Shades Of Gray

Partners pointed out to HP that it could drastically stem the flow by correlating product serial numbers with sales-out data and tracing the gray-market product back to its source, a process as irrefutable as DNA evidence. But, unbelievable as it seems, the soon-to-be largest technology company on the face of the earth says it lacks the capability to track serial numbers on the products it sells except in the United States. It won't be able to track serial numbers globally until the end of the year.

Then HP told partners: "You can reduce the demand for gray-market products by not buying them. If you don't buy them, they [gray marketers] won't sell them." Wow. That's like going after a 16-year-old kid with a joint in his pocket instead of attacking the drug cartels.

HP then proceeded to tell partners that 95 percent of all gray-market HP products come from solution providers that have purchased the product at special discounts. If that is the case, fixing the problem is simple. Track the serial numbers back to the solution provider that dumped the product and deauthorize the offender.

That's where the potential conspiracy comes in. Solution providers in attendance alleged that some of HP's largest partners are the biggest source of gray-market products. They buy huge quantities of HP products at discounts greater than smaller VARs, often in cahoots with their HP rep, and dump any excess inventory on the open market, the solution providers allege. VARs wonder privately whether HP has the courage to deauthorize partners that may be selling hundreds of millions of dollars in HP products a year through authorized channels.

If HP really wants to fix the problem, the answer is easy: Track the serial numbers, and punish the offenders. HP's gray-market compliance team needs to listen closely to the words of CEO Mark Hurd: "If it's easy to say, it's easy to do."

What's your take on gray-market matters? Contact me via e-mail at [email protected].