Sohail Mirza, standing in for Peter.

Random failure is Good For Business

So why do our gadgets die so young? Quite simply, gadgets that die young make for higher profit margins.

I’m sure few organizations plan on marketing technology that is fundamentally flawed or designed to expire outside the warranty period. That said, it is often in the manufacturer’s best interest when a product ends up being more likely to expire after the warranty is up.

Manufacturer’s may not be acting maliciously in this regard, but they may not be doing enough to ensure longer lifespans on their products, and this is a horrible trend in the high tech industry, but one that consumers seem to be satisfied with.

I’ve been bitten, like everyone else, by a product that seemed to expire prematurely. My Dell Inspiron XPS Gen 1 laptop croaked about half-way through this year. Purchased in November 2004, the laptop was expected to last well beyond the 18 months it made it. Of course, being my first laptop purchase, I neglected to pick up the extended warranty.

As a self-professed geek, you always figure you can handle any technical issue that may arise, so I didn’t pay any attention to the warranty that Dell was offering. In retrospect, I should have picked it up, and I now advise laptop buyers to always pick up the manufacturer’s warranty.

One-and-a-half years after purchase though, my XPS bombed. Just wouldn’t boot up. Wouldn’t POST. A $40 phone conversation with a Dell technician revealed that I would need to invest another $500+ to have the motherboard replaced. By the way, this is why I recommend laptop buyers get the warranty. When the two most likely points of failure on a laptop (the motherboard and the LCD panel) are also the two most expensive points of failure, you’d be foolish not to pick up an extended warranty. Yes, I was a fool, but I’ve since learned my lesson!

So did Dell design my motherboard to fail after 18 months? Probably not. Do they know how likely the motherboard is to fail during that period of time? Almost certainly. Do they care to improve the inherent quality of the product and reduce time-to-failure? No. It all comes down to dollars and cents.

To pull some numbers out of thin air, if Dell calculates that they can retain 90% of their customer base, despite a 30% rate of failure past 18 months of ownership, given that they can sell through a warranty plan to 70% of their customers, and make 200% profit on replacement parts outside of warranty, then of course they have no interest in improving quality.

While Dell and similar organizations may not necessarily be evil, they’re certainly not being nice. Until consumers start speaking with their wallets by punishing these companies for their support policies, the trend is not likely to change.

In the meantime, the laptop will remain on my closet shelf, collecting dust. Anyone care to spot me $500 or so?

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Written by Sohail Mirza

December 12, 2006 at 12:32 am

Posted in Business, Technology

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