Wednesday, February 29, 2012

OEM, Approved Optics and Internet Brokers

There are many differences between OEM, Approved Optics and Internet “Manufacturers” of optical transceivers. As one of the oldest third party distributors of optical transceivers, the three areas our clients always focus on are: price, availability and compatibility. At Approved Optics we believe quality is the backbone of our success and that quality permeates evenly between price, compatibility and availability.
The truth is Price is always an issue; whether  you are buying a car or skateboard price is always on the forefront of your buying decision. So why is there such a price difference between the OEM (Cisco, Juniper, HP, IBM), Approved Optics and other Internet Distributors?
Lets look at Approved Optics in comparison to the OEMs. Lets take Cisco for this discussion. By purchasing Approved Optics part number: GLC-SX-MM-A compared to Cisco’s GLC-SX-MM you would save 90% off of Cisco’s Best Customer Pricing. Why is that? Is Cisco’s manufacturing process that much different than Approved Optics? Well no, actually Approved Optics doesn’t manufacturer optical transceivers, never has…. but neither does Cisco. The truth is Cisco has never built its own Optical Transceivers (Or memory or cables either). A designated Contract Manufacturer builds the transceivers for Cisco. Cisco purchases the transceivers preprogrammed with their code on them and ships for fulfillment, sometimes straight from these factories.
Approved Optics has a unique relationship with the exact same Contract Manufacturers that build for the OEM’s such as Cisco. We purchase the same MSA Spec, OEM quality optical transceivers that Cisco does. So why the price difference if both Approved Optics and Cisco are buying from Contract Manufacturers? Is it because of testing? No (and we will get into that a little later). Are we buying them that much Cheaper? No, We actually purchase our product for much more than a huge OEM like Cisco does. So, why? It is quite simple.
Cisco charges 1000% more because it can. The ridiculous amount Cisco charges for its optical transceivers are well documented (read: Cisco Secret Franchise). Cisco’s profit margin and stock price are directly related to a product accessory they did not design, develop or manufacture. In a sense, there’s nothing truly wrong with this, they have done an excellent job of taking their strong Ethernet position and extracting value out of what is a commodity device. They threaten with the loss of SmartNet (Illegal – because of the Magnuson-Moss Act) and even go so far as putting anti-competitive coding on standard transceivers (Illegal – see Your Rights) in what has been an incredible retention of their margins.
So now we know Approved Optics’ transceiver line carries the highest level of quality in discrete hardware, algorithm/firmware, serial number sequence, packet integrity, and light strength… for all intensive purposes the same exact product as the OEM at a fraction of the cost. What separates Approved from the other online “manufacturers” out there? Everything.
Approved Optics is unique in our industry, we are priced affordably but program and test our product more extensively than the actual OEM’s (Remember: They purchase pre-programmed from their Contract Manufacturer) and certainly more than online resellers, refurb broker or memory manufacturers that have added the line to their offerings. No company has the extensive programming experience and test facilities like we do at Approved.
Why is programming so important? As we mentioned before, it is because Cisco and other manufacturers have placed specific attributes and firmware on the EEProm of the transceivers for it to function properly in their particular switch platform. It’s part of their margin retention efforts! They take a standard MSA Spec part and code it so they can charge 10x’s more than a part by a third party supplier. It’s great for them and bad for you! What Approved does is engineer the unique, independent code to work within their unique platforms. It’s engineering and it’s what we do! No other transceiver vendor does this to the extent of our capabilities, not the CM’s, they can’t; they are under contract with the Network OEM’s that they build for.
Being a programmer of transceivers leads us to the most important part in Approved’s Quality Process: testing. Since Approved purchases transceivers from Tier One Contract Manufacturers then programs them in-house, the only way to make sure they are 100% compatible in the platform they are intended for is to test them in the actual switch or router they are intended for. What this means, is that Approved has one of the largest multi-environmental testing labs that facilitates the testing and operation of hundreds of switches and routers spanning over 40 Network Equipment Manufactures, including: Cisco, Juniper, Force 10, IBM, HP, Brocade and on. It’s a huge expenditure for us and an incredible benefit for you. Purchasing an Approved Optical transceiver means you are purchasing a product that is Guaranteed Compatible in the system you intend to use it in. We aren’t a middleman like most of the other suppliers out there who depend on overseas distribution from China for programming and testing. We are an engineering and test house - it’s what we do! It’s why we are the fastest growing transceiver vendor in the industry, and why we might not be as cheap as some of the Internet Brokers but offer Tier One Quality Transceivers at a fraction of the cost of the OEMs.
Lastly, and for many of our high-end Telco and Data Center Engineers who have purchased and evaluated our product over the years, most importantly is availability. Approved carries a huge amount of inventory. Since we program in-house, we must stock a large amount of product; this means we can offer same day shipping on almost our entire product line, as well as offer expedited shipments for constrained DWDM and CWDM transceivers that take the OEM sometimes 12 weeks to ship. We ship in days what many OEMs ship in months.
Quality. Compatibility. Availability. Price. They are the cornerstone of what have made us successful. Although we would never call ourselves smart, we sure make the Data Centers/Telco Engineers and Purchasing Departments that use us look smart. After all, that is our goal. Give us a call; we are more than just a pretty site. Approved Optics, For the Smart Data Center!

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