Apple iPhone Knock-Offs Become Big Business

By Douglas A. McIntyre Published Sep 10, 7:28PM EDT

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The Chinese seems to be quite good at copying Western products, and, as it turns out, the Apple (AAPL) iPhone is no exception.

Bloomberg found that some of the counterfeit handsets had been made in Taiwan using pictures of the iPhone that AAPL had posted online. The news service also found "the knockoff phones are produced in batches of 1,000 at a factory in Shenzhen, China."

The fake iPhone are apparently not very hard to build and priced well below the real thing. `The longer Apple delays, the more the pirates can rip the company off,” says Chialin Lu, an analyst at Yuanta Core Pacific Securities Co. in Taipei.

Bloomberg also notes that the fakes have an advantage: "While the knockoffs resemble iPhones, they don’t use Apple software. Ben says his phones have the advantage of working on any network, while iPhones connect only to AT&T Inc.’s system."

Apple may well find out that Asia, especially China, has a way of sucking huge profits out of many products sold globally. Microsoft (MSFT) estimates than more that 85% of the Window OS copies sold in China are counterfeit. Jobs & Co. will end up leaving a lot of money on the table there, but there is almost nothing that they can do.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.