Newbridge plans to auction old networking
gear
By Wylie Wong
Staff Writer, CNET News.com
January 25, 2000, 4:00 a.m. PT
Newbridge Networks is hoping to auction off its excess networking equipment over the Web.
The Canadian firm plans to sell off some of its older gear to businesses through a Web
start-up called TekSell.com, which aims to become an eBay of sorts for technology companies
that market networking equipment and server systems. For Newbridge, which has struggled
financially the past few years, the Web auction is a new
avenue to move older equipment sitting in warehouses and
gathering dust, executives said.
TekSell.com, which has already signed on some 20
companies including networking firm Allied Telesyn, says
its goal is to help firms who don't want to spend their
resources to find buyers of old equipment. The Web
start-up plans to add more clients in the coming weeks and
also is negotiating with the likes of Cisco Systems and
Nortel Networks as well as some server manufacturers,
according to company executives.
Online auctions are common enough for PCs and and other
relatively inexpensive equipment, but selling servers and
networking gear departs from the norm. Though occasional
examples of expensive hardware have been found on
consumer sites, Sun Microsystems' December move to market servers and workstations on
eBay may have been the first time a big-name company started selling current high-end
products.
"We suspect...the customers we'd attract at eBay are not the people attracted by the channel,"
a Sun representative previously told News.com.
Newbridge's sales staff has historically sold surplus equipment by offering discounts to its
customers, and will continue to do so, said Tim Ragan, Newbridge's vice president of
e-business.
"E-commerce auctions is a new capability for us and the industry," Ragan said. "This will not
become our major sales channel anytime soon, but it will potentially add millions of dollars (in
sales) per quarter as we go forward."
Most network equipment makers, including Cisco and Nortel, already sell their new products
online. But analysts believe Newbridge is the first one to sell its surplus equipment through a
Web auction.
Cahners In-Stat Group analyst Laurie Gooding said the Web auction is a novel idea, but
wondered whether Newbridge is admitting it over-estimated demand for its older equipment.
"With the advent of e-commerce, this is a sound strategy, but it sounds like a fire sale to me,"
Gooding said.
"That tells me loud and clear that their products didn't move well and they're trying to reduce
inventory. That they overestimated market demand and these products were not as successful
as they thought it would be," the analyst said.
A Newbridge representative said it is not a fire sale, but merely a new channel.
Regardless, Newbridge executives say they plan to begin auctioning off their equipment early
next week and will sell basic switches and other equipment, as well as phone switches for
voice services and leased lines.
Such sales shouldn't be difficult, one analyst said.
"They're almost commodity items. They're not cutting-edge technology, so most buyers will
be familiar with these products," said Dataquest analyst John Armstrong. "So they're
probably suitable to sell over the Web."
Related news stories
• Newbridge jumps on upgrade, takeover talk January 11, 2000
• Newbridge Networks climbs on buyout speculation November 9, 1999
• Newbridge Networks' future in question November 3, 1999
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