Editorial: Trapped in the warranty minefield

Editorial: Trapped in the warranty minefield

Microsoft has launched Office 2003, Digiland and Exeed have ended their short-lived romance on what can, without a doubt, be described as a messy note, and a US class action against Fujitsu bore fruit for a number of North American resellers. But the story you seem to be following with most interest is the day-to-day warranty wrangles I wrote about in this space a couple of weeks ago.

While our own investigation into the matter is under way, a letter from reader Ray Shaw highlighted just how complicated the issue is. In a highly competitive environment of IT commodities, there seems to be a move to shorten the period of manufacturer’s responsibility for servicing the product. As Shaw points out, at least in the PC space, the discrepancy between vendor perception of what constitutes an optimal spare parts inventory cycle and the customer perception of what constitutes a fair warranty cycle are at odds.

Like that imaginary memo sent by a certain car company to a certain software company, you have to ask yourself if the IT industry is for real in expecting that the day-to-day business tools they sell to the world can be pushed out with minimal provision for customer care (be that the vendor’s supply chain or the end-user). Not only are vendors tightening their warranty terms, but it is fair to assume that such practice allows for some serious downgrades in quality control and, ultimately, in the quality of product sold. The question, of course, is not so much about ethics in business (although there are some valid reasons to poke the big ‘efficiency’ wigs with a philosophical question or two), as it is about the sustainable profitability of such a business model.

But that is not a matter for this editorial. What is interesting is the size of legislative loopholes that allow the reseller to be held responsible for lousy production standards in order to protect the rights of the consumer, while disregarding the notion of the reseller as a customer in their own right. Most distributors and resellers would agree that, combined with the administrative cost of warranty provision, the decline in product quality is making the issue a lot more sensitive than it used to be in the era of high product turnover and fat margins that padded out the cost of administering customer satisfaction, which is what warranties are essentially about.

Furthermore, the variety of warranty terms and conditions a reseller has to juggle often make it an easy target of customer wrath, leaving the middle man not simply out of pocket, but also manifestly confused and potentially vulnerable to the high cost of any resulting legal action.

Meanwhile, it is not unusual for many a reseller and retailer to offer special warranty conditions to its customers in order to protect their own good name.

The flow-on benefit of such practice to the vendor is not taken into account or calculated as it should be, for instance, by attaching a numerical value to the positive increase in brand perception and follow-up sales.

The minefield is, of course, equally dangerous for the distributor. In both cases, it seems that the only valid option is to think of warranty provision as a service by a reseller, rather than a guarantee of product quality by a vendor. Perhaps this is something that IT manufacturers have yet to learn.

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