Gray Market Products: Stealing Legitimate IT Sales?
The VAR Guy is often skeptical of market studies that make bold statements about all the money technology companies lose to the high-tech underground. But our resident blogger loves statistics. And the latest stats about gray market high-tech products should be alarming to VARs.
According to The Alliance for Gray Market and Counterfeit Abatement (AGMA) and KPMG, the value of gray market products in 2007 averaged $58 billion, placing the gray market between 5% and 30% of total IT sales.
Hold on. That’s a pretty big range. Is it 5% — or is it 30%?
In the defense of AGMA and KPMG, even a 5% problem is a big problem. A spokesman for AGMA and KPMG says:
With an average impact on profits of between $8 [billion] and $10 billion, it is imperative that IT executives educate themselves about the dangers of the gray market, establish tighter management policies and effectively monitor compliance among business partners in order to minimize the flow of product into the gray market.
Big-time IT companies like Cisco Systems Inc. are talking up the threat of gray market hardware. And Hewlett-Packard is battling the gray market threats as well. Consider yourself warned. Don’t go over to the dark side.