The Software Files

Exposing decades of malpractices in the networking equipment industry

Overview

Over the past two decades, the networking equipment industry has experienced rapid growth and expansion as businesses worldwide continue to make substantial network infrastructure investments. Despite this industry attaining maturity, it remains riddled with numerous malpractices reminiscent of old-world cartel-like behavior where corporations collude to increase their collective profits through rehearsed messaging, price fixing and other restrictive practices.

There are hundreds of companies that manufacture networking hardware and software with larger players like Cisco, Nortel Networks, Juniper Networks, Alcatel-Lucent, Avaya and HP dominating this market and setting the tone for the overarching trends that prevail.

There are two basic business models for software manufacturers:

• Open-Source Software - is offered free-of-charge with best effort support for bug fixes. Customers that require dedicated on-going software support can purchase support contracts from several third-party providers. Linux and XORP are examples of such operating system software.
• Proprietary Software - is offered on a for-fee basis whereby the customer pays the manufacturer for use of the software and in return enjoys free on-going support for all the embedded features in the software. An example of this is Microsoft Windows operating system software which offers customers free ongoing software support and bug fixes. Today, most networking equipment run on proprietary software.

Unfortunately, networking equipment manufacturers (NEMs) continue to fraudulently extort billions of dollars annually from their customers by propagating the perception that customers that have paid for software licenses have to also pay additional fees to obtain fixes to defects found in such software.

This file of the Multiven dossier will examine these and other unethical malpractices in the networking equipment industry with the hope of educating customers and industry observers alike of their rights and hopefully effecting due corrective action.

The Industry Today

Today, very few businesses can compete effectively without an Internet Protocol network. As such the need for network maintenance service and support remain a priority for organizations of all sizes.

In an attempt to continuously grow revenue and profitability, the leading network equipment manufacturers (NEMs) perpetrate a number of unethical malpractices such as selling operating system software with tens of thousands of features with only a 90-day-warranty and refusing customers that do not purchase their maintenance contracts access to basic online documentation and tools required to install, operate and troubleshoot their equipment.

For NEMs, the revenue streams from equipment maintenance and support services used to be byproducts of new hardware sales. However, pursuant to the economic downtown of 2001, this value equation changed. Revenue from service and support maintenance contracts have become the primary driver of profitability for NEMs as growth in hardware sales remains highly competitive, especially with low-cost alternatives from emerging markets. Thus, NEMs closely guard and aggressively manage and negotiate service contract renewals directly and through their channel partners.

Added to this trend of higher margin pursuit, the leading NEMs have realized that their status of quasimonopoly in providing maintenance services allows them to get away with malpractices that forced customers to either buy their software support service contracts or suffer the consequences.

The Myths and the Malpractices

Industry malpractices exist because of the lack of regulations and structured customer advocacy oversight. This in turn leads to end-customers having little or no choice in the vendors that provide them goods and services. A lack of true competition translates to a lack of choice, which skews the bargaining power in favor of the vendor.

In the case of the networking equipment industry, customers are continuously subjected to unfair and unethical treatments despite their growing budgetary expenditure and loyalty. NEMs often coerce customers into buying maintenance services and support by threatening to discontinue customer access to software bug fixes and basic product documentation.

For a long time, the networking equipment industry has lacked independent watchdogs that would denounce these unethical tactics and advocate fair practices especially regarding software bug fixes. It is imperative that the following key issues be addressed to restore balance and fairness in the way customers are treated as the current status-quo is not sustainable.

The 90-day Software Warranty. Most new networking hardware usually comes bundled with a base level operating system software package (with an option to purchase and add-on more fully featured versions) and an "industry-standard" 90-day manufacturer warranty. The warranty implies that any hardware or software defect reported by customers within 90 days of product purchase will be replaced by the manufacturer typically within 10 business days of the manufacturer receiving the defective component. Customers without a manufacturer support contract will be declined support for defects reported beyond the 90-day warranty period. While this practice would be deemed legitimate for hardware as 90 days should be more than sufficient to test and discover manufacturer defects in hardware- it is simply inappropriate for software.

Considering the fact that there are thousands of features (and millions of lines of code) in all operating system software, it is preposterous to limit customers to this unrealistic timeline, especially bearing in mind that the average user enables less than 10% of all available features in the operating system software within the first 24 months of operation.

Mandatory-Maintenance-Contract-for-Software-Bug-Fixes. Customers cannot obtain software bug fixes unless their software - which is bundled with the hardware - is under maintenance contract with the manufacturer. If customers decide to turn down the NEM service contract offered at the hardware point of sale, they are informed that they will be denied software bug fixes after the 90-day warranty period unless they pay exorbitant fees of between US$300/hour - US$600/hour with a minimum of US$3000 - US$5000 for each TAC case.

Inherent-Software-Bugs. Mankind is fallible; as such all software designed by humans will always contain defects. In addition to inherent bugs in the code and unlike hardware, there is no wear and tear in software. Put differently, it is impossible for users of any kind of software to introduce defects into the software from overuse of the software. Therefore, if a bug is discovered in software 20 years after its original purchase, it must have come with the original purchase or was introduced during an upgrade. Either way, the customer is not at fault and as such, should not be made to pay the software manufacturer to fix inherent defects in the software.

Non-Transferable-Software-Licenses. Today, networking equipment operating system software licenses are not transferable. This means that if a customer buys an operating system software, installs it on a network hardware and decides to give it away or sell it in future, the recipient will have to re-pay the manufacturer for the same operating system software license. This is like asking the new owner of a pre-owned car to pay the manufacturer software license fees for use of the on-board navigation system.

Denial-of-Product-Documentation-for-New-Equipment. Some network equipment manufacturers still deny customers access to new product documentation, software super-user levels (in-depth debug-level software terminal access useful for troubleshooting) or complete access to the product software interface for configuration purposes unless they purchase support contracts along with the software licenses. As with the aforementioned malpractices, this behavior is not only unethical, it is illegal.

The proposed solutions

• Free Lifetime Software Support Warranty*. It is impossible to test tens of thousands of operating system software features for defects across limitless network scenarios within 90 days. And since defects are inherent in all software along with the fact that there is no wearand- tear in software, customers should enjoy a no-strings-attached free lifetime support warranty for all operating and application software bug fixes. Minor caveat: The free lifetime warranty proposed here is for software bug fixes only and should not include generic troubleshooting support.
• Sell Software Features a-la-carte. All software should be completely unbundled from hardware and sold a-la-carte on a per-feature basis just like music is sold today on a per-track basis on iTunes. This way, customers:
  
  1. Only pay for the features they really need
  2. Enjoy minimized exposure to defects
  3. Enjoy increased network availability.
  Quick mathematical tips:
  
  

  Network Availability ∝1
  Number of SW Features      The more software features you run, the less available your network is.

  Network Availability ∝1
  Age of Software       The older your software, the more available your network is.

• Transferable Software Licenses. Networking equipment operating system software licenses should be transferable the same way Microsoft operating system software is transferable on the following conditions:
  1. The original owner deletes all prior copies of the software
  2. The new owner agrees to the manufacturer End-User-License-Agreement
• Proactive Software Updates. Networking equipment manufacturers should proactively notify their customers of software defects so that they can review and take necessary preventive actions before their business is negatively impacted from a preventable network outage. Example, customers John and Jane both purchase the same software release. John runs into a defect, reports it to the manufacturer and gets it fixed. At the time of releasing the fix to John, the manufacturer should proactively notify Jane of this defect and release the fix for her before it impacts her network negatively.
  
  An example of such practice today is Microsoft, which disseminates bug fixes through the Internet to its customers worldwide proactively through its automatic software update program. Network equipment manufacturers can do the same with email and Really Simple Syndication (RSS) notifications in the absence of an automatic seamless machine-to-machine patch.

Conclusion

The aforementioned malpractices have helped network equipment manufacturers skim billions of dollars away from their customers fraudulently over the past decades by forcing them to pay for bug fixes in proprietary software that customers purchase. These companies have built a financial and business model around maintaining the face-value legitimacy of paying for software maintenance.

Imagine paying $100 for an operating system software with 100 embedded features and you enable 10 of those features immediately. After 18 months of use, you enable the 11th feature only to find out that it does not work as documented or worse still, it causes your network to suffer an outage thereby impacting your company's revenue, productivity and customer satisfaction amongst other concerns. Is it fair for the manufacturer to make you pay to fix this defect? The answer is NO. The $100 you initially paid was for 100 features that were expected to work as documented, not for 100 bugs

It is time to put an end to this industry-wide malpractice. Customers worldwide should wake up and demand their fundamental software right to a no-fee, no-strings-attached lifetime support warranty for all proprietary network equipment operating system software before renewing their support contracts or purchasing new hardware and software.

Footnote

*It is noteworthy to mention that HP recently announced an industry-first lifetime warranty for its enterprise-grade switch hardware and operating systems software. This is highly remarkable and should serve as the industry standard moving forward.

About the author

Peter Alfred-Adekeye is the founder and CEO of Multiven - the industry's first hardware-neutral global provider of premium multivendor IP network services, and Pingsta - a collaborative platform for the world's internetwork experts with a core goal of growing mysolvr™ into the world's most comprehensive openly-available repository of internetwork intelligence

Peter's insight into the networking industry is shaped by over fifteen years of service at leading technology companies across the globe and various entrepreneurial adventures. Before Multiven and Pingsta, Peter spent five years at Cisco in the advanced engineering and technical services organization where he excelled in various technical and non-technical leadership positions. He possesses an immense understanding of the internals of Cisco Internetwork Operating System - IOS and IOS-XR source code and a granular understanding of the architecture of all Cisco routers and switches especially the high-end routers - GSR 12000 and the CRS-1. Prior to Cisco, Peter held various network engineering positions at IBM and AT&T Global Network Services based out of the United Kingdom.

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