First-sale entrapment

Another Nokia phone explodes in Finland. Nokia recommends using only original batteries:

Using inferior quality standards may lead to these types of incidents occurring. The best way to prevent such incidents is to use only original Nokia enhancements and to buy them from an authorized or other reputable dealer.

We enter a mix-bag of ugly things here which touches other industries, notably the car industry where these problems are well known. Supplies mainly come from the following sources:

  1. genuine brand / original equipment manufacturer
  2. renowned third-party
  3. white brand / unknown third-party
  4. black market / counterfeit supplies wearing original brand

Defective supplies are a real -- and sometimes deadly -- problem, as the explosive batteries illustrate. Whether the defective batteries came from a known supplier or were counterfeit is not said anywhere I looked -- although the legal tone Nokia uses in the above press release suggests the latter -- nevertheless it gives to Nokia a perfect argument to persuade people to stick with its brand at all times.

This is not necessarily good news for consumers.

In many industries now, business models based on selling quantities of lucrative supplies are multiplying. The trick is to catch you with a product that has a very aggressive price (understand no margin, sold at cost) but which requires you to buy a significant amount of supplies on which the margin is substantial (read 3 to 4 figures). Ink-jet printers are the perfect example where a powerful printer costs less than an average phone and the ink is worth a thousand times more than caviar.

Defective supplies hurt all third-parties but boost the original brands (unless the original brand is selling crap, but we are talking brands here, aren't we?). In the case of Nokia for example, the message that consumers are likely to perceive is "buy Nokia or explode", and even renowned third-parties with good supplies will suffer.

Add to that the efforts that original brands are spending to prevent third-parties from making compatible supplies -- and yet again the ink-jet printer market gives us the perfect example with Lexmark using the DMCA to stop SCC -- and you have too many ingredients for a market without competition.

Counterfeiting must be stopped, there is no doubt about that. Dangerous products must be removed, that's an issue for local authorities. Low quality supplies is a problem for manufacturers. And in a business model based on first-sale entrapment, brands must not be authorized to use whatever trick, like technical locks then the DMCA, to get competitors out of their way. Otherwise, those business models aim at nothing but being small monopolies.

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