Too Simplistic slammed you and you in turn slammed him/her. However, he/she is somewhat correct and I have seen similar experiences. There is a lot of work in qualifying SFP modules. They are not all alike even though they should be. There can be serious variations in quality, heat output, power consumption and wavelength sometimes even in the same module by the same manufacturer (they change parts and process without telling the vendor and it causes problems so we find out about the “small” changes). My understanding from the HW experts that I work with is that the SFP is a very loose standard.

Companies, such as cisco and others, have to account for qualification testing and then standing behind these products (they can not test every one shipped) and they are mass produced and defect rate is actually fairly high. They also have to account for the cost of supporting/troubleshooting and replacing defective modules for their customers.

That said, there is a lot of markup in the module but also very large discounting on modules and whole systems (of which the SFP module is expected to help make up for the loss on other components).

I would like to know where you got your numbers because frankly, I do not believe they are very realistic (i.e. they are too simple). Even if cisco prices the $25 SFP at $250, which they do. They then often discount the system it is put in at 50-60% or more. To claim that they make 25% on SFPs based on how many SFPs they sell at list price is not accurate. If you said they make 5-10% I might believe it because they sell a lot of SFPs.

Customers often come complaining about the price and when they try to buy the components themselves to “save money” as toosimplistic stated, they run into many problems with the components they get and they don’t get the volume discount that cisco does either. In the end the vendor does provide a lot of value that the optical company can not on their own. I would agree that cisco probably exerts their leverage better than anyone else and to some extent it may be unhealthy for their suppliers in the long run.

First and foremost, I was responsible for maintaining and running the network for the UCSB College of Letters and Science in the early 90’s.

Your explanation makes no sense. If Cisco tested each and every module they receive from a supplier, it would- but they don’t. So if in fact you bought modules from the same supplier to Cisco you would have an equal chance of failure as a Cisco branded module. Your ‘10 different parameters’ are tested more extensively by a quality module supplier than Cisco itself.

Finally, if you are going to point accusatory fingers, stop hiding behind an alias, and perhaps you could start by at least posting your message from the University you work at and not a generic IP address. It would lend more authenticity to your claims.

In my network, when I use so called equivalent components from from the same vendors which Cisco supplies and the
components are not Cisco certified, I have always lended
into trouble, without exception.

Just to give an exact picture, we bought SFPs from the same
vendor which Cisco supplies but the catch is that all SFPs
are not the same. They have too many variations and they are
not completely passive components but do communicate with
networking gear. There are at least 10 different critical
parameters which must be right of 99.99% (just 2 9s) uptime.
In our components we found bunch of problems and the manufacture finally did acknowledge that compatibility tests
with network modules are REQUIRED!

Cisco did let our university these components allowing us
to bypass checks but the end result was that we were better
off getting Cisco approved optics.

Try yourself before really falling for soooooooo much
simplicity of a naive author who never seem to have worked
on a network.

-NetAddmin

The author finds this trend worrisome not because monopolists or oligopolists in the U.S. will charge consumers higher prices, but that they will dictate pricing from their suppliers, and that “it deprives the firms that actually manufacture products from obtaining adequate return on their investment. In other words, the ultimate danger of monopsony is that, over time, it tends to destroy the machines and skills on which we all rely.”

That seems to apply more to Bookham and Avanex than to Fininsar and Agilient, but Andrew points out a very specific example here of monopsony at work: the customer (Cisco’s enterprise and service provider customers) do not suffer so much from high prices from Cisco’s near monopoly on Ethernet switching as do Cisco’s suppliers. This has opened the door for Chinese competitors to come in, and therefore has a negative consequence on domestic suppliers and our economy in some slight way.

This pratice, writ large across the whole U.S. economy, definitely warrants some critical thinking. The author lays the blame at the feet of Reagan-era legislators, who pushed free markets so hard that the market in many cases now is anything but free (Wal-Mart being the best example for suppliers of consumer goods). When I read this article a few weeks ago, I couldn’t help but think of telecom, and this report seems to confirm my suspicions with some real detail.

Thanks, Andrew

Scott Clavenna