It's A Knockoff World
By Gary Stanfill
Colmar Systems

Imitation is the sincerest form of flattery, it's said. But try to tell that to a pro audio manufacturer whose killer new product design has just been ripped off by someone.

This "someone" is a knockoff manufacturer. Someone who didn't spend months or years and hundreds of thousands of dollars inventing the new product. Someone who didn't agonize over achieving just the right mix of performance, features and price. Someone who didn't take any of the risks. This "someone" is a thief.

Not so long ago, when one manufacturer brought out a product that became popular, competitors would rush to bring out their own versions. However, these companies would attempt to improve upon the original product; to increase performance, add worthwhile features, correct small shortcomings in the original design and offer a better product.

Sometimes the other manufacturers would try to provide a similar product at a slightly lower price. But it was extremely rare for anyone to risk simply copying a product.

This model has served the audio industry well over the years, although it has not always been kind to the innovators. That’s capitalism, and it works.

This system has consistently resulted in better and more reliable products, major strides forward in audio quality, new ways of doing things and lower prices. And skillful people and companies have made money the old fashioned way; they’ve earned it.

But now blatant ripoffs of successful products have become a major problem. These are direct copies of products, designed to mimic the original product in almost ever detail, often cleverly packaged and promoted is such a way as to deliberately confuse potential buyers.

In many cases, the actual design is virtually a direct copy of the original, with a few key corners cut. And, of course, these products are always cheaper, a “bargain” that is presented as being "just as good" as the real thing.

Unless you are a manufacturer, or work for one, why should you care? Aside from the obvious ethical issues, there are many very good reasons. First, a good many of the products being ripped off are developed by North American companies, and those doing the ripping off are headquartered elsewhere.

These entities don't hire your neighbors to design, build, test or sell their products. In fact, they may cost your friends and neighbors their jobs. They pay little or no taxes to support schools, hospitals, police and fire departments, or repair roads. They don't buy their parts and supplies in your area.

And they will never improve the audio industry, never make a better sounding product, never contribute anything to the industry. They will simply prey on those who do.

Still not impressed? After all, you get all the "features" of the original product, and at a lower price. Or do you? Features are not performance, they are knobs, buttons, connectors and "stuff". Features are not audio quality, in fact, most features are cheaper to implement if you don't worry about how the equipment actually sounds. And features are not reliability, durability and long -term dependability.

There is also the question as to where all those savings actually came from. Certainly labor costs are much lower in many parts of the world as compared to North America, especially in certain countries where convict labor is widely used. But automated manufacturing can make up a great deal of the difference. And transportation costs, tariffs, taxes and various other costs further narrow the gap.

This means that most of the savings must come from somewhere else. Reducing component quality is one of the easiest ways of cutting cost. Wide tolerance, cheap parts cost much less than quality components, especially if the quality parts come from North America or Europe. Reliable connectors, switches and controls are expensive, locally manufactured substitutes will be cheaper but their useful life will likely be far shorter.

As an example, in Asia, at least five quality levels for electrolytic capacitors are widely available. Quality ranges from excellent to extremely poor, and the price range is similarly wide. Cheap electrolytic capacitors usually have short lives and high failure rates, and can cause a wide variety of performance problems. However, if cost absolutely must be reduced, which grade of capacitor would you suppose will be used?

And if a piece of equipment does fail, can you get it fixed? Warranties tend to be short and once a unit is out of warranty, service might not even be available. Often this means that the equipment has to be tossed. Technical support is generally extremely poor or nonexistent.

In fact, it is not uncommon for desperate owners of knockoff equipment to call the manufacturer of the original product for support, adding insult to injury. Good technical support and service are expensive; eliminating them can mean substantial savings.

And engineering is even more expensive. Engineering quality products is not easy or simple, and the process is time consuming. Just defining a successful product is often quite difficult and few companies routinely get it right on the first pass.

As a result, somewhere between eight and 20 percent of the cost of a high-tech product goes to pay for engineering. What a huge savings if a company just steals someone else’s design and avoids all those nasty costs!

Not having a good engineering staff will inevitably compromise product performance, reliability and quality. Inexperienced junior engineers frequently make small changes - with big consequences. Lack of an experienced engineering staff can also cause the opposite problem. One of this author's more interesting experiences at a high-end wireless company was to see mistakes and schematic errors faithfully copied by the knockoff artist.

Why don't manufacturers take legal action to stop the ripoffs? A few larger companies do. Unfortunately, however, almost all of the knockoff manufacturers are in countries that refuse to protect the intellectual property of other countries.

International lawsuits are difficult, expensive and time consuming. And even if successful, there may be no compensation for legal costs or damages. In those few cases where there is an award, the amount is usually trivial in comparison to what the offender has gained. Hardly a deterrent.

The real solution to the problem is in the hands of the people who specify and purchase audio equipment. Until they resist buying knockoffs, both because it’s the right thing to do and because it is in their own self-interest, the problem is likely to continue.

A regular contributor to ProSoundWeb Install Sound, Gary Stanfill is principle consultant for Colmar Systems, based in Southern California. His company has provided engineering and marketing consulting services to wireless microphone manufacturers for several years. Stanfill was president and general manager of Vega, a leading manufacturer of wireless microphone systems, for a total of 18 years. He has over 30 years experience in audio, RF technology, communications and wireless systems. He can be reached at gjstanfill@earthlink.net