Grey-Market IT Equipment: A Cautionary Tale

December 31st, 2018
Grey-Market IT Equipment: A Cautionary Tale

Grey-Market IT Equipment: A Cautionary Tale

These days, every IT organization is under scrutiny to spend less. It is the responsibility of every IT practitioner to ensure they’re getting the best value for the money their organization spends on IT products and services. With shrinking budgets and increasing needs, some purchasers look for ways to get creative and find deals that may be just a little too good to be true.

Recently I had an experience with a customer who some time ago needed to refresh some network components. We proposed a Meraki cloud-managed solution for them as it was a good fit for the customer profile, but the customer decided to cut costs and corners by purchasing some of their equipment via eBay. Their intent was to get the gear cheaper off eBay (supposedly new in box) and buy new Meraki licenses from H.A.

We strongly cautioned against this approach for a variety of reasons, but in the end, Meraki does support the purchase of second-hand equipment. Here is a link to their policy on the topic.

So, the customer bought their gear and everything seemed OK during the deployment. Fast forward about 9 months later. That recent day, their firewall shut down and disappeared from their Meraki dashboard. The customer contacted H.A., and our engineer opened a case with Meraki support. Meraki support said:

“After additional investigation, I found that the firewall was part of a trial program, and the device was indeed shutdown after the trial period. Please confirm with your Admin network and with your  Meraki Representative for confirmation and guidance, as it is possible that the device will be removed again as it is reported as part of a trial.”

In other words, Meraki remotely killed the device. Why? Our account manager reached out to the Meraki rep covering the customer. The response from the Meraki rep was:

“So I don’t have good news, the gear was in fact part of a trial that was not returned or paid for. Support just did a mass shutdown of all of those somewhat “stolen" units which is why they are experiencing issues. If this unit had been properly unclaimed and resold they wouldn’t be experiencing this issue but that isn’t the case which is why grey market is always a risk.”

In other words, someone ordered this firewall as part of a free trial, did not purchase the device in the end (e.g., ended their trial), and either unknowingly or deceitfully then did not return the device and instead sold the device on eBay. Eventually, Meraki, as part of a batch cleanup, remotely killed the device since it was, in effect, stolen.

This is, admittedly, a rather extreme example, since the manufacturer was able to remotely disable the “stolen” equipment. However, I seen similar situations many times before where a device purchased through a private transaction or a less-than-reputable online seller may turn out to be ineligible for a support contract/warranty or some sort of a subscription renewal or a software upgrade because it has not officially been transferred to the party that now has possession of the physical device.

Purchasing IT equipment in this way – second-hand, through private transactions or online auction sites – is usually called the “grey market” because while legal to purchase a physical object in that way, it is often a violation of the manufacturer’s licensing terms and conditions for someone other than the original purchaser to then use the software that would run on that device. In short, the physical device itself is not the question, but a non-transferrable software license or subscription is.

To make such a purchase legitimate, most manufacturers have a process whereby the device in question can be “recertified” or “requalified” to make the transfer completely official and transfer/assign all applicable software licenses to the new owner. The problem is, most buyers don’t even realized this is required, and even if they do, they rarely bother. Worse yet, I’ve encountered many recently-hired administrators who have inherited an environment only to discover that their equipment inventory consists of grey-market gear that they can’t get manufacturer support on or obtain a much-needed software update for. A decision to turn to the grey market may become a major headache for someone down the road even if the risk is understood at the time of purchase.

Here at High Availability, we always try to make sure that our customers get a fair price and a great value on equipment they purchase from us. And our customers get the reassurances of working with an authorized reseller to purchase new equipment that is ready to run without hassles. We always recommend working with an authorized reseller to get your equipment, but if you do decide to buy from the grey market be sure to research the policies and requirements of the manufacturer in questions, understand the risks, and caveat emptor.

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