With a few exceptions (eg, Acacia), Cisco does not manufacture its own optics. Instead, it buys massive amounts of optics from OEMs and re-labels / re-sells them. Does that mean that the 3rd-party optics on the open market are the same as the Cisco optics? No, not necessarily...
Cisco will put out an optics RFP to the reputable optics OEMs (eg, Finisar/II-VI, Avago/Broadcom, Innolight, etc) that can handle Cisco purchase volumes, with RFP technical specs that can be more stringent than those required by the IEEE or the MSA. Cisco will then take samples from down-selected RFP respondents to qualify in their labs. Lab qualification trials very often reveal the need for tweaks to an OEM's product, which most are happy to make, given the potential sales volumes. These Cisco-specific tweaks can bifurcate an OEM's product line if the OEM chooses to continue to sell the untweaked product on the open market. An OEM's contract with Cisco does not prevent the OEM from selling the Cisco-tweaked product on the open market, but the OEM cannot sell it using the exact same product number purchased by Cisco (product number will be slightly modified), nor can they market the tweaked product as "Cisco".
There are also times when a Cisco technical spec can only be met by a fraction of the OEM's production run, with OEM quality-control testing dividing the production "yield" into two buckets: (1) sellable to Cisco and (2) not sellable to Cisco, but still meets IEEE and MSA specs. Note that the not-sellable-to-Cisco bucket can still be sold on the open market as functioning optics. For this reason, and for Cisco-specific product tweaks, an OEM can end up with two products supporting the same IEEE PHY, but they are not functionally identical: one product OEM'ed to Cisco and one product sold on the open market that is not Cisco-qualified. Again, the OEM can sell the Cisco-specific products on the open market, but for economic reasons they may choose not to. The only way to be certain that you are buying Cisco-qualified optics is to purchase Cisco-branded optics through a Cisco-authorized channel.
So what about the enormous price difference between Cisco-branded and 3rd-party optics? A few thoughts on that:
- Only compare Cisco optics prices to those of reputable OEM products purchased through reputable 3rd-party sales channels. Fans, power supplies, and optics are the items that wear out the fastest, so quality is everything when it comes to optics. Network downtime is likely to cost you far more than the purchase price of a $35 optic that comes from a low-quality source.
- Absolutely nobody in Cisco is interested in selling any product for $35. A Cisco account manager having a five minute conversation with the customer or internally over a $35 order would eliminate any profit, not to mention that processing the order would cost more than the purchase price. The Cisco AM would need to sell many hundreds of $35 items daily to meet quota. Bring a large sales volume to Cisco and get a big discount.
- Everybody should negotiate a discount on Cisco purchases; nobody should pay list price. List price is just Cisco's opening offer in a price negotiation.
- Cisco successfully competes to become customers' 3rd-party optics vendors. Wait, what? For customers with large networks of non-Cisco switches/routers, Cisco can compete on price and service to provide the optics to that non-Cisco gear, as Cisco's purchase of optics from OEMs is so massive that they get huge discounts from the OEMs. Cisco can compete on price for customers' optics business, if the volumes make business sense.
- Generally, OEMs do not test their products against equipment vendors' product lines and software images; they test against the IEEE and MSA specs to claim conformity. Ask the 3rd-party optic vendor which Cisco products they tested and with what versions of software? A 3rd-party's customers are really their compatibility test lab. By contrast, Cisco qualifies their branded optics against their hardware and software before saying "supported". How much Cisco's testing is worth to you is for you to decide.
- If you run into an issue with 3rd-party optics, it is up to that 3rd-party to troubleshoot with you to arrive at root cause. What resources can that 3rd-party muster to troubleshoot issues? Cisco TAC troubleshooting is worth something, but how much it is worth to you is for you to decide. Alternatively, you could just throw away a 3rd-party optic and move on to another vendor if troubleshooting is not a concern for you.
Disclaimer: I am long in CSCO
