REVEALED: Knock-Off Phones “Booming” Trade

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Gray market phones are a booming trade, with the numner of dodgy smartphones also on the rise, analysts IHS warned.

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Pictured: iPhone 4 knock-off

Shipments of gray market mobiles are set to hit an astonishing 210 million this year – 13% of the total mobile industry, according to IHS iSuppli.

While this figure marks a drop from 2011’s 250m ‘gray’ phones, shipments are set to remain high, and look set to hit 189 m in 2013.

And it seems its not low end mobiles, there’s a steady market for high end smartphones which includes the likes of Apple’s iPhone, and Samsung’s Galaxy devices, Nokias and other Androids.

The number of ‘gray’ smartphones has jumped from 1.4% of all shipments last year, to 6% in 2012. There has already been knock off iPhones seen in China, as pictured.

Some say workers at Apple’s official China plants are leaking design and other material to knock off factories there.

The gray market business is “dramatically larger” than it was in 2009, when shipments amounted to 145m, analysts warn.

“Gray-market phones represent a huge segment of the overall mobile handset industry,” said Michael Yang, principal analyst for memory & storage research, IHS and is “steadily moving upstream” to high end smart devices.

This comes as just yesterday it was revealed global phone sales had dipped 2% in Q1 2012 – to 419.1 million – the first fall since 2009.

So, what are gray phones anyway?

Gray-market phones are usually made in China and are not recognized or licensed by official regulators and contain features copied from other big name handsets.

Makers generally dodge China’s value-added taxes and, “profit illegally from their participation in the market,” say analysts.

The mobile gray market for mobile handsets thrives mostly in developing countries – mostly Asia- where a large black market exists, where cut throat prices are the name of the game.

But, its seems, consumers could be easily fooled into believing the device is their real deal, if unaware.

 

In China, gray-market handsets include counterfeits as well as so-called white-box units in which any logo can be slapped on a ready device. these white-box phones can also feature smuggled chips, lack official certification and use fake international mobile equipment identity (IMEI) codes otherwise used to distinguish genuine handsets.

Asia, accounts for 62% of gray market consumers last year, although demand in Latin America, which skews more toward low-end smartphones, as well as the Middle East/Africa region, could also be in the up, IHS predict.

Feature phones, however, will continue to command the lion’s share of gray-market handset shipments this year, say IHS. In Austalia, JB Hi Fi has already engaged in some grey importing of cameras.

 Last year, CEO of Panasonic Australia said JBs move to grey importing was “just the tip of the iceberg” and called for global warranty and global pricing to be implemted on all tech devices

Read: GREY IMPORTING: Panasonic CEO Calls For Global Pricing & Warranties

“For manufacturers of these phones, keeping up with consumer trends while maintaining low costs will continue to be a concern as they fight to remain viable in a fiercely competitive market, ” say IHS.

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