If you’re someone who gets excited by opening a box of shiny new networking gear, then you might need to prepare yourself for what may be arriving in your data center over the next few years.
Before getting into that, though, it’s worth mentioning that this hasn’t been a great few months for new networking kit. For example, Cisco has reported that during its last quarter it saw revenue down 9% year on year, with product revenue down 13% and infrastructure platforms down an eye-watering 16%.
“We saw declines across switching, routing, data center and wireless, driven primarily by the weakness we saw in the enterprise and commercial markets,” said Kelly Kramer, Cisco’s CFO.
Cisco isn’t the only hardware vendor that has suffered like this, and that’s partly because of how enterprises have reacted to the pandemic. In the early stages there was a rush to buy and roll out the infrastructure required to cope with a mass of remote workers, and then there was a pause while enterprises caught their breath and looked at what changes were going to be necessary in the medium to long term.
Now it looks like businesses have made their plans and are ready to start work on new projects, many (but not all) of which are still related to remote working.
“Everybody is moving to this WAN re-architecture with SD-WAN and [SASE-style] cloud security,” Chuck Robbins, Cisco’s CEO, says.
Pre-Owned Networking Gear
So does this mean that lots of boxes of new gear will soon be arriving at your data center? Not necessarily. And that’s because what may actually be arriving is gear that is used. Pre-owned. Second hand. Recycled. Call it what you like.
Used networking kit is not something that many companies have been interested in in the past, but that looks like it’s changing. Enterprises of all sizes are beginning to buy both recycled brand-name hardware from the likes of Cisco and used no-label brands from China, according to research from IDC. It reckons that the secondhand market will be worth $36 billion by 2024, and is currently growing at a modest but significant CAGR of about 5%.
Supply and Demand
What are they using this kit for? IDC says it’s less for equipment refreshes and more to add to existing capacity. Most major hardware vendors now have a recycling and refurb operation, and these often offer warranties for the secondhand kit they sell.
This market is likely to be strong in the short term, if only because the pandemic has forced many companies out of business. That means there is plenty of supply. And for those still in business but struggling, it makes sense to sell old unwanted gear to free up funds to invest in what’s needed today.
On the demand side, things look equally as good. Businesses are beginning to spend on hardware again, but squeezed by the pandemic the estimated 24% reduction in TCO offered by secondhand hardware looks attractive.
Then there are those sustainability goals and commitments to a greener way of doing business. Buying used kit certainly looks good in those stockholder reports.
All of this is really a long way of saying: when those new boxes of networking gear arrive at your data center, don’t be too surprised if there’s nothing inside which is brand-spanking new.