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'Gray market' gear hurts tech industry

The unauthorized sale of technology gear costs computer equipment makers some $5 billion a year, according to a KPMG study commissioned by a coalition of tech companies. The study addressed lost profits from the so-called gray market for tech gear, that is the sale of products through unauthorized channels or in countries other than the ones in which products are intended for sale.

According to the study, the gray market for tech gear could amount to as much as $40 billion. "The gray market is a serious threat to manufacturers, customers and authorized distribution channels," said Marie Myers, chairman of the Anti-Gray Market Alliance, a trade group whose members include Hewlett-Packard, Cisco Systems, 3Com, Lexmark International Group, Xerox and others. "Without utilizing the proper channels and distributors, consumers take the risk of purchasing damaged (goods) or products without warranties--this not only hurts the consumer, but can threaten a company?s reputation with customers and investors."