Nokia Admits Growing Counterfeit Phone Problem

The world’s largest phone manufacturer, Nokia, has admitted that it is encountering a growing problem posed by fake or counterfeit phones, passing themselves off as the genuine article.

One out of every five cellphones sold in the world are illegal or unlicensed copycats,” a senior member of Nokia’s executive board was quoted as saying by Reuters.

“It is mostly China-originated, but it is global. It is not only in Asia, but also in Latin America and even in some parts of Europe,” said Esko Aho.

20 Percent Fake

If these numbers are true, it means that a staggering 20 percent of all the phones sold worldwide are fake. And of course this is hurting the business of companies such as Nokia, but also others including Apple.

The scale of the problem seems to be huge then. Indeed, Gartner has estimated that the grey market share has increased to above 20 percent.

It is clear that this problem has been with us for a while now. An online video here for example shows the differences between a fake and a genuine Nokia N95 smartphone.

And it should be pointed out here that Nokia is not the only handset maker seeing false handsets, with counterfeit Apple iPhones also reported.

Nokia Efforts

Nokia has been at the forefront of the clampdown on the sales and distribution of these counterfeit phones. Its batteries for example display a hologram to confirm that it is a genuine Nokia product.

The company has in the past assisted local officials in developing countries in Africa and elsewhere in raids on the sellers of counterfeit Nokia-branded products. And increasingly Nokia is said to be turning its attention to the ports of entry into those markets.

On top of this, the Finnish handset giant has also sought to undertake consumer education programmes to raise awareness of the issue. Indeed, Nokia has previously argued that the counterfeit trade in certain countries undermines the attractiveness of those economies, which could see international companies opting not to invest in that market and instead fund developments in other countries that can actively protect intellectual property (IP).

IP Protection

For the user, the main advantage of false handsets is of course the cost, but users need to be aware that these handsets come with a price, in that they often have poor battery life, poor reliability (memory loss etc) and poor build quality.

The European Commission this week admitted that its own current intellectual property rights laws are not strong enough.

An EC report found that the sheer volume and financial value of intellectual property rights infringements is alarming and blamed the Internet for fueling software theft and file-sharing of music.