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Dell Cuts Consumer PC Warranties Worldwide
Originally posted on October
23rd, 2001
By IDG
Jul 18 2001 04:24 PM PDT
The decision to shorten the standard
warranties for the Dimension line of desktop PCs and the Inspiron
line of notebooks was made in a bid to reduce system prices.
In a move intended to lower its prices, Dell Computer Corp. has
decided to reduce the warranties on its consumer and small business
PCs from three years to one, a company spokesman confirmed Wednesday.
The announcement comes in the midst of a global slowdown in PC
sales.
The decision to shorten the standard warranties for the Dimension
line of desktop PCs and the Inspiron line of notebooks was made
in a bid to reduce system prices, said Bruce Anderson, a spokesman
for Dell. The warranty reduction, which is being rolled out worldwide,
does not affect PC lines targeted at corporate users, he said.
Users aren't locked into a shorter
warranty, however. Dell is offering a two-year warranty and a
three-year warranty as an upgrade to interested customers, Anderson
said. Likewise, customers in some areas will also have the option
to receive a shorter warranty, and a lower PC price, he said.
In the U.S., prices for the upgrade
from the base one-year warranty, which provides for telephone
support and on-site repair services, are $69 for a two-year warranty
and $119 for a three-year warranty. The company is also offering
a $20 discount for users willing to accept a one-year warranty
that requires them to ship PCs back to Dell's factory if a repair
is needed. That process will typically require between two to
three weeks, according to Dell's Web site.
Dell is also offering U.S. customers
the option of a 90-day warranty, according to information posted
on the company's Web site. Information on the discount granted
with the selection of the 90-day warranty was not immediately
available.
In Europe, Dell shortened the
standard warranty for Dimension PCs sold in the U.K. from three
years to one year in early July. The rest of Europe is set to
follow on August 1, according to Pierre Vigna, marketing director
for Dell's Dimension product line in Europe.
The new one-year warranty is
based on collect-and-return service, where Dell picks up the
PC and returns it repaired within six days. The old three-year
plan included on-site repair in the first year and two years
of collect-and-return service, Vigna said.
"This is to show our willingness
to offer better value to our customers. We did extensive research
and most of our customers told us that they didn't need a three-year
warranty. Those who did want it were very willing to pay extra.
We will be able to lower our prices as there definitely is a
cost for those two extra years," Vigna said.
Brian Gammage, principal analyst
with Dataquest Inc., a unit of Gartner Inc., said Dell is trimming
costs.
"Dell is saving itself some
money. Warranty is difficult to quantify because it depends on
how much the customer uses it, but there is a warranty cost.
Dell is removing a risk element from its cost structure,"
he said.
Furthermore, Gammage said, the
warranty cutback shows Dell "intends to continue with the
price aggression it has showed all year" as it "creates
a small space for price cuts."
"It's not such a bad move,"
said Kitty Fok, associate director for PC research at International
Data Corp. Asia-Pacific, adding that most large PC vendors, such
as IBM Corp., also offer one-year warranties.
There's always been a distinction
drawn between corporate and consumer customers and it's more
important for Dell to keep up its service levels with its major
corporate customers than for small businesses and consumers,
Fok said.
"The (PC) market is very
bad," Fok continued. "It's kind of scary."
Shipments of PCs have been well
below expectations, Fok said.
In the U.S., PC shipments during
the second quarter are expected to show negative growth compared
to the same period last year, she said. Even China, which is
viewed as one of the few bright spots in the PC industry, fell
short of forecasts,although it continues to show growth overall,
she said, adding that shipments during April and May were particularly
slow.
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