Cisco tries to stop reseller abuse

Cisco Systems has terminated a portion of the company's worldwide trade-in program, amid accusations that it was being abused.

Apparently, many Cisco resellers were using the trade-in program, which covered old Cisco and other competitive vendor's equipment, as a way to get around restrictions Cisco had put in place on discounting prices beyond a certain level.

Consequently, Cisco will no longer accept competitive trade-in equipment in exchange for additional discounts under its Competitive Technology Migration Program (CTMP).

The CTMP trade-in calculator, which was used to predetermine trade-in discounts, is also no longer accessible to the channel partner community. Instead, Cisco has said it will review and determine discounts for competitive replacement prospects on a case-by-case basis.

Partners and resellers will need to work with their Cisco account team to perform Cisco trade-ins, the company said.

Stan Schatt, an analyst at Giga Information Group, said: "Discontinuation of this program is probably a good thing since Cisco will still provide trade-ins. Especially, given all the Cisco resellers out there, and the fact that some resellers did not play fair but took in non-competitive equipment in order to win the sale over other Cisco resellers."

He also pointed out that the end result for Cisco customers will be higher prices, but not for a while.

"There is still so much barely used Cisco equipment being offered by way of the grey market and auctions, that there are pressures on resellers to be competitive, not so much against major Cisco competitors as against Cisco used equipment," Schatt said.

A Cisco spokesman commenting on the trade-in changes said: "The modifications that we are making to the CTMP will maintain the Cisco tradition of offering investment protection for the company's existing customer base."

He added that at this time there are no plans for launching a new trade-in program.