The Truth About Cisco Compatible Optics

Today’s competitive market puts a great deal of pressure on CIO’s, CTO's, purchasing clerks, and other personnel to keep costs down as much as possible without sacrificing quality or efficiency.  That is a tall order indeed and one that has certainly had an interesting effect on the way business is conducted throughout the world.  The demand for Cisco Compatible optics and Juniper Compatible optics continues to rise and consumers are constantly looking for options that relieve the financial burden of operations. The unfortunate reality is that there is a huge price discrepancy between OEM products and their compatible counterparts, leading consumers to question why the discrepancy exists and if the discrepancy is a reflection of poor quality on the part of 3rd Party Distributors even while considering their purchase due to the savings involved.  Is it possible for consumers to safely purchase optics from 3rd Party Distributors and reap the benefit of cost savings?  Where did Compatible companies come from and why are their products so much less expensive than those sold by OEMs?

First, a History Lesson on Optical Transceivers:

The economy has been consistently struggling for years, now, which has had a direct effect on every industry in the nation.  As budgets began to shrink while the demand for optics grew, conscientious CTO’s, Network Admins and purchasing clerks were forced to start looking into other options for supplies due to the seemingly outrageous costs of purchasing products directly from OEM’s.  3rd Party companies were born and began purchasing and redistributing compatible products at a fraction of what OEM’s were charging.  The price discrepancy is so great that many consumers today are still unsure what is going on or if 3rd Party purchases are reliable. 

Ultimately, the concerns boil down to one major question: Are 3rd Party Optics and other products of poorer quality and/or somehow different than those offered by OEMs? 

In order to find the answer to these questions, consumers must understand how the manufacture and sale of optics works.   Most consumers are under the impression that companies such as Cisco charge and arm and a leg for their products because they are the ones manufacturing them for full compatibility with their products.  This is a reasonable assumption however; this is not actually the case.  The reality is that every company in the world that sells or supplies optic transceivers and their components are pulling from the same handful of contract manufacturers.  There are very few optical manufacturers in the entire world and those contractors supply every other company with their products, whether they be Cisco or Juniper or 3rd party distributors.

In truth, Cisco, Juniper and all the other name-brand product distributors may have never manufactured their own products.  What they do is purchase their products from designated contract manufacturers that are pre-programmed with the specifications they need to make the optics compatible with their systems.  Take Cisco, for example.  They purchase transceivers from their manufacturers that are preprogrammed with specific firmware on the EEProm of transceivers so that it functions correctly in their unique switch platform.  There are many similar examples of this in the industry; Cisco is not the only company doing this as it is basically standard practice for OEMs.  Cisco then feels justified in marking up their optics by as much as 1000% because they have the reputation to do so.  Consumers are unaware that they can get these same parts, with the same specifications for compatibility from 3rd party distributors for a tiny fraction of the cost. 

It is natural for any network manager to assume that if their network elements are Cisco, then they need Cisco’s optics in order for everything to function properly. 

The good news is that other companies are able to offer the same products that are preprogrammed with their own firmware that has been developed with the specific intention of making it compatible with Cisco systems (or any other system, depending on the product in question).  Third party companies charge up to 90% less for their products, giving them a highly effective business model.  The one and only difference between an optical transceiver from Cisco vs. an optical transceiver from a compatible company is the cost.  The third party companies simply don't over-inflate the price.

Many consumers are completely unaware of this reality and some will even insist that the only way to ensure that their money is wisely spent is to purchase name-brand optics.  Yet, as the economy continues to struggle and budgets continue to shrink while demand for various services and products rises, the situation appears more and more ridiculous.  Why would anyone prefer to pay a thousand times what a commodity product is actually worth if they don’t have to?

Compatible Products: Nothing But Benefit

The main difference between a third party distributor and an OEM is what they do.  Third party distributors that offer compatible products typically offer a large variety of products that are compatible with all the major OEMs.  OEMs offer a specific range of products that work with their systems and their systems only.  A business running Cisco, for example, needs optics that are compatible with Cisco’s switches.  Cisco as a company has no interest whatsoever in making sure their optical transceivers work properly in a Juniper switch.  As such, they only purchase and redistribute optics for their products.  3rd Party businesses have a completely different business model.  

The important point to understand from all of the above is that the two business types have very little in common other than that they offer the exact same hardware for vastly different prices.  Unfortunately,  many network managers and purchasing clerks are under the impression that third party distributors offer products as such an enormous discount at the cost of quality.  As mentioned in the previous section, however, there is no difference between the products at all as both the optics sold by Cisco and those sold by reputable companies are manufactured by the same contractors.  As a result, there is literally no discernible difference in quality or manufacture between a GBIC, SFP, SFP+, X2, XENPAK purchased from Cisco and Cisco compatible optics purchased from Hummingbird Networks.

Naturally, the main concern once worries about quality have been addressed, would be compatibility.  It is reasonable to expect Juniper to sell products that are guaranteed compatible with their systems yet consumers may not have that same comfort level when purchasing from a third party distributor.