optics pricing (Re: Weird GigE Media Converter Behavior)

Michel Py michel at arneill-py.sacramento.ca.us
Sat Aug 28 17:28:24 UTC 2004


> Mikael Abrahamsson wrote:
> If the VSR card was $899k, the SR card was $999k and the LR
> card was $1099 you wouldn't hear any complaints from me.

That's even worse than the current prices! Given that the VSR is
currently 330k, the SR could be 450k and the IR 500k.


> It's the fact that Cisco is reselling optics (which
> is not their core business as far as I see it) at a
> huge markup that is bothering me.

Grow up; when you buy a Saab "brand" part or option for a Saab car, it
costs twice as much as the same aftermarket part, which still is twice
as much as what you could get if you bought a box of 10 directly from
the manufacturer, which is twice as much as it costs them to manufacture
overseas. Everyone does that.

Besides, there's nothing new about Cisco doing it, they've always have.
DRAM and Flash is not their core business either, and they have sold
both for 20 times the street price just because they built a proprietary
connector. Then some smart @55 at Kingston and Viking figured out if
Micron could manufacture the Cisco part so could they and that there was
tons of money to make and they begun to sell memory for "only" twice as
much as it could be, which in turn caused Cisco memory to drop to "only"
4 times the price of regular.

Economics 101. Cisco (and many other vendors, BTW) are not charities.
Their purpose is to make investors and shareholders (which includes me)
happy. And yes, this includes reselling OEM hardware at astronomical
prices when they can, because it never lasts long.

Michel.




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