The Reason Dell Makes Money

[Jason Dunn]

Something quite remarkable just occurred, and it's so simple it boggles the imagination. Last Christmas I bought a Dell 4300S computer for my wife. At the end of this December, the one-year warranty on it expires - we haven't had any problems with it (other than a CD-R issue that seems to have cleared up), so I wasn't consciously aware of the warranty being up in a month. A Dell representative called me to remind me that the warranty was expiring, and offered me an additional year warranty for $99 CND or two years extra for $150. I signed up for an extra year without giving it a second thought - $99 is a small price to pay for a full parts & labour warranty.<br /><br />In all the years I've been buying consumer electronics, I've never had a manufacturer contact me like this - it's so simple, but can you imagine the revenue it generates for Dell? My respect for Dell's business acumen just went up a notch - they have great instincts for making money in a rough market.

[ricksfiona]

Intuit also calls their Quickbooks customers to extend technical support contracts. It was too expensive to sign-up for the contract considering how often I call them. Yes, Dell is smart.

[GoldKey]

I usually think extended warantees are a rip. They are just insurance. The price of them is based on the odds of a breakdown, the expected cost of the repair, and a profit for the company. You are much better off self insuring if you can afford to do so. For example, you paid $99 to extend the warantee on a machine that even if totally lost, could probably be replace with a new machine for considerably less than you originally paid. Even if the odds were 5% that it was totally lost, the new machine would have to cost over $2000 to make the expected value of the extended warantee a positive for the consumer. In the long run, you would probably be better off holding on to your $99 and just accept that you may have to buy a new machine if your dies.

By this same logic, I decided the extended warantee on the Axim was too expensive. The features of the $299 model will probably be available (maybe even more features) at the $199 price level by the time the included warantee runs out. I could lay out $59 now, or just run the risk that after a year, if it breaks I would just have to buy a new one and put the $59 towards it.

[takotchi]

Dell might make money, but they must waste it all on me. They sent me a ONE-INCH wide peice of plastic and a screw overnight. Their service is really nice, but overnight for that? Sheesh.

Maybe if they hadn't went to Compal for the Inspiron 5000e it wouldn't be such a creaky, unreliable peice of....... :twisted:

[jeff]

Sony contacted me three or four times about extending the warranty on my TV. I declined. TVs either go quick or last forever. And if it breaks on me, I can get a new one without feeling guilty.

[Rirath]

Selling warrenties was a big thing at Staples. I couldn't hawk a peice of paper the customer will most likely never need with a clear conscious. Asking them, sure. But not selling it like a used car salesman. Everyone there would tell you they'd never buy a plan, but they'll gladly tell the customer it's the Holy Grail. :? Warranties may be good things for companies, and sometimes customers, but pushy sales staff drive me nuts.

[Fishie]

This is another thing about Europe, yah we pay higher prices over here for some stuff(actually most) but in most West European countries law dictates that a manufacturer of electric devices must give a full year of total warrantee on its products(2 years in germany).

[CESkins]

I usually think extended warantees are a rip. They are just insurance. The price of them is based on the odds of a breakdown, the expected cost of the repair, and a profit for the company. You are much better off self insuring if you can afford to do so.

In general, I agree with your sentiments Goldkey. However, I am glad I got an extended warranty from Circuit City when I purchased my HP 568. Less than 1 month after shelling out over $600 for the HP, it fell out of my parka pocket onto a concrete floor and the screen cracked. I called HP to ask if they would replace it under warranty but they were asking for $200 (almost 1/3 of what I paid for the PDA). I was able to take the Jornada back to Circuit City who replaced it with a brand new one at no cost to me. I paid around $100 for the 3 year Circuit City warranty. Needless to say, it was the best $100 I spent considering how much I would be out on a single PDA.

Dell's service is outstanding. Back in '98 almost 1 year after I purchased my old PII, the CD-R died. Dell sent out a rep the next day with a brand new CD-R drive and within 15-30 minutes my system was back to its original state. I was impressed and pleased with the service I received from Dell then and it is one of the reasons why my new computer is a Dell. Dell has earned my respect and $$$ for their great customer service and low cost/high quality systems. :way to go:

[imorton]

My extended warranty really paid off when the LCD, Hard Drive went. The next day service was excellent, and the cost of screen and HD definitely outweighed the cost of the warranty. It's always a gamble.
You can always save on home insurance, but if it burns down, your really glad you have it.
Just my 2 cents worth...

"Microsoft didn't put man on the moon", neither did DELL...

[JvanEkris]

In europe it's a bit better now. Under the new European Laws, two changes are made:
* Warenty is always two years (not only in Germany :) )
* The expected lifetime is considered as well.

The last one is a very nice one. For example if a consumer really invests in a product that promisses a long-living product or has that brand-name, warenty is implicitly extended to more years. So if your dishwasher breaks down after 5 years, and the producer said it would be at least 10 years, you get half your money back on the repairs !

Jaap

[mookie123]

In europe it's a bit better now. Under the new European Laws, two changes are made:
* Warenty is always two years (not only in Germany :) )
* The expected lifetime is considered as well.

The last one is a very nice one. For example if a consumer really invests in a product that promisses a long-living product or has that brand-name, warenty is implicitly extended to more years. So if your dishwasher breaks down after 5 years, and the producer said it would be at least 10 years, you get half your money back on the repairs !

Jaap


wait, why would anybody want 2years warranty for EVERY household items? Some items I dont' even care if it come with one week warranty or not. Won't it cost more for items that I only need less than 2 years? Company has to figure replacement cost under warranty for all that law. I sure don't want to pay all that if I only need it for 1 month.

Definitely bad regulation. They should have write good laws about easy to read warranty and claim instead of dictating the warranty time.

the law about printing expected lifetime is nice tho' (just like lamp bulb here in US. LOL)

[GoldKey]

You can always save on home insurance, but if it burns down, your really glad you have it.
Just my 2 cents worth...



My usual rule is that if I can usually afford to have it replaced without it being to much of a burden, forgo the warantee. I can't afford to replace my home if it burns down, so I have insurance. I have bought extended warantees before though. For example when I bought my first digital camera in early 2000, the extended service cost only $30.00 (or something right around that) at Best Buy for like 3 years. That seemed like a good investment, especially considering that on items like that it is usually cheaper for them to replace rather than repair them and with so much inovation going on if I did get a replacement, it would probably be much better than the original. That was a great investment. The first Kodak $299 (1.3 MP) died within a month. Prices had come down such that I was able to replace it with the 2 MP model that had originally cost $499 for only an additional $50. That Kodak lasted almost 2 years and then it went dead. At that point I was again able to trade up for only $100 to a Canon Powershot S30 (which is on the low end of Canon's Professional line).

[Ed Hansberry]

Like others here, I never ever buy extended warranties, under any circumstance. I know I have saved enough money over the years on not buying them on cars, computers, floppy disks (I am 99% sure CompUSA will sell you an extended warranty on those), household appliances, etc., that if I bought a new car tomorrow and 1 day after the warranty expired and the engine and transmission blew at once, I'd still be money ahead.

If extended warranties were such a good deal for the consumer, companies wouldn't be eager to sell them. My 2c (3c Canadian ;) )

[Thoughtful Guy]

I considered Dell's $99/yr coverage. But then I found that I could get an Electronics Rider on my insurance for $50/yr that covers EVERY computer I own as well as EVERYTHING that they can connect to (TV, home theater, router, PDA, etc.).

So for $50 I've covered just about every electronic device in my house!

:lol:

[Sheynk]

I have to agree that Dells support is exceptional, My monitor was burning out (it was making a very high piched noise) and they just sent me a replacement one.

[Jason Dunn]

But then I found that I could get an Electronics Rider on my insurance for $50/yr that covers EVERY computer I own as well as EVERYTHING that they can connect to (TV, home theater, router, PDA, etc.).

Wow - that's VERY interesting....I've never heard of such a thing. I'm going to talk to my insurance company. :-)

[seeker]

I believe that the standard insurance rider covers standard hazards including electrical surge, airport mishandling, and theft. I do not think that they cover hazards including self imposed clumsiness... or perhaps I need to change insurance companies...

8O

[CESkins]

I do not think that they cover hazards including self imposed clumsiness...
Hmm...you could always blame the damage on a natural disaster..."Well, I was just sitting by the pool sipping a Pina Colada when out of the clear blue sky my PDA got struck by a bolt of lightning which cracked the screen" :D

[GoldKey]

I do not think that they cover hazards including self imposed clumsiness...
Hmm...you could always blame the damage on a natural disaster..."Well, I was just sitting by the pool sipping a Pina Colada when out of the clear blue sky my PDA got struck by a bolt of lightning which cracked the screen" :D

However, your deductible may very well be higher than the value of the item.

[yawanag]

I'm like Jeff. Sony does it too. I just got contacted. My warranty expires in Feb. I think Service Plans are a rip off. I worked at Best Buy for a while and my Sup. got made because I didn't always sell a SP with each computer. I know how I am when I say "No" I mean "No" Don't try to push something over on my after I've said it either.

However, I wish I had gotten one with my Lexmark X63. If you purchase one for a printer at Best Buy you can get a new one if it goes bad.

I've had nothing but trouble with this All-in-one printer. I keep getting "Device is busy. Try again later." when I try to print and nothing is in use. I've concluded it doesn't like my PPC's being plugged into the HUB I have. They've done everything but offer to take it back and exchange it.

[GoldKey]

However, I wish I had gotten one with my Lexmark X63. If you purchase one for a printer at Best Buy you can get a new one if it goes bad.


Here, the Best Buy personnel make a point of saying that if anything goes wrong, you can get it instantly replaced. This is not true. They will only replace it if it cannot be repaired. It can take weeks for them to make that determination. I was without a camera for nearly a month waiting for them to determine that a known defect for which I brought in documentation from the manufacturer that it could not be fixed.

I have had them tell me that I can intentionally break an item to exercise the warantee. The employees don't seem to care because most of them are short term and won't be there when it comes time to honor what they told the customer.

[yawanag]

The employees don't seem to care because most of them are short term and won't be there when it comes time to honor what they told the customer.



I'll add AMEN to that!

[Thoughtful Guy]

I do not think that they cover hazards including self imposed clumsiness...
Hmm...you could always blame the damage on a natural disaster..."Well, I was just sitting by the pool sipping a Pina Colada when out of the clear blue sky my PDA got struck by a bolt of lightning which cracked the screen" :D

However, your deductible may very well be higher than the value of the item.

First, it's USAA insurance which is only available for military officers and their dependents. If you can get it, get it. Second, with the rider there is no deductible. Lastly, it covers all incidents, accidental or not.

I asked them "So what if I drop my 36 inch TV out the window?" The response was "Can your computer connect to it?" Again, if it connects, it's covered.

[ECOslin]

The reason Dell makes money: They have bills just like everybody else.

When doing warranty support for Dell, I never had to argue to get a replacement part. With Compaq I had to resubmit or use one of the many parallel part numbers.

Edward

[pro_worm]

DELL's rise to the top of the desktop market has been in no small part due to its excellent service. Throughout my three year service plan they have not only replaced my laptop's DVD drive and entire frame, but also its 15" TFT flat screen because it had a minor scratch in the corner. I LOVE DELL.