Network Hardware Resale Frequently Asked Questions

1. Who is Network Hardware Resale (NHR) and what makes you the world’s leading provider and most trusted source for pre-owned networking gear? Founded in 1986, Network Hardware Resale (www.networkhardware.com) has become the largest alternate source for pre-owned and refurbished networking equipment, by offering a wide range of products from leading vendors such as Cisco, Juniper, Extreme and Redback—all with a standard, one-year warranty. Based in Santa Barbara, Calif., with its European headquarters in Amsterdam, the company supports a global customer base of more than 10,000 organizations with proven, quality business practices, highly responsive customer service and more than $100 million in inventory. NHR has achieved 25 consecutive quarters of profitability and is on target to exceed $135 million in revenue in 2006. This represents almost triple 2003’s performance, and far exceeds any competitor. Inc. magazine has named NHR one of the fastest growing private companies in the U.S. for four consecutive years. 2. What are the differences between “pre-owned,” “refurbished” and “used” equipment? What does “new/open box” and “new/in box” mean? NHR considers all equipment its sells as “pre-owned,” meaning originally it was sold by the manufacturer or an authorized reseller and now is being resold. We also favor the word “refurbished” because all NHR’s wares have undergone full inspection, testing and reconditioning to return the equipment to as close to original condition as possible. This entails cleaning the chassis, replacing necessary components and always putting in new memory. Our goal is to return equipment to “like new” condition while offering exceptional savings of between 50 and 90 percent off manufacturers’ list prices. “Used” equipment, as offered by other providers in the secondary market, may mean nothing more than reselling gear in as-is condition. Equipment that is called “new/open box” can range in condition from mint to two or more years old and already resold multiple times. “New/in box” typically denotes the product is from the OEM’s distribution channel with its original tape unopened. In either of these cases, NHR opens the boxes to verify the contents and tests the equipment to make sure it is up to specification. As NHR does not sell any new products, both of these instances would be considered “pre-owned” in our vernacular.

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3. How large is the market for pre-owned networking equipment? While the size of the secondary market has been the subject of much debate and some controversy, industry analysts seem to agree that momentum is gaining as corporations of all sizes strive to maximize their technology capital investments. A Gartner report in 2004 gauged the market then at $2 billion. A survey in 2002 by CIO.com revealed that 77 percent of companies contacted had purchased equipment from the secondary market while 46 percent expected spending to increase. As the secondary market continues to grow, NHR expects the leading analyst firms to follow this burgeoning industry segment more closely. 4. What types of equipment are available on the secondary market? Today, almost any kind of networking gear can be found for sale on the secondary market. NHR’s inventory is typically driven by current market demand, so the company aggressively pursues the top 100-to-200 products in order to provide customers with the most popular Cisco routers and other leading network equipment within 24-to-48 hours. With its extensive resources and contacts throughout many vertical markets, NHR secures 99 percent of the requests received from customers. 5. Specifically, what equipment is available from NHR? NHR carries more than $100 million in inventory of pre-owned routers, switches and other network hardware, including the full line of Cisco products: routers, switches, access servers, security products, IP telephony products, VoIP/IP phones as well as content/storage products, memory, modules and accessories. NHR also carries the full line of pre-owned, refurbished and used Juniper routers, Extreme switches and Redback routers. 6. How much equipment inventory does NHR carry? NHR has more than $100 million in inventory—by far the most in the secondary market. Having such a wide range of networking equipment on hand helps NHR remain exceptionally responsive to its customers. The company maintains a database of more than 2,000 resources globally along with state-of-the-art databases for tracking every one of its equipment acquisitions and purchases. As a result, NHR typically has the most popular as well as hard-to-find networking gear available and ready to ship within 24-to-48 hours. 7. What type of warranty does NHR provide on the equipment it sells? In June 2004, NHR led the secondary market by introducing the first, standard one-year, overnight replacement warranty on every equipment purchase. In doing so, NHR provides the terms and services most desired by Global 1000 organizations while surpassing the warranty terms offered by many OEMs and other secondary network equipment vendors.

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8. How does NHR ensure product integrity/quality assurance of pre-owned equipment? NHR will only buy from legitimate suppliers that have clear and free title to the equipment. Every piece of equipment taken into NHR’s vast inventory then undergoes complete refurbishment and testing. These kinds of standard practices yield an equipment failure rate of less than one percent—which stands up to the levels of the OEMs. 9. What kind of customer service and technical support do NHR customers receive? NHR has assembled the most knowledgeable, technical and service-driven support team in the secondary market. The company’s technicians are all Ciscocertified with substantial real-world technical expertise obtained from testing up to 50-to-100 pieces of networking gear each day. With extensive experience resolving interface and compatibility issues, the team expedites answers to most technical issues and questions. Sales and technical support are available from the company’s California, metropolitan New York and Amsterdam locations. Postsale technical support also is available at no extra charge. 10. Does NHR offer any additional services, such as asset recovery? NHR offers asset recovery services to assist customers in converting excess or depreciated assets into working capital. Customers can sell excess or end-of-life equipment to NHR for trade or credit toward other equipment. NHR also offers disaster recovery assistance with fast and economical emergency replacement of essential networking equipment to minimize the impact of disasters while lowering overall business risks. Additionally, NHR offers flexible network rental and leasing options for companies needing to fill short-term demands or meet immediate needs for networking technology with limited capital. 11. What are the benefits of purchasing pre-owned equipment? The key benefits are substantial savings and expedited delivery. Companies buying pre-owned networking gear can save as much as 90 percent off manufacturers’ list prices. When dealing with NHR, another clear benefit is being able to receive expedited product shipments. In a time when OEMs may take 10 to 80 days to fulfill orders, NHR can ship overnight if the product is in stock. 12. Are there any risks in buying pre-owned equipment? Of course, there are risks in purchasing any kind of equipment—even new. NHR, however, does the utmost to reduce risks. In fact, our failure rate on equipment delivered is less than one percent—which compares favorably with OEMs’ new gear. At NHR, every piece of equipment we sell is fully refurbished and tested to maintain OEM standards and is delivered with maximum memory. These

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practices go a long way toward alleviating risks—along with the company’s standard, one-year warranty on all products. 13. Is it illegal to buy pre-owned or used networking equipment? It is perfectly legal to purchase from an alternate source. It is akin to how people buy used books, CDs and DVDs. They can be resold forever and many times. The concept follows what is called the “first sale doctrine.” The same goes for the software that accompanies networking equipment. Manufacturers cannot make customers re-license software as there is no legal impediment to using the preowned equipment and the accompanying software. What is illegal is copying the software and offering it for resale. 14. What types of organizations buy pre-owned networking equipment from NHR and what do they primarily use if for? NHR has sold pre-owned equipment more than 10,000 organizations, spanning Global 1000 enterprises, small- and mid-sized businesses, telecommunications service providers, financial institutions, government entities, educational institutions and healthcare organizations. Most of the equipment, including deployments in carrier networks where uptime is essential, is used in production environments. While some organizations buy equipment from NHR for sparing, testing and disaster recovery applications, the majority use the equipment to support front-line service and network expansions.

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