that Cisco can sell customers on the need to upgrade, the better. Used networking gear would merely be a distraction.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
