Concerns around who will assume responsibility for Optima’s substantial list of warranties has left channel players debating the value of third-party coverage as opposed to in-house contingency plans.
Optima, which went into voluntary administration last month, is one of many Australian PC manufacturers that managed warranty claims internally. Co-administrator from Moore Stephens, David Mansfield, is now evaluating several parties that have expressed an interest in taking over Optima’s warranty work including Pioneer, Leading Edge Group and Impact Systems.
The problem for customers and service agents is that any money Optima once had to cover warranty work has been swallowed up by debt.
“Optima had made provisions for warranties, which is to be expected, but there was no separate bank account – it was being funded from ongoing sales,” Mansfield said. “Those who are selling lots of PCs can afford to do the labour work free of charge, but Optima had been experiencing declining sales.
“It goes to show that when you buy any type of product, whether it’s a 10-year warranty or a lifetime warranty, it’s only as good as the company. If they’re not there in 10 years, there’s no warranty.”
Mansfield claimed it was not unusual for companies to self-fund warranty work with ongoing business.
“Some people offer insurance on warranty work but it’s cost prohibitive, particularly in a market like this which is working on very low margins,” he said.
Former national sales manager for one local PC manufacturer and now director of reseller Digital DNA, David Cuthill, took issue with manufacturers funding warranty work internally and argued the industry needed to do more to ensure customer warranties were being protected – no matter what happens to the PC provider.
He claimed manufacturers were taking money for services not yet rendered and adding it to their general sales accounts.
“There are no safeguards – it’s up to each company how they manage warranties,” Cuthill said. “The concern I have is that there’s no insurance if that company goes under. We have seen this happen before – Optima is not the first manufacturer to get into strife and probably not the last, but we don’t seem to learn from past mistakes. There’s no legislation to cover this.”
Cuthill suggested one way PC manufacturers could mitigate the problem was by setting up a separate account or to escrow funds to cover warranties. Another was to use a third-party warranty agency but several local manufacturers, including Pioneer and ASI, said they had found third-party warranty providers inefficient and problematic in the past.
“We’re dead against third-party lines as many are inefficient,” ASI Solutions director, Maree Lowe, said. “Also, if you’re going through a third-party warranty provider there’s still a liability no matter who controls it [the warranty].