Software slipping through the cracks

Software makers selling through the channel may find their products slipping through the cracks into the so-called “gray market,” according to a news report . The report highlights a KPMG study that says gray market products account for anywhere from five to 30 percent of total IT sales.

The “gray market” is a sort of under-the-radar market that is hard to put your finger on. It’s not outright piracy. I’ve come face-to-face with that in the Far East, where I saw obvious bootleg copies of Microsoft Office 2007 and Windows Vista for five bucks a pop. (I also came across the latest “Pirates of the Caribbean” movie with a photocopied jacket, which described the movie as starring “Johnnie Deep”.) Rather, the gray market is when legitimate, branded goods are diverted from authorized channels into the hands of third parties that are not authorized resellers.

This gray market seems to be on the increase, and the report highlights a few suggestions that OEMs take to prevent it, including compliance and reporting programs, monitoring sales activity, and strengthening incentive programs. How about making it a little easier for smaller resellers to play too, by giving them access to decent pricing?

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