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.
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 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."