Cisco Partners Helping Customers Save 'Thousands' By Replacing Faulty Products Through New Smart Net Contracts

Partners are saving customers big bucks who have Cisco products not covered for a faulty component by providing them with replacement products for the price of a service contract.

The faulty clock signal component issue – which Cisco disclosed on Feb. 2- causes some of Cisco's most popular product lines –namely Nexus switches, ASA firewalls, ISR routers and Meraki cloud managed switches – to fail after just 18 months of use. Cisco has cautioned that once the "component has failed, the system will stop functioning, will not boot and is not recoverable."

The San Jose, Calif. based networking giant is providing replacement products free of charge for the affected devices- before they fail if they are under warranty or covered by any valid Cisco services contract dated as of November 16, 2016. However, if an affected product is not under warranty or covered by a valid service contract, Cisco says it will provide a replacement product free of charge if a customer purchases a service contract for the new product.

[Related: Cisco Not Covering Onsite Services Costs For Smart Net Customers Affected By Faulty Component]

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Partners say the Cisco offer gives them an opportunity to bail affected customers out of a bad situation.

"Most of our customers have a service contract with us or with Cisco [Smart Net], but those that don't have the option of paying only 20 [percent] or 25 percent for a brand new product gets them out of a pickle," said a top Cisco Gold partner executive, noting only a handful of his customers do not have Smart Net. "So we're telling those customers -- and honestly it makes us even more of a trusted advisor -- that right now, 'Look, you didn't want a warranty or the 90 days are up or you didn't buy any type of service contract, here's a real good path towards fixing this."

While buying Smart Net will give customers free product replacement, it does not cover the cost of equipment installation.

A typical Smart Net contract costs between 10 percent to 30 percent of the total price of the product, according to partners. Several partners said the standard Smart Net services attach rate to Cisco products ranges from 70 percent to 90 percent.

The executive said one customer with multiple Adaptive Security Appliances (ASA) firewalls that are affected with the faulty clock component, which are not under warranty or a service contact, is now planning to buy Smart Net contracts for them. He said this option will save the customer "thousands and thousands of dollars" compared to purchasing new ASA firewalls.

Some partners believe the majority of their customers who don't have a valid services contract or a valid warranty for the affected products will take advantage of Cisco's offer and purchase Smart Net in the near future.

One top sales executive from a solution provider ranked on CRN's Solution Provider 500 list said the "few" affected customers who don't have a support contract or own a valid warranty have been "very open to" buying a new services contract so they don't have to pay for the full price of the product when it fails later on.

For example, he said one customer has several affected Integrated Services Routers (ISRs) with expired warranties and no service contracts. That customer stands to save upwards of $10,000 "if they choose to buy a services contract now" instead of buying new routers when the product eventually fails, he said.

"Look, if you buy anything and you decline to get ongoing support and maintenance for it, you're on your own," said the top sales executive. "What makes this any different? We're telling them that we aren't leaving them behind here and that paying 15 [percent] or maybe a little bit more for a replacement product is something to seriously to think about. We are constantly trying to position the value of maintenance and support."

The sales executive applauded Cisco for being "very proactive" in providing customers the ability to receive a new product for the cost of a Smart Net contract. He said customers typically don't purchase service contracts for devices such as phones and edge switches, but do buy services for routers and other core gear.

"I hope it turns into an opportunity for us to really show the difference in why we have an additional value-added services to be honest," said the Cisco Gold partner. "We're going to have more customers under service contracts and we'll probably be doing the onsite [replacement] services for those products … it will hopefully be a win-win for the customer and partner."