From: neidorff@uicc.com (Bob Neidorff)
Subject: Gray Market
Originator: neidorff@makore
Organization: Unitrode Integrated Circuits Corp., Merrimack, NH
Date: Tue, 18 Aug 1992 13:46:22 GMT


As it was asked, I hope that this gives an unbiased explanation of
what is "Gray Market".  If I am wrong, don't sue me, please correct
me directly by e-mail and I will post a correction.  I welcome
any and all comments on this.  
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Gray market equipment, as the term is commonly used, is equipment
which is sold by a dealer that is not supplying manufacturer's
support with the product.  Most often, this means that the dealer
themself provides the warranty, performs the repairs (if required),
and advises the customer on installation, use, etc.

If a dealer is willing to support the customer in this fashion,
many manufacturers are willing to sell them the equipment cheaper
than they would sell it to "authorized" dealers.  Some manufacturers
prefer dealing in this fashion, because it allows them to focus their
limited resources on new product development, rather than getting
bogged down in service and support.

Gray Market equipment is not necessarily better or worse than
normal market equipment.  Frequently, the stuff in the box is
identical, except for the paperwork.  If the company that supports 
the equipment is in business when you need support, you will probably 
get service from them comparable to manufacturer's service.  

A smart gray market dealer will keep spares on hand, and swap a 
defective unit for a spare as their idea of warranty support.  It
is great for the dealer, because they can offer instant support,
perfect support, and know exactly what it will cost.

Software companies have learned that support is VERY expensive.
Why else would they sell $2 worth of discs and a $10 book for $300?

If a dealer can support the product cheaper than a big company can,
then they can offer the product cheaper than an authorized dealer,
they can prosper, get a good reputation, and stay in business.  We
know that big companies can have severe overhead problems, for
various reasons, so it is believable that a mid-sized dealer might
be able to support big-name Japanese gear better than the Japanese
manufacturer themself.  
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All of the above is vague and generalized.  There are some manufacturers
that have incomparable factory support.  There are also some 
manufacturers that prevent users from talking to anyone knowledgable.
There are extremely knowledgable dealers and also dealers which
don't know which plug goes where.

There are also fly-by-night firms which sell then fold up.  Some of 
the fly-by-night firms collect the cash and never ship.  Some firms 
lie about their market status.  However, this is not related to the 
term "Gray Market".

BTW, for all of you verbavores, according to both of my
dictionaries, "gray" and "grey" are both valid spellings, so the 
terms "Gray Market" and "Grey Market" can be used interchangably.

Personal note: We bought a $6000 laser printer for $4000 gray market.
It is a B-size laser, 400 DPI, with 4Meg of RAM, a RISC processor,
Adobe PostScript II, and two paper trays.  The manufacturer is 
Data Products.  We have had excellent success with this printer,
15,000 pages later.  We have not needed the dealer's support, but
it is nice to see that they are still advertising.  We felt good
buying the product, because we had seen this same dealer advertise
for over three years.  It gave us a feeling that they would be there
should we need warranty support.  The fact that it is made by 
Data Products gave us the feeling that the manufacturer would be there 
if we needed after warranty parts or service.  Your mileage may vary.

-- 
Bob Neidorff; Unitrode I. C. Corp.  |  Internet: neidorff@uicc.com
7 Continental Blvd.                 |  Voice   : (US) 603-424-2410
Merrimack, NH  03054-0399 USA       |  FAX     : (US) 603-424-3460
Newsgroups: rec.audio