By Olga Kharif - Nov 1, 2011 11:01 AM GMT+0700
The success of Apple Inc. (AAPL)’s iPad isn’t just drawing more competition to the tablet market. It’s attracting thousands of counterfeit and knockoff products.
On a single day in July, almost 18,000 fakes and clones resembling the iPad and Android devices were available for sale on 23 e-commerce sites, according to MarkMonitor Inc., a San Francisco-based firm that helps companies protect their brands.
The tablets can be illegal -- for instance, if they have a bogus Apple logo -- and often they don’t work well and have no warranty protection, said Fred Felman, chief marketing officer of MarkMonitor. The copycat products and suspected counterfeits found in MarkMonitor’s survey were offered by more than 5,000 sellers, many of them located in China.
Knockoff iPads may proliferate during the year-end holiday season, as shoppers beset by the economic slump go hunting for bargains. That’s creating more competition for Apple, even if many consumers only buy the tablets because they believe they’re getting the real thing. Apple’s advantage is its software is hard to replicate, said Francis Sideco, an analyst at research firm IHS Inc.
“You can only copy to a certain degree,” he said. For instance, knockoff tablets may not connect to Apple’s iTunes and App Store. “It’s not necessarily about hardware but the software, and it’s very difficult to copy that,” Sideco said.
Trudy Muller, an Apple spokeswoman, declined to comment.
No. 2 Product
Apple released the iPad in April 2010, and it quickly emerged as the company’s No. 2 product category behind the iPhone. The tablet generated $6.9 billion for Cupertino, California-based Apple last quarter, out of a total of $28.3 billion.
The device has attracted scads of legitimate competitors, with many manufacturers using Google Inc. (GOOG)’s Android software. Amazon.com Inc. (AMZN) also is jumping into the market this holiday season. It will release its $199 Kindle Fire tablet later this month, aiming to undercut the iPad, which starts at $499.
Counterfeiters are increasingly focusing on mobile technology after years of copying pharmaceuticals, handbags, software and other products. Tablets are obvious targets because they’re the most-desired technology gifts this holiday season -- beating out laptops, televisions, e-readers and video-game consoles, according to the Consumer Electronics Association.
To avoid getting cheated, shoppers should stick with retail sites they know, Felman said. A dramatically low price is another red flag, he said. The clone tablets in MarkMonitor’s survey were typically 69 percent less than the retail price of the genuine item.
Higher prices, meanwhile, often can signal that shoppers are dealing with gray-market goods -- genuine tablets that haven’t been authorized for sale in a given country. Buyers of such devices typically pay a 15 percent premium, and then risk having no warranty or a way to resolve technical problems. More than 5,500 gray-market tablets were offered for sale on the day in July when MarkMonitor conducted its study.
“It’s very important for consumers to understand as they go into the holiday season, there’s a very high likelihood there are scammers out there,” Felman said.
To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net
To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net
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