Cisco raises maintenance fees

Users of some older Cisco Systems Inc. gear will pay more for maintenance contracts as Cisco restructures its maintenance contract pricing this week.

Increased costs of about five per cent to 10 per cent on Cisco SMARTnet and SMARTnet Onsite maintenance contracts for older router product families – such as the Cisco 4500, 4700 and 7500 – took effect today. Increases of up to 20 per cent on Cisco’s Content Family Engine products also were instituted. While the increases will not be a major hit to customers, observers say the move is a good reminder to businesses that they should keep vigilant about their maintenance plans, and what their vendors are doing.

According to Cisco’s Web site, a typical maintenance contract for a Cisco 7505 would cost about US$5,100 per year under the new price guidelines, up from the previous cost of US$4,600 per year. A 4500 series router would cost about US$1,600 per year to maintain, up from US$1,430.

According to Cisco, the hardware service pricing increases will affect products that have not had increases in several years. “The price increase is primarily due to cumulative increases in the cost of providing service and to the increasing complexity and support requirements,” says Mike Farabelli, vice-president, services marketing at Cisco “These service adjustments will affect less than one half of one per cent of Cisco’s existing contractual install base.”

The increase in maintenance costs for older gear is a common move by network vendors, says Lawrence Orans, senior analyst with Gartner.

“It costs [Cisco] more money to provide maintenance for those products,” Orans says of the 4500, 4700 and 7500 product lines. “Cisco has new products that are out there that they want people to migrate to, so they’ll charge more to maintain the older products. That’s sound business.”

While Cisco is upping some of its hardware maintenance contract pricing, enterprise users could get a 15 per cent to 35 per cent break on pricing for its Software Application Support and Software Application Support plus Upgrades programs, which provide continuous equipment software and firmware upgrades for customers.

Overall, Orans says, “this is not something that will not tax the budgets of IT departments too greatly.”

The 10 per cent increase on certain products won’t be too much of a burden on customers, agrees Stu Feddersen, vice president of Network Visions, a network integration firm in Herndon, Va., that specializes in installing Cisco products. “They’ve done it before.”

Gartner says customers should look into third-party maintenance offerings if they are looking for deals on maintenance costs, but the firm warns that putting one degree of separation between its enterprise products and the manufacturer could cause enterprise customers to lose some control over how complex technical and maintenance issues are handled through Cisco support.

Arranging maintenance through the firm that installed the network has advantages other than potential cost savings, Feddersen says.

“Getting on-site maintenance directly [from Cisco] is negative sometimes from a customer standpoint,” he says. “Sometimes you may get someone that doesn’t know your network who just brings out a part and sticks it in.”

Customers with direct Cisco maintenance deals could be serviced by firms that were not involved with the installation of the gear.

Analysts and consultants also say that maintenance contracts for chassis-based switching and routing products should be looked over carefully. If companies are not using only the most complex and advanced modules and configurations on a product, they could probably go with a less-expensive maintenance plan, the firm says.

“Cisco wants to sell maintenance on everything, but sometimes it’s just not practical,” Feddersen says, adding that some users might look into eliminating maintenance contracts altogether for commodity network gear that runs in stable environments.

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