SDD, Apple aim to halt grey products

Fluctuations in the exchange rate coupled with updates to the product range have caused concerns at Apple SA and local Apple distributor, Siltek Distribution Dynamics (SDD), a member of JSE-listed Siltek Limited, SA's largest Technology Supply Chain Group, that grey product is infiltrating the market.

Users are often unaware that they are purchasing grey, unsupported stock loaded with pirated software, itself unsupported and also illegal.

"The grey market is primarily driven by two things," says Laetitia van den Berg, product manager at SDD. "Firstly by a lack of supply, a common occurrence during product transitions, and secondly by fluctuations in the exchange rate."

"Grey Product dumping as a result of product transitions fuels grey product sales. When overseas resellers are caught with large volumes of stocks when vendors announce new products, in order to flush out stock they target 3rd world markets with supposed attractive pricing. Stock management is therefore becoming an ever increasingly crucial element of the business.

Everyone's trying to manage stock as best possible, and everyone's moving toward a configure-to-order model," says Bruno Verolini, MD of Apple SA. A configure-to-order model means a base unit is supplied by the vendor and the stock is configured to customer requirements satisfying a broader range of customer needs,, therefore, causing less opportunity for grey product reaching the market.

One of the major problems with buying grey product in South Africa is that users can expect hardware problems. "A grey Mac will not have a locally certified modem, which means users can expect a degree of instability whilst the product is in operation," says Verolini. Apple has endeavoured to co-operate fully with local authorities to ensure proper certification for our products is achieved to enable our customers to have the best possible experience when using those products. A grey unit will not offer such an experience. All Apple products brought into the South African market via our authorised distributors will have SATRA certification for the installed modems.

The problem for users is identifying the grey product in the first instance. "There are a number of ways users can spot a grey market product," says Verolini. "Apple pricing is pretty constant worldwide other than import duties and exchange rate fluctuations. So if users find they are getting an extraordinarily good deal, they should beware, as it could be grey product. Users should also look out for a 'SO/A' suffix on our part numbers for all products with internal modems. Any other suffix, the chances are high that it's a grey product. If uncertain please contact the Apple office for confirmation as a last resort."

In addition, Verolini says users should insist on original software CDs with a system. "We have often found, when discovering a grey product in the market, that it has been loaded with pirated software," he says. This is one of the quickest ways to spot grey hardware products.

"Users must always insist on an original invoice," says Verolini, "as this is also required to receive free repairs under the 1 year carry-in warranty."

Apple SA and its distributors and resellers will not service or repair a grey product under warranty for free, but will charge for this service.

Verolini states that the reason behind this is that while the costs of repairing or servicing the system are those of the local agent, the initial benefit from the purchase of the machine is not locally derived. "We will repair grey machines at cost and users can claim back from their overseas supplier," he says.

"If a user has bought a grey product from a local supplier they should demand their money back, if unhappy. That's a basic consumer right," says Verolini.

Customers can address any concerns regarding the authenticity of product to SDD on 652-8222, or Apple on 234-0922.