Response: Extreme Charges License Fee When Using OEM SFPs, Limits Bandwidth

Extreme Network now charges a license fee for ports that have 40G/100G OEM or third party SFPs installed. If you don’t purchase a license within 90 days, it will limit bandwidth to 25%.

How crappy is that ? Hiding the full price of the switch with hidden SFP pricing strategies is a dumb idea that all the big vendors have.  What about simply being honest and calling it what it is – a per-port licensing fee designed to extract more revenue from a shrinking product market.

From the “Pluggable Hardware Installation Guide” on the Extreme support site:

Beginning with EXOS 15.5, customers will need to purchase a feature license to achieve full functionality of new unapproved third-party 40G or 100G optical interfaces. If customers do not purchase the feature license for these new modules, they will receive an informational message via SNMP/ Syslog. This message will indicate that they have an unapproved third- party 40G or 100G optic and that a feature license is required for full functionality of the new hardware. Customers will have 90 days to obtain the feature pack before the port’s egress bandwidth is rate-limited to 25% of line rate.

I’ve been saying for some time that SFPs include a “per port license fee” for the switch. I’m not picking on Extreme Networks here since all the big vendors have some version of this. For example, Cisco SFPs cost 10 to 20 times the price of smaller vendors while the physical product is identical to OEM versions freely available.

The EtherealMind View

Sales of Ethernet switches are in steep decline and vendors are desperately looking for ways to maintain revenue because sales are not going to increase . Cisco is rumoured to make over USD$2 Billion year on SFP sales.

My advice to customers is to calculate the the full price of a new Ethernet switch, including a selection of optics, when comparing vendor pricing. Vendors have discounted the physical switch to make their product look cheaper but gouging customers with high priced SFP modules.

Or consider using Whitebox Ethernet with Cumulus Networks. With optics included, savings of more than 80% are expected and for that amount of money, it will be worth trying out.

 

  • http://packetpushers.net/author/ecbanks Ethan Banks

    Extreme, as Greg points out, charging extra for SFPs is not a differentiator. Others do that same silly thing. “Silly” because engineers know from experience that third-party optics work just fine 99% of the time.

    Want to stand out from the crowd? Stop being evil. Instead, certify third-party optics to work on your platforms. That will get some folks’ attention, as it’s no surprise to those of us building data center networks that cabling and optics are a huge part of the cost. Come in doing the right thing, then market that you’re doing so.

    That’s the sort of thing that will help you displace incumbent vendors. Amazing tech isn’t enough to displace incumbents in this market. The price squeeze is on, and that’s going to be felt more and more over the next few years. Everyone’s cost conscious, and it’s harder and harder to justify the cost of premium-branded gear when whitebox might just get the job done. This optic stunt is just a needless slap in the face to a potential buyer.

  • http://blog.cnidus.net Doug Youd

    Thanks for the Cumulus networks mention Greg :) We had exactly this experience with a customer recently… and wrote a short blog on the process.

    http://cumulusnetworks.com/blog/detail/faster-easier-and-affordable/

  • http://lkhill.com/ Lindsay Hill

    Funnily enough I’m looking at a quote for a vendor SFP today, and it’s over $3K…with a 3-4 week lead time (it’s not a standard SR SFP). Alternative OEM options are 1/10th the price, and I can get them delivered within a couple of days.

    Good thing we’re not using Extreme gear.

  • ppr1

    Oddly extreme had actually been very open to using 3rd party optics until recently. You could take a cisco coded SFP and stick it in an extreme switch without it even blinking. No “service unsupported transceiver” here.

    Some may argue it is worth paying the extra, and that it covers the costs of interoperability testing, etc. To those vendors I want to share two stories – firstly the vendor whose vendor supported optics stopped working after a software upgrade (oops we forgot to test those, here have a patch). Secondly the vendor who couldn’t guarantee whether or not their SFPs had DOM support (apparently they have 3 different factories they source SFPs from, two factories produce SFPs that support DOM, the other doesn’t, they all get the same vendor logo and part number stamped on).

    Bonus points to arista for not playing SFP locking games too.

  • insekt

    With such high density SFP switches, for sure it’s EXTREMELY profitable business =)
    https://dl.dropboxusercontent.com/u/11851055/extreme_3sfp.png