Cell phones made by no-name manufacturers in China are “no longer just ultra-low cost models,” according to a Nov. 12 report from consultant Gartner. “Gartner has torn down several gray-market products that showcase enhanced-phone features.” Distributors report that gray-market shops are moving to incorporate 3G technology and high-resolution cameras into their devices, threatening businesses of everyone from Nokia to Apple.
Demand for gray-market phones is rising so rapidly, it’s contributed to a slight uptick in third-quarter handset sales, according to Gartner. In that period, the world’s manufacturers had shipped a total of 308.9 million units, up 0.1% year over year, the consultant reports. Recently, researcher iSuppli reported that gray-market handset sales are up nearly 44% this year over 2008, with shipments reaching 145 million units. The burgeoning market has contributed to the Apple iPhone’s flop in China, where many consumers opt for gray-market iPhone clones, instead.