Risky Business: Purchasing Grey Market Equipment Can Leave You Exposed
For many companies, 2021 has been a challenging year to procure networking and infrastructure hardware. Transforming networks to accommodate remote workers has stretched already thin IT budgets, and global chip shortages continue to impact product availability and lead times. As early as April, industry leader Cisco predicted that chip shortages would disrupt equipment production at least until the end of the year — guidance echoed by other manufacturers like HP, Dell, and Lenovo.
In this environment, some business leaders are tempted to explore other hardware procurement options, including the grey market. While the promise of lower hardware costs and apparent supply is appealing, the risks to security, network performance, and manufacturer support are considerable.
What Is the Grey Market?
‘Grey market’ products are new devices sold legally but not through a manufacturer’s authorized distribution channels. These products are often sold at low prices through discount websites, and typically sellers will have no local office or representatives. Used or refurbished equipment is sold similarly, sometimes by the same grey market sellers.
Both carry the same risks for prospective buyers.
Why ‘Buying Grey’ Can Be Bad for Your Business
While the initial purchase price of grey or secondary market equipment may be very attractive, customers should fully understand the business risks.
Here are some of the most common pitfalls encountered when purchasing gear from non-authorized sources:
Hardware has questionable origins. Grey market equipment may be counterfeit, stolen, illegally imported, or have damaged or substandard components. Questionable hardware may not perform as expected and can result in significant downtime for unsuspecting customers.
Invalid software licenses. Companies that buy from the grey or secondary market may not be purchasing valid software licensing for their equipment. As a result, they may not have access to manufacturer software updates or security patches. Maintaining updated security software is essential to protecting networks and sensitive data.
No manufacturer warranty or support. Manufacturers track hardware by serial number and often will not provide support or hardware replacement for equipment they determine hasn’t been procured through authorized channels. For example, a manufacturer may delay or even decline support for an end-to-end network issue if edge devices originate from the grey or secondary market.
Expensive inspection and licensing fees. Some manufacturers will provide hardware and software support for grey market equipment, but the process can be lengthy and costly. It often involves the physical inspection of equipment — a challenge if devices are deployed in multiple regional or branch offices. Customers may also have to purchase an authorized software license to gain support. The cost of inspection and licensing fees can run very high.
How Your Managed Service Provider Can Help
Procuring hardware through your Managed Service Provider (MSP) offers a wide range of benefits, including:
Pricing and lead times. Through established relationships with industry leaders like Cisco, HP, and Dell, your MSP can ensure you’re receiving competitive pricing (including any manufacturer incentives) and the best available delivery times.
Configuration and integration. Your MSP will help customize and integrate your equipment to perform optimally in your environment and in compliance with your firm’s security policies.
Flexible support options. MSP support options can be more comprehensive than manufacturer warranty and support. For example, hardware vendor support has specific deliverables (e.g., parts and labor) and may not cover device configuration or the integration of replacement devices. Many MSPs offer flexible, holistic service options that support your whole environment, not just individual manufacturer products.
Warranty, Licensing, and End-of-Life Support. Managing the warranty and support status of all devices in your network can be an administrative burden. Your MSP has the tools to track each device and report on warranty and support status. Your MSP can also alert you when devices require software upgrades or are approaching end-of-support or end-of-life and help build a plan for network additions or refreshes.
Plan Ahead to Tackle Long Lead Times
While ordering equipment through authorized channels will minimize the risk to your business, equipment shortages and shipping delays may be with us for some time. In response, companies should work with their MSPs to understand their device status (especially end-of-support and end-of-life dates), create a migration or upgrade plan, and place equipment orders well in advance of proposed installation dates. In some cases, your MSP may recommend you order equipment as early as year-end to ensure Q2 delivery.
At Thrive, our Procurement team works with manufacturers and distributors to deliver enterprise-level equipment. Our expert Engineering team can review your environment and equipment status and help manage your equipment refresh as needed.