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Gartner: Protect yourself against Cisco maintenance price rises

Cisco customers could be faced with substantial price increases on their network router maintenance agreements, and users are...

Cisco customers could be faced with substantial price increases on their network router maintenance agreements, and users are being urged to start re-negotiating maintenance contracts before the 1 July deadline.

Cisco has told analyst group Gartner, that the cost of services, which come as part of its widely used SMARTnet maintenance contracts, will increase by between 5% and 20%.

Cisco informed Gartner of the plan to raise prices in the US. Cisco could not immediately confirm when the price rises would be introduced in Europe.

Global companies with a presence in the US will, however, certainly be affected from 1 July.

The price rises are between 5% and 10% for maintenance cover on the older 4500/4700 and 7500 router families, and average increases of 20% on the newer content engine products.

Gartner said: "The increases mark another attempt by Cisco to increase profit margins in a stagnant market."

Gartner recommends that Cisco customers do the following before 1 July:

  • Extend Cisco maintenance contracts under current prices

  • Negotiate maintenance rates before making any new purchases

  • Long-term customers should take advantage of multi-year commitments to increase discounts

  • Negotiate additional discounts for lightly configured chassis systems, which are not expected to need heavy maintenance

  • More controversially, Gartner recommends that companies consider bringing in third-party maintenance and ending their direct relationship with Cisco.

    While acknowledging that this tactic could be risky, Gartner said savings of anything between 10% and 50% on maintenance could be achieved.

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