optics pricing (Re: Weird GigE Media Converter Behavior)

Sun Aug 29 18:53:54 UTC 2004

>> Michel Py wrote:
>> 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.

> Richard A Steenbergen wrote:
> Obviously. But us folks who run networks aren't charities either

FTR, I made the exact same point many times myself.

> Obviously it is the job of the vendor to try and squeeze as
> much money out of their customers as they possibly can, but
> at least smart folks have the CHOICE not to take the bait.

It's not that simple, because of two things: 1. Support and 2. The FUD
factor.

<me is the devil's advocate one more time>

1. Support: sometimes you will need vendor support, and this is
especially true of new products. Putting Kingston DRAM in a 2600 is one
thing; a limited test on a few routers will quickly show if it works or
not, and the odds of an IOS upgrade that would suddenly trigger the
third-party memory to cause problems are close to zero, as DRAM as long
passed the development stage and is now a commodity.

OTOH, you won't have that many OC-192 IRs or LRs to play with. Maybe
you'd try one third party PHY, then another one if the first one works,
and so on. And suddenly something changes (which does happen with new
products) and your vendor implements the changes on their PHYs but not
on yours. You're screwed.

2. FUD: How much revenue do these 4 OC-192s bring? This combined with
the multi-million cost of a CRS-1 system, is it worth the risk to save a
mere $200k street price or $400k list? Would you put your job on the
line for it?

</me is the devil's advocate one more time>

> We start to get annoyed when the vendors remove that choice
> by engaging in practices like locking down GBIC/SFP modules
> by vendor ID codes for no reason other than to force customers
> into paying absurd markup for their optics, intentionally
> designing interfaces with fixed optics so that you have to
> purchase more cards than you might actually need in order
> to have the necessary optics, etc.

Don't get me wrong: I'm equally annoyed, and I think that some pointing
out of the practice and whining about it can be healthy. After all, if
nobody whined about memory prices, we would still be facing the choice
of buying it at 20x cost with support or at 2x without. The point I was
trying to make is that during the initial phase of a product, there is
likely nothing we can do about it no matter how loud we whine (which
should not stop us to whine).

> Robert E. Seastrom wrote:
> [..CRS-1..] and nobody, not even certain well known crazy people,
> is going to pay money for one to use as a SOHO router).

Never say never. 7500s are common soho routers and there are a growing
number of us that are GSR wannabes, because we can't stand to see our
buddies have one. I do not plan to install it in my WC though.

Michel.