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Feds Seize $78M of Bogus Chinese Cisco Gear
Posted by
kdawson
on Fri Feb 29, 2008 12:17 PM
from the perfect-for-man-in-the-middle dept.
from the perfect-for-man-in-the-middle dept.
Ian Lamont writes "The IDG News Service is reporting that US and Canadian authorities have made more than 400 seizures of counterfeit Cisco hardware from China in an ongoing investigation that started in 2005. The most recent seizure was last Friday in Toronto, where the RCMP charged two people and a company with distributing large quantities of counterfeit network components to companies in the US through the Internet. The RCMP seized approximately 1,600 pieces of counterfeit network hardware with an estimated value of $2 million, says the report. According to another source, bogus Cisco gear from China typically includes network modules, WAN interface cards, gigabit interface converters, and less expensive routers."
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Hardware: FBI Concerned About Implications of Counterfeit Cisco Gear 273 comments
SpicyBrownMustard writes "An FBI PowerPoint presentation provides details about a criminal investigation into counterfeit CISCO hardware originating from China, and sold by Gold/Silver partners to numerous US government, military, and intelligence agencies. The concern of the article's author and the FBI is that the counterfeit equipment may be state-sponsored to aid in accessing otherwise secure systems (slides 46+47). Says the article author: 'The threat is real. Compromised hardware of potentially hostile foreign origin sits within secure networks of the US government, military, and intelligence services. And as you now see, the FBI has been concerned about it.'" We've mentioned the seizure of some of this equipment before, but this presentation adds quite a bit of detail, and highlights the FBI's concern of Chinese government involvement.
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IT: FBI Says Military Had Counterfeit Cisco Routers 186 comments
There are new developments in the case of the counterfeit Cisco routers, which we have been discussing for some time. The NYTimes updates the story after an FBI PowerPoint presentation made its way onto the Web. It seems that experts at Cisco have examined some of the counterfeit routers in detail and proclaimed that they contain no back doors. Others don't believe we can be so sure. "Last month, [DARPA] began distributing chips with hidden Trojan horse circuitry to military contractors who are participating in the agency's Trusted Integrated Circuits program. The goal is to test forensic techniques for finding hidden electronic trap doors, which can be maddeningly elusive... The threat was demonstrated in April when a team of computer scientists from the University of Illinois presented a paper at a technical conference in San Francisco detailing how they had modified a Sun Microsystems SPARC microprocessor... The researchers were able to create a stealth system that would allow them to automatically log in to a computer and steal passwords."
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Not really counterfeit (Score:5, Insightful)
It's a very difficult problem to manage unless you have trusted people overseeing the entire manufacturing operation. The amount of gross margin in Cisco gear makes this activity extremely profitable.
Re:Not really counterfeit (Score:5, Informative)
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Re:Not really counterfeit (Score:5, Informative)
Say Cisco specified a 1 ohm SMT resistor that has a
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And who pays list for Cisco?
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Re:Not really counterfeit (Score:5, Informative)
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In contrast to the HP Procurve equipment, which is sold with next business day lifetime warranty at no additional charge.
Why make *anything* in China, then? (Score:5, Insightful)
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Re:Why make *anything* in China, then? (Score:4, Insightful)
The cause of offshoring/outsourcing is not labour cost, but labour mobility: the price of labour in electronics is very low, around 5%, but you cannot do without people. Giving better salaries is not a solution. It was tried during the IT bubble but it did not work: the companies got more expensive workers but not in greater numbers, since all competed over the same number of workers, and due to the limitations on immigration the game was a zero sum game. This problem is much more grave in EU than in US (imagine needing a Green Card in order to leave California and find work in Florida) so factories are moved not only to China or Eastern Europe, but even to US.
Of course in the long run it gets you into trouble, but in order to have a "long run", the companies that moved their operations in other countries attempted to have a "short run" first: they would be already dead without the ability to expand.
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Because making those products in US, Germany, Japan or Taiwan (BTW both used to be doing the same things as China,) will not be price competitive; production in other 3rd world countries will have the same or worse problems. For the companies, all the extra costs and troubles still cannot negate the benefits. For the buyers, prices are always an important consideration. Quality is not the only criterion and is hardly quantifiable. Especially for electronics, my new laptop will be worth practically $0.00 in
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Remind me again, why is free trade with China such a great deal for the developed world?
Screw all the people who say "those evil CEOs want an extra dollar in the stock benefits" or whoever the current bogeyman is.
Trade with China is good for the developed world because they can make some things a lot cheaper than we can. Practically everything we buy is cheaper, either directly or indirectly, because of Chinese production.
The higher standards of living everyone enjoys comes with the cost of some do
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Re:Not really counterfeit (Score:5, Interesting)
It isn't just that. In any other tech industry you would see 'legit' clones, i.e. ones that were sold AS clones, with someone else's name on it. But you can't do that with Cisco gear. If you put any non-cisco stuff in one it voids the service contract. No service contract no bug fixes. Unpatched gear is an accident waiting to happen.
Personally I'm happy as hell. We don't have much Cisco gear and I didn't buy it (donated) but it has been enough of a PITA that I absolutely HATE Cisco. When I had to scrounge up some extra ports I certainly hope I managed to get the knockoffs and avoid giving those rat bastards one cent more than absoluteley required. Had to put the unit back under a service contract before I could get a IOS with device drivers. Tell me, who still charges for (basically) device drivers and security fixes?
Adn their hardware is so pathetic. Open one up sometimes and check out just how little is inside one. Ponder just how little they are paying those Chinese contract manufacturers for the hardware they then jackup to such stupid prices. And don't tell me it is the software either, they used to just be running BSD with the serial numbers filed off and with the volume they do they can afford some software devels. As for support it ain't in the price of the product, they sell that as a extra and for all intents and purposes only to those who have also paid em a crapload to get their people certified.
By being able to milk hardware, software and support they probably make Gates & Balmer jealous.
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Re:Not really counterfeit (Score:5, Insightful)
(hint: it's around 80$. same cable that comes with every power supply)
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Re:Not really counterfeit (Score:5, Informative)
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Re:Not really counterfeit (Score:5, Funny)
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The dangers of outsourcing (Score:2)
And this is where outsourcing becomes so viciously dangerous. When considering outsourcing, it's important to limit it to only those areas that are not "core competencies". If your core business is to manufacture hardware, it's just stupid to outsource manufacturing hardware. If you're in the business of hostin
Where is this warehouse, (Score:2, Funny)
I'll even waive the disposal fees.
Doesn't take Sherlock Holmes (Score:2, Funny)
So, um... (Score:4, Interesting)
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when are they auctioning this stuff off..?
"Counterfeit" (or in this case, unlicensed) goods are usually destroyed.
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You're missing the whole point of this. Having these products in circulation is extremely detrimental to Cisco. Not just in terms of lost sales, but also that people will be calling in for tech support, attempting to get warranty replacements, putting it up on eBay, etc. Even if you donate it to a charitable cause it is costing them real money in a direct sense, and also tarnishing the brand and piss
Re:So, um... (Score:4, Insightful)
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What's the Difference? (Score:5, Insightful)
If Chinese counterfeits can get marketed under their own brands, we'll actually have some price competition. And maybe when some American companies get killed by their OEM factories like Japanese manufacturers did to cameras and consumer electronics in the 1970s-80s, we'll see some more caution in shipping all their tech expertise overseas to create their competitors. They might be more likely to consider the less immediate costs of outsourcing from a country where the law (usually) protects things like intellectual property, contracts, labor and the environment.
Or maybe every generation is doomed to watch America squander its hard-won tech leads for the sake of a few years of cheap manufacturing that then eats the parent for lunch.
Heavy Gear (Score:2)
It's easy to identify this bogus gear in the wild. It's really really heavy, because it's made of lead.
Prefered Trade Status (Score:2, Insightful)
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It was easy to identify the fakes (Score:2)
yeah, right. (Score:5, Insightful)
No, I think the goal is to protect the corporation. Not that I completely object to these actions, just that it's getting pretty tiresome to see the police always trotting out the public safety angle.
big software thefts in past too (Score:2)
Was it just non-sanctioned boxes or IP theft? (Score:5, Interesting)
How much of this is the manufacturer just building more than what they were supposed to, and how much of it is actually theft of intellectual property? I remember reading that the Soviet Union would go the IP theft route...obtain a computer from another country and totally reverse-engineer it so they could use a similar design. My bet is that these manufacturers just want to make more money and not necessarily use the same quality parts. (If you're building 1000 routers, the difference between a $10 transciever and a $100 one is big, for example. How worried should we be that, say, the manufacturer has reverse-engineered IOS and put it into their own gear?
Either way, if my business was based on building clever hardware, I'd be worried about outsourcing the manufacturing to anyone, let alone a different country. However, there is absolutely no way to stop people from demanding cheaper goods. It's at the point where people are haggling over a few cents -- we're just addicted to low prices.
I'm generally not one of these protectionist, "keep America working" types, but I can't see a good way out of this situation. All the scenarios are bad:
- Go to war with China or cut off trade completely in some other fashion --> Huge price increases and emergency ramp-up of domestic production --> possibly a bad recession.
- Continue as-is --> More poisoned or cloned merchandise and IP theft --> eventually a very bad situation for us.
- Try to get China to comply with environmental and IP laws --> ???
Some gear doesnt work (Score:5, Informative)
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Makes one wonder ... (Score:5, Funny)
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Re:Makes one wonder ... (Score:5, Interesting)
-nB
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Or has backdoors and viruses (Score:3, Interesting)
If someone is producing un-lic gear why not pick up a few more bucks on offer to add compromises.
Why not go cheap on the capacitors or the solder? not like it will hurt your brand rep.
Not saying it happens but why not?
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The fact that this is from China is not the point, even if it is (sounds likely, IMO). That it *is fake* is the point - who cares where it comes from, apart from some xenophobic, er, xenophobes?
From TFA[1] - note the names involved - Todd Richard, Michael Edman, Robert Edman.
Sound Chinese to *you*??? Didn't think so.
When *in* China, in my experience, fake electronics is openly admitted as fake. They don't mind you buying the real stuff, but it'll cost more and take longer to get. That some foreigners
Just so you know (Score:5, Funny)
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A generation from now: s/Chinese/American/g;
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No.
Fake cables.
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Like it or not, IOS has had a few over the past 10 years that should be applied.
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Re:This would be good for spying (Score:5, Interesting)
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Made Where? (Score:2)
Let me make a guess here... It's the same stuff, just without the right paperwork or import tax/fee applied. Kind of like how they claim "Grey Market" versions aren't real despite being from the same company in China.