July 20, 2007 4:00 AM PDT
Perspective: Wake up, folks--tech warranties don't need to be lameSee all Perspectives
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Taking the measure of the computer warranty scam
July 6, 2007
Back in the day, all hell would break loose if a manufacturer tried to duck responsibility when one of its products malfunctioned. It was a matter of simple honesty: in return for paying the price of a purchase, a customer was entitled to a fair deal.
When it comes to leaving consumers with the short end of the stick, there are few inequities as egregious as the standard warranty terms attached to technology products. For the most part--though not all--you get one year of protection and then you're on your own, Jack. That's fine if your computer or MP3 player performs as reliably as a Toyota, but let's get real here. Few products do.
All the more reason I'd like to know when we got turned into a nation of sheep.
It's not unreasonable to expect trouble-free performance from a $1,000-plus purchase. So when glitches crop up, the corporation should stand behind its products. That's not always the case.
In fact, standard warranty protection in the computer business rarely lasts longer than a year. As my Gen-Y nephew is wont to say, "How lame is that?"
Even more baffling is the public's meek acceptance of the status quo. Not long ago, when I mused about this in a blog, one reader countered that one-year protection constituted ample protection and hardly qualified as a "scam."
The post was made anonymously--unless, of course, some rambunctious counterculture couple actually named their spawn "Mergatroid Mania." So it was that "Mergatroid," who said that he (or was it she?) worked in the electronics service industry, suggested that I must inhabit a dream world with like-minded fools.
"A warranty is meant to protect you from defects in workmanship," the Mergster harrumphed. "It's not a guarantee that the goods you purchase will never break down. Being human, we have yet to invent anything that is perfect and will last forever."
Just so happens that I agree with the position. At some point along the line, every fancy tech toy is going to malfunction--if not give up the ghost entirely. Warranties are there to offer security in the event that these contraptions break down sooner, rather than later.
That's why so many people opt to buy extended warranties. In most cases, they're not worth the money. Still, we do it because an out-of-warranty repair is going to cost plenty more--thus adding to the expense in buying a big ticket item. (And even then you may need to spend hours trying to reach someone who can fix your problem, let alone communicate in clear English. But that's fodder for another column.)
Warranty protection also costs a company a tidy sum--especially if its products keep breaking down. The expense can add up. Microsoft recently learned this the hard way, announcing that it would spend more than $1 billion to fix faulty game consoles while also extending warranty protection from one to three years on its Xbox line.
I would have given Microsoft more credit had management started out with offering a three-year warranty as standard fare. Instead, it was classic after-the-fact spin control.
That wasn't the case at a Southern California peripherals maker called Iogear, which has offered a three-year warranty as a way to distinguish the company from the competition. CEO Sampson Yang told me he equated it with granting "peace of mind" to consumers.
Seagate offered up a similar tale. In January, the company attached five-year warranties to its FreeAgent line of external storage products. Brian Dexheimer, who runs sales and marketing, also used the term customer "peace of mind" to explain why Seagate was still willing to shoulder the potential extra expense.
"There's absolutely a cost associated here," Dexheimer said. "The more you extend that warranty, the more you have to put in reserve to account for a (product) failure."
All true. None of this qualifies as charity. Instead, call it enlightened self-interest because Seagate, Iogear and other forward-thinking tech companies stand to get repaid in full, and then some, in the coin of winning customer loyalty.
Doesn't it all come down to a question of fairness? You pay good money for an expensive product assuming you won't get hosed on the transaction (let alone because of the fine print in the contract). When that's not the case, it's all the more galling.
New York Times columnist Joe Nocera recently wrote about how iPhone users will have to mail the units back to Apple to replace the phone's battery. That's not a problem if your phone is covered under Apple's one-year warranty. If not, you'll spend $79 plus an extra $6.95 for shipping (a loaner unit will cost an extra $20).
With some parts of Europe already mandating minimum warranty coverage, how long before some ambitious congressman gets the same idea? That would be too juicy an opportunity to pass up. Especially when the sotto voce message being sent to consumers is: assume the position and like it.
Charles Cooper is CNET News.com's executive editor of commentary.
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