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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.