IoT products today, are growing uncontrollably, without much government intervention. The rate at which IoT adoption is taking place is alarming, as this uncontrolled and un-monitored IoT implementation has brought in a plethora of cybersecurity threat related risks and vulnerabilities. IoT devices today, apart from the security issue, are also facing shortages. These IoT shortages often force the consumer to approach the gray markets.
These gray markets, generally sell products through legal channels, but often in ways that are not intended by the manufacturer. If a manufacturer intends to bridge the gap between product shortage and demand and opts for outsourcing some of its manufacturing shortfall for IoT devices, the major consequence it may face is that surplus products could end up into the gray market at a significantly low price.
The counterfeiter could very easily get his hands on the outsourced product, disassemble them to copy the components and launch the fake product at a discounted price. This issue of product reaching gray markets often arises if a third party or contractor who’ve been approached to outsource the manufacturing produces a surplus or extra IoT devices and then secretly or through back channels sell these leftovers or surplus IoT devices. Eventually, to tackle this extra product manufacturing, device manufacturers or OEMs can limit the IoT product manufacturing with a set number of licenses, and if the contractor or third party breaches the licensed number, a legal proceeding can be initiated against them.