Last week, I dug into a few of the benefits of buying IT gear from the gray market and working with less-expensive support contracts. Although it's true that in working with less-supported (or unsupported) gear you take on a much larger share of the responsibility if things go wrong, you can also save an enormous pile of money.
However, in addition to making sure you have appropriate spare equipment on site and have staffed appropriately to be able to handle failures yourself, you must be aware of the other dangers of working with gray-market gear -- especially when it comes from unscrupulous sources. Knowing what to look for when you're in the market for used tech is incredibly important if you're hoping to cut costs with gray-market purchases.
Unsurprisingly, hardware vendors are not shy about telling you about all the potential evils of the gray market. They claim that broken, misrepresented, incomplete, flat-out counterfeit, and even stolen hardware flood the outlets for used IT gear. It's easy to see why hardware manufacturers aren't jumping for joy when you decide to spend $20,000 on a used switch from a remarketer rather than $80,000 on a new one; if enough people did that (more than they already do), the manufacturers stand to lose huge amounts of revenue.
But the manufacturers' scare stories aren't all wrong; there's plenty of unscrupulous behavior in the gray market. In one of the more memorable cases, in 2008 the Defense Department bought a large number of cut-rate Cisco routers, only to find out that they were counterfeit -- assembled in China and sold with no support contracts and pirated Cisco software. Fortunately, that kind of large-scale deception is rare, but other risks need to be considered when dealing in the gray market, depending on the gear you're seeking.
For example, in the worst cases when buying replacement disks for a server, you might get an inoperable disk, it might die prematurely, or it might not be the right disk. I've seen a few situations where someone had used legitimate Dell or Hewlett-Packard drive sleds once containing legitimate disks. But the disks had died and were replaced with ultracheap consumer disks that couldn't withstand the workload expected of enterprise disks.
In this kind of purchase, the key is selecting gear that exactly matches your needs -- down to the original manufacturer's part number on the disk itself. Having good-quality pictures of the equipment can help you avoid much of that risk, so you can see exactly what you're buying and if it matches what is shipped to you.
Complications arise when you're dealing with more sophisticated tech, such as network and enterprise storage gear. In these cases, even completely legitimate hardware exactly matching the specifications you want could end up causing you real trouble.
For example, if you go on eBay and search for a NetApp FAS array, you're likely to find many disks and disk shelves for sale, but you'll also notice a few complete arrays -- some of which aren't even all that old. In all but a few instances, these arrays are being sold by remarketing firms that have no association with NetApp. These vendors lack the authority to transfer any existing warranty or, more important, software licensing to your name. Don't think this is a NetApp-specific issue: Pretty much all enterprise-grade storage and networking gear is sold with specific and generally nontransferrable software licenses.
Not having a support contract is one thing -- you may be willing to take that risk because you'll purchase spares and the like -- but running software you don't own and aren't legally allowed to operate is a completely different matter. Under such circumstances, you may be opening yourself and your company to a legitimate (though perhaps remote) risk of being sued for software piracy.
However, you can safely purchase and run off-lease or remarketed gear. It's simply an issue of finding a remarketer that does so legally. In the case of NetApp gear, many vendors can legally resell an entire SAN and transfer ownership of the licenses -- even provide real support contracts if you want them. Just make sure to get a signed letter on the original manufacturer's letterhead showing that the software licenses for the exact serial number of the equipment you've bought have been transferred. Otherwise, it's not legitimate.
Granted, going this route won't save you the same kind of money that purchasing gear from eBay will, but it's important to recognize that there's a (usually shady) reason the stuff you find there is so incredibly cheap. Getting authorized remarketed gear will still help your bottom line quite a bit versus buying new.
Enterprises of all shapes and sizes can cut costs significantly by working with lower-end support contracts, buying previous-generation tech, and learning to rely on themselves when the hardware dies. But be sure to consider the risks of buying through the gray market, and be careful about what you do purchase.
This article, "The 50 shades of the enterprise tech gray market," originally appeared at InfoWorld.com. Read more of Matt Prigge's Information Overload blog and follow the latest developments in storage at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.