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[ The PC Guide | The PC Buyer's Guide | Designing and Specifying PC Systems and Components | Component Specification Issues ]

"Gray Market" Components

An important issue, which is similar to that of retail and OEM parts, is that of so-called gray market components. This term is undoubtedly derived from the term "black market". Black market goods are ones that are sold through illegal channels; gray market goods are ones that are sold in ways that are not illegal, but not "official" either. They are being seen increasingly not only in the internal PC component market, but even with external components and even whole PCs. (In fact, they are in issue in all sorts of markets, not just computers.)

Here's how the gray market works. A manufacturer makes certain products for sale within a certain country; say the United States as an example. That company also manufacturers some of those same products, intending to sell them in other countries. Someone buys these products outside the U.S. and then imports them back into the United States for sale there. These items are considered gray market to distinguish them from the products originally made for sale within the U.S.

Why bother with this circuitous route? Cost savings. Manufacturers often sell the same products for less in the international market than they do in the domestic one. The products intended for export may be identical to the ones sold within the U.S., but may be of a somewhat different design in order to reduce cost. Distributors may be cut out of the supply chain, reducing overhead. There may also be other reasons why these units cost less than ones sold in the market for which they were intended. Not being an expert on import matters I cannot comment with certainty as to the reason for the price differences, but they do exist. (But I will say that there are many people who believe that the main reason for the higher cost of "official" products is simply that the manufacturers feel they can get away with charging more in some markets than others for the same products.)

Much as is the case with OEM parts, the people who buy these units have obtained them from a legal source (assuming all laws were followed), but one that is "unofficial". As a result, most of the issues associated with OEM parts will apply: the manufacturer will usually want nothing to do with these units. They won't want to provide warranty coverage for them, often won't support them or even answer questions about them! This means that the only warranty you have on this part is whatever the vendor offers, which may be only 30 days or less.

Some manufacturers are even fighting legal battles to keep gray market versions of their products from being sold. They claim that in many cases the gray market versions are different from the products they intend for sale in the targeted country, and that having both types confuses the market--and they are right about that. Like OEM parts, gray market items are often different from proper retail ones. They sometimes are built using lower-quality parts, or have a different design. They may have safety certifications particular to the country where they were intended to be sold, not where they end up after being re-imported.

What's worse about gray market components than OEM ones is that it can be even more difficult to tell gray market parts from ones that were sold through proper channels. The items often look absolutely identical. In some ways, the best indicator of a potential gray market product is a price that just seems too attractive: TANSTAAFL and all that.

The bottom line, as always, is to be sure of exactly what you are buying, and from whom you are buying. If you don't want gray market goods, the best way to avoid them is to shop from a reputable vendor that buys from official distributors, and resist the urge to shop for anything primarily on the basis of price. An honest vendor will explicitly tell customers if a gray market product is being sold; some sell both gray market and "official" versions and let the customer decide which they want, which I think is fine. If you aren't sure, ask.

Next: Component Warranties


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