Posted by: Mark Stevens | June 26, 2008

Counterfeit Activities in China

China Counterfeit-slides

Posted by: Mark Stevens | June 11, 2008

First Thing Monday – AMR Research $250B Counterfeit Problem

The future of enterprise software

May 19, 2008

New Momentum Carving a Slice Out of the $250B Counterfeit Problem
by Bruce Richardson

A few weeks ago, we met with old friend Stu Clifton, chairman and CEO of New Momentum, a software company set up in February 2005. The company’s products are built on top of an advanced search engine that can read and interpret unstructured data.

About 18 months ago, New Momentum met with a West Coast tech leader to discuss working together. Somehow the conversation shifted to brand protection and security. New Momentum let this prospect pilot the software for 30 days. In that period, the brand protection manager discovered 500 instances of potential counterfeiters, gray market sales channels, and some unsavory practices.

Here’s how it works. Imagine your company produces a quality electronic component known by its part number, say AMR2008. With its advanced search technology, New Momentum gathers data from a variety of sources on the global open market. These sources include bulletin boards, forums, gray market, and the like. If anyone is selling AMR2008 at an inappropriate discount, volume, or date, a code is listed in an alert on the user’s dashboard. Complete contact information on the company selling the questionable product is provided. Even though the database is global, with the websites potentially in a foreign language, the part numbers are always in English.

We talked to one of New Momentum’s early customers, a company that is using the software to monitor offshore sites and collect push e-mails. New Momentum gathers the raw data from both sources, collates it, and forwards it to the customer to verify whether the products are from legitimate channels or the gray market, or whether they may be counterfeit or modified.

New Momentum’s risk management software also includes an application that focuses on protecting companies from supplier interruptions. Using AMR2008 as an example again, the software provides trending information on price, availability, and lead time so that the user can avoid getting into a constrained situation. Should buyers find themselves in one, the system scans a database of some 90 million parts to see where to find AMR2008. It contains transactional and parametric data on that part as well as data on alternative parts. It also alerts buyers to any news related to key suppliers.

Caveat emptor: products without the original precious metals or parts

A major concern for tech companies is fake product returns. For example, some buyers purchase products for the precious metals or to reuse the high-priced components they strip out. One tech company found customers were taking out a $400 circuit board, replacing it with a $30 board, and sending it back to the manufacturer. Manufacturing would then replace the cheaper board with another $400 board and sent it back into the field. The touch time was so quick on incoming boards that it took a long time to notice the pattern.

New Momentum’s customer described cases in which people were buying mil-spec products from the manufacturer: They opened them up and took out the $22 mil-spec chip, replaced that part with a used $2 chip, remarketed the unit as the higher end mil-spec product through the gray market, and resold the $22 chips as well.

Armed with the data, the customer proceeded to investigate the supplier. This often turns into a game of Whack-a-Mole: a supplier is put out of business, only to resurface a short time later under a new company name.

When we asked the customer about the amount of attention given to gray markets versus counterfeit, he said his previous employer had 30 people targeting gray markets and one on counterfeits five years ago. Two years later, 40 are in the anti-counterfeit group and 5 are tracking gray market sales.

The real benefit of products like New Momentum’s is the prevention of brand degradation and commoditization, especially for counterfeit products that look close enough to the real item, a la the Apple-like HiPhone or the Mont Blanc knockoffs selling for a couple of dollars.

I closed my discussion with the customer by asking him what he would like to see next from New Momentum. Without taking a breath, he replied, “New Momentum allows us to see who is selling fakes. Now I want to know who’s buying them.”

Next C-level title: Chief brand protection officer?

While I found it incredible so few companies had a brand protection officer or department, I bet that is going to change quickly.

I also found out that there are few technology companies looking to offer software or services for brand protection. Many tech companies seem to be developing their own products for internal use, but I’m not sure how other industries manage this. I suspect through armies of people and by working closely with government agencies.

What do you think about the impact that counterfeits and fakes are having on legitimate brand owners? Is Consumer Reports understating or overstating the size and effect on brand owners? Does your company have a good strategy in place? White Paper

As always, I welcome your feedback and ideas. Post a comment at the blog,, e-mail me at, or share your ideas over a Prickly Pear Margarita at our upcoming Supply Chain Executive Conference (May 28–30, The Phoenician Resort, Scottsdale, Arizona).

This week’s must-read news

The State of Supply Chain Talent: A Groundbreaking Study
by David Aquino

If making more money is in your interest, then supply chain management expertise matters. How does this expertise stack up? To find out, AMR Research recently conducted a cross-industry study to assess the current state of supply chain talent and education…and it doesn’t look good. But still, there’s hope, with our survey results being used to create standards for supply chain professional development. (Complimentary Content)

EDS and HP Look To Create a BPO Powerhouse
by Phil Fersht

The combined HP-EDS entity will complement both companies’ business process outsourcing (BPO) portfolio gaps, most notably in finance and accounting and HR processes. BPO market leaders Accenture and IBM have already been aggressively pushing their combined portfolios of finance and accounting and HR BPO services, with increasing emphasis on bundling these services with their application outsourcing services. If it can successfully integrate EDS’s capabilities, HP will be in a better position to compete. (Complimentary Content until May 16)

HP To Acquire EDS for $13.9B; Hurd Lays It on the Line
by Dana Stiffler, Phil Fersht

HP is acquiring outsourcing giant EDS for $13.9B, doubling HP’s services revenue and significantly strengthening its application services. For the largest global IT outsourcing (ITO) and business process outsourcing (BPO) deals, both HP and EDS were often in the running with IBM. Now there are two giants at the front of the market on equal footing. (Complimentary Content until May 16)

RIM Wireless Summit: Mobile Enterprise Applications Are Here To Stay
by Chris Fletcher

Mobile enterprise applications seem to finally be here to stay, based on the number of alliance and application partnerships Blackberry-maker Research-in-Motion (RIM) unveiled at WES2008 and by the strong growth in RIM devices the past year. (Complimentary Content until May 16)

Enterprise Application Services Spending Report, 2007–2008: U.S. and European Spend Stays Robust
by Dana Stiffler, Eric Klein

Despite turbulence in the U.S. markets, the outlook for the enterprise application services market is rosy. While cost savings has reemerged as a primary concern for IT organizations, it has not eclipsed innovation or emerging market growth to the extent it did in the early years of this decade. While European company budgets are smaller and plans for growth more conservative, nearly half will increase their budgets. (Member Access Only)

Developing a Manufacturing Strategy: Four Characteristics of Demand-Driven Leaders
by Lora Cecere, Alison Smith, Jane Barrett

Aligning manufacturing operations is critical to becoming a demand-driven leader. However, this cannot happen at the local factory level. Instead, manufacturing networks must be designed as part of the holistic value-network strategy based on four demand-driven principles. (Member Access Only)

Is Your CP Organization Ready for Rising Demand Variability?
by Lora Cecere, Heather Keltz

As consumer products companies execute growth strategies, demand variability increases. When 120 were asked about demand variability, nearly 70% said the trend will grow worse, not better. AMR Research has four steps to take to reverse this trend. (Member Access Only)

PLM Vendors: Taking the Temperature of 2008 Forecasts
by Laura McCaughey, Jeffrey Hojlo

With many product innovation and product lifecycle management (PLM) players announcing their most recent quarterly results, AMR Research is taking the temperature of current F2008 revenue outlooks versus PLM application spending plans and market growth expectations, given the tumultuous economic backdrop. (Member Access Only)

In This Issue


  • Countering Counterfeiters
  • Supplying Talent
  • HP+EDS
  • Enterprising BlackBerry
  • more


Read the Blog


Latest Posts:


EDS Joins the Hurd


Last week, Hewlett-Packard purchased EDS for $13.9B. Tony and Bruce discuss the strategy behind HP’s move into the outsourcing services market.

Listen now: EDS Joins the Hurd

To download this podcast, listen to previous ones, or to subscribe to weekly downloads (now available on iTunes as well), visit our Podcast page.


Quote of the Week


We had never heard of “Maker Faire” before seeing an article in The New York Times (May 13). More than 65,000 people attended the third annual Faire, which was held in San Mateo in early May. The Times photos showed cars shaped like muffins, remote-controlled orbs, fire robots, and a life-sized replica of the Mouse Trap game. Here is how Xeni Jardin, an editor of the BoingBoing blog described the family-friendly event:

“It’s deeply American. It’s like Burning Man without all the icky elements, without the pants-free guy on the bike.”

AMR Research Advanced, Emerging, and Disruptive Technologies Market Service

Additional Complimentary Executive Commentaries From AMR Research


  • Above the Noise‹AMR Research CEO and President Tony Friscia discusses AMR Research opinion on the world events and issues affecting today’s executive. This week’s column: “Rules of Success”
  • Chain Reaction‹AMR Research Chief Strategy Officer Kevin O’Marah examines the business strategies that matter for today’s operations executive. This week’s column: “Inflation Reaction”

To subscribe to these AMR Research E-Newsletters, including First Thing Monday, or to share them with others, visit our subscription page.





Stat Shot


Cost savings was a primary driver behind companies turning to SaaS to source business intelligence and performance management applications, according to a recent AMR Research survey. However, companies also view migrating to the SaaS delivery model as a long-term strategic endeavor.






  AMR Research Supply Chain Executive Conference
May 28 – 30, 2008
The Phoenician
Scottsdale, AZ, US
2008 Value Chain and Logistics Outsourcing Exchange
May 28, 2008
The Phoenician
Scottsdale, AZ, US
AMR Research Executive Leadership Conference
November 10 – 12, 2008
Westin Boston Waterfront
Boston, MA, US


Posted by: Mark Stevens | June 11, 2008

Global Health Crisis


“Counterfeit medicines are a threat to our communities and must be stopped. This problem is not isolated to a handful of countries; it is present everywhere and it is gaining momentum. It is not a problem of one person, it is a problem of all people. It is not a problem of one country, it is a problem of all nations.” – Dr. Howard Zucker, Assistant Director-General for Health Technology and Pharmaceuticals, World Health Organization


Posted by: Mark Stevens | January 7, 2008

Counterfeit and Brand Protection Tool

Check out this video that describes a web tool by to protect your brand and intellectual property.

Posted by: Mark Stevens | December 13, 2007

Is Your Intellectual Property Safe?

Intellectual property theft is threatening manufacturing. Start-It magazine article

Counterfeit goods and used equipment have been the topic of two cover stories this summer. InformationWeek’s July 7 cover story titled Used Gear: Notes from the Underground provides an in-depth look at enterprise customer behaviors and concludes that purchasing used IT gear from unauthorized brokers is risky. This week’s CRN cover story titled Fakes: Can You Tell the Difference looks at the issue from the channel perspective. It cites the prevalence of IT counterfeit products globally (estimated at $100B annually), the origin of the manufacture for the suspect goods (often China), and how the counterfeit goods get mixed into the channel (typically through multiple intermediaries). This is not just a Cisco problem, but a widespread problem in the IT industry. Full article

Posted by: Mark Stevens | November 25, 2007

Brand Protection – Intellectual Property White Paper

Any company that manufactures or consumes  in their products has always had to deal with a volatile component marketplace.  But now globalization and outsourcing are making the situation significantly more challenging.  In particular, companies are struggling with how to protect their intellectual property in a rogue world—particularly when outsourcing to low cost regions.  One Tier 1 global enterprise (Whose name remains confidential for security purposes.) found that the combination of setting up an “intelligence” department within the company and a new software solution from New Momentum which targets finding counterfeits and sales through unauthorized channels helped them protect their brand and their revenues.



There were four key issues that were the catalysts for driving the need to more effectively protect the company’s brand and IP.

·         As this company expanded its operations globally, quality issues began to appear in customers ‘     products. Research into these problems revealed that remarked or counterfeit parts were used—a problem that could lead to a loss of both reputation and revenues. 

·         There was a potential loss of revenues from existing partners buying “excess” products on the open market, instead of at “good partner” prices. 

·         Since their business plan focused on moving to an increasingly royalty based and less chip based business model, they needed to find a way let partners know they were serious about protecting their IP and their brand.

·         As one of the few companies who started early developing patents and investing huge amounts in partner development, much of their culture was built around knowing what’s coming, out-engineering and investing the competition, and then winning in the stage of world trade.  As a result, they were concerned that their features would begin appearing in competitors products, causing their reputation and culture to suffer.

Solution: Brand Protection White Paper

Posted by: Mark Stevens | November 25, 2007

Iphone and the counterfeit china situation

Interesting article on the Iphone Iphone and the counterfeit china situation « Solice’s Moon

Posted by: Mark Stevens | November 24, 2007

Counterfeit Rubber Belts Seized in Malta


By David Eldridge
Fake ContiTech drive belts from China have been shredded.
21 November 2007 – Counterfeit ContiTech rubber drive belts have been destroyed after authorities in Malta intercepted Chinese shipments of automotive aftermarket products which were found to be fake.Around 19,500 phoney drive belts and packaging with ContiTech labeling were seized by customs authorities in Malta and then destroyed upon release by the courts.The counterfeits were tossed into a gigantic shredder in an exercise funded at the expense of ContiTech.

The identity of the manufacturer and dealer of the copies remain unknown.

ContiTech said it has stepped up legal efforts to fight counterfeiters. Previously, a dealer and a general importer in Taiwan were ordered by the court of last resort to make damage payments to the company.

Posted by: Mark Stevens | November 24, 2007

Chinese Counterfeit Devises Elevate Health Concerns


Christe S. Bruderlin-Nelson

This past summer, a Shanghai court fined a Chinese businessman 400,000 yuan ($53,000) and sentenced him to 3½ years in prison for producing fake versions of the OneTouch brand of diabetes testing supplies, a product of LifeScan Inc. (Milpitas, CA), a Johnson and Johnson company.

LifeScan announced in October 2006 that it discovered counterfeiters were distributing the imitation test strips. Complaints about faulty results last year in September led to the discovery. These test strips, which are used to help monitor blood sugar levels of people with diabetes, produced erratic results according to LifeScan, and as a result, testers could give themselves life-threatening amounts of insulin. No known cases of injury or death were associated with the use of these counterfeit products, though certainly both were possible.

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