Sales of Cheap, Fake Cellphones Expected to Double

The sale of cheap imitation brand-name mobile telephones is expected to double, hurting such cellphone giants as Nokia, Samsung and Motorola, and possibly threatening the safety of unwary consumers.

A recent report by the market research firm Gartner estimated 2009 sales of knock-off cellphones could reach $150 million, nearly double the sales figures for 2008. Finland’s leading daily newspaper, Helsingin Sanomat, reported that Finnish cellphone manufacturer Nokia could suffer significant losses because it has its highest market share in those areas where illegal phones are most in demand – southeast Asia, the Middle East, Russia, and Africa. Gartner analyst Carolina Milanesi traces the origin of these knock-offs to the Taiwanese semiconductor manufacturer Mediatek. In the report, Milanesi said between 80 and 90 percent of the illegal phones contained Mediatek products. While the knock-offs share most of the same features as their legitimate counterparts, the quality is noticeably poorer. However, at a quarter of the price, they find a ready market. Nokia says that the copied phones are manufactured in China in relatively small factories, with maybe as few as 20 workers. The company has been working with Chinese officials to crack down on these operations, and report some cooperation, since these companies are trying to avoid taxes as well, according to the Helsingin Sanomat. In India, another area where Nokia has been experiencing difficulty with counterfeit phones, the company has been supporting legislation that would make it illegal to link a phone to a network without an International Mobile Equipment Identity Code. The illegal phones have either been forged or have no such codes. Several times over the past few years, Nokia has warned consumers about the dangers of the counterfeit batteries used in some of these knock-offs, which have resulted in fires and even some explosions.