Ask Cisco: What’s the difference between a warranty and service contract?

February 20, 2012 - 5 Comments

Q: I have a business with 150 employees and am looking into upgrading some of my IT hardware. When evaluating products, the availability of a service contract is sometimes mentioned. If the hardware I’m purchasing already has a warranty, why would I need a service contract? Aren’t they the same thing?

A: This question comes up often during purchasing negotiations. Many think that the terms “warranty” and “service contract” are synonymous—but they are decidedly different.

Let’s look at what a product warranty typically includes: The hardware manufacturer pledges that its product will not fail due to design or manufacturing defect within a given timeframe, usually up to a year. If the product does fail during this time, the manufacturer is obligated to repair or replace that hardware.

However, a product warranty doesn’t generally specify a timeframe in which the product will be repaired or replaced. The manufacturer may require that the product be returned to its repair service center or may ship a replacement product while waiting for the return of the failed item. In either case, the turn-around time to get the failed hardware replaced can take days and, sometimes, weeks.

Now, if you’re talking about a hard disk in a redundant array or a monitor, that lead time may be a bit annoying but is certainly not a showstopper for your business. But if you’re talking about network switches, routers, or firewalls, waiting days or weeks for a fix means that some or all of your network is down and, possibly, unprotected. This could mean lost revenue as well as lost data.

More than a warranty

A service contract goes well beyond a standard product warranty. When vendors talk about service contracts, a significant part of that discussion involves product replacement timeframe. In many cases, manufacturers offer product replacement anywhere from two hours to next business day, and work on 24 hours a day, 7 days a week or 8 hours a day, 5 days a week schedule, meaning that the replacement hardware is available at all times or only during normal business hours. So, should a critical component fail, the manufacturer will deliver a replacement product within that timeframe.

Generally, service contracts also include tech support and access to software updates for components covered under the agreement. For example, Cisco Small Business Support Service provides next-business-day hardware replacement, telephone and online chat support via the Cisco Small Business Support Center, access to the Cisco Small Business Support Community, and software updates.

The quick response you get with a service contract can dramatically speed up the time required to remedy a network problem, whether due to a failed device or a configuration issue. This can mean significant savings in both time and money for your business. But if the hardware you’re purchasing isn’t critical to your business, then a product warranty will probably suffice.

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    Be careful with Cisco – MOST cisco Hardware has a very short warranty period – see link to UK PDF.
    As most hardware will have a service contract option, except the very low value or Domestic type equipment such as the old linksys range, you are expected to take out the service contract if you want ongoing hardware failure protection.

  2. Good Support, Horrible practices.

    Your Warranty for 90 Days is a Joke. Sometime my customers take way more than 90 days to deploy. If they bought a support contract for 10,000 devices they would be out of business. Are you kidding me? What a rip off. God Forbid we are outside of a support contract or warranty window and we need the latest code. Your site is locked down like Fort Knox nowadays.

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  4. This is very helpful and now i can able to explain more about this to my customers…thnks Gaby pinto.

    • Thank you for your comment. We’re glad that you found this information useful to further educate your customers on this topic.