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History 2004: HDD Makers at War over Gray Market

OEMs and resellers behind it

HDD manufacturers have been trying to fight the gray market as long as we can remember.

To fortify their efforts, the International Disk Drive Equipment and Materials Association has formed a partnership with the Alliance for Gray Market and Counterfeit Abatement.

The HDD makers aren’t so worried about counterfeits, as it turns out, but rather distribution circuits over which they have no control, in which their units are sold at very low prices.

The biggest problem for the HDD makers is that their own clients, both OEMs and resellers, are behind this gray market, by putting their unsold stock in these gray circuits.

“The IDEMA-AGMA cooperation is not to attack our customers,” explained Mark Geenen, president of IDEMA and Trendfocus, in an email. “And you are right, there are no ‘counterfeit’ HDDs. However, there are many practices employed by 2nd-level distributors and brokers that are not only illegal, but are stealing money from HDD vendors. For example, there is fraud when reporting the number of drives sold. During physical inventory audits, some distributors/brokers illegally misreport the location of unsold inventories, in order to get additional price concessions from HDD makers. Additionally, drives are moved to different markets and countries without telling HDD makers. We want legal, honest practices by distributors and brokers. Of course, many are honest, but not all.”

This article is an abstract of news published on issue 197 on June 2004 from the former paper version of Computer Data Storage Newsletter.