RESEARCH STUDY: 10GB SFP+ SR Transceiver

 Let’s apply this model to the cost of optic transceivers. There are just so many transceiver companies with the manufacturing, engineering, and quality control to help make the world go round: Avago, Finisar, and Lumentum (formerly JDSU). So whenever a networking company is wanting to market you an optic, it’s typically among these three.

Let’s dissect the Cisco SFP-10G-SR transceiver module, which lists for $1000 (I’m sorry, $995).

Cisco doesn’t make cables or optics, so each goes to the individuals who do. Rather than counting on one ODM, they make use of two, and another two for their telco line, for price guarantees and supply assurances. Just how much does a 10GB SFP+ SR optic cost? As it happens around $85 + some margin, bringing the price to $95.

However, Cisco doesn’t wish some ODM’s name on the part. They need the Cisco logo on the part, along with the Cisco logo on the finish cap, some branding on the ESD wrapper, tissue paper, stickers, etc….(ok, ok, no tissue paper or stickers, nevertheless, you obtain my stage).

This re-branding now brings the part to over $600. Generate the distributors: $800. And today, the resellers: $1000. Meaning, if Cisco sells this part at MSRP, it creates $500 in profit on a $100 part.

Imagine if we bought the product directly without the OEM rebranding? $95 plus distributor + reseller yields $150 with 2-day free shipping on OEMfibers.com.

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