Wednesday, July 09, 2008

Warranties Matter a Lot

Last week, in my post on pricing, Feetsdr asked about the fascination with three year warranties.

Generally speaking, here's what we do on warranties:

1) We try very hard not to sell anything with less than a three year warranty (this applies most particularly to computers and servers).

2) For minor things we will accept a 1 year warranty, but we sell an extended warranty to cover it.

Why the fascination with warranties, and three years?

First, we expect a computer or server to last three years. At any point during that time, if something goes wrong, we want to pick up the phone, call the manufacturer, and make them fix it for free.

In this way, systems are covered by the manufacturer for the lifetime of the equipment.

Second, we sell HP Equipment because a three year warranty means a real three years. In other words, the hardware is intended to actually last that long. And 99.999% of the time it does.

There are two kinds of Three Year Warranties

First, there's the warranty you will never use.

I've been working with HP for more than fifteen years. In that time, I've experienced two bad hard drives and one bad power supply -- in thousands of computers. They are virtually flawless.

Warranties this good allow us to assume that the hardware will simply not fail. That, in turn, allows us to cover the warranty-related labor on all hardware -- because we assume there won't be any.

Second, there's the warranty you will probably use.

There's another brand we come across. A name you'd recognize. Their warranty service is excellent. We know this because we end up calling them a fair amount. Over the life of a server, I'd say the average is more than once a year. For laptops, it might be two or three times a year. Desktops? OMG. I've seen a shipment with 30% bad motherboards.

We don't sell that stuff. If we did, we'd have to charge for the labor to deal with tech support.

Warranties that you use cost you more money than warranties that you never use!

Here's how it works for us:

Option A: You buy the equipment from us. We sell HP. Therefore, we cover all warranty-related work. That consists of calling HP and asking them to live up to their warranty.

Option B: You buy equipment from someone other than us. We may or may not know what you've ordered. As a rule, it's the wrong thing, it's cheap, and it doesn't have a real warranty.

We then get to charge you for returning the junk, calling warranty support, switching out hard drives (Very often, such warranties are not Next Business Day on site. They are "ship it and do it yourself."), etc.

In other words, by saving up to $100 on day of purchase, you spend an hour here and an hour there over the life of the machine. In addition, you get to enjoy downtime.

We use the generic term "business class machine" to describe what we sell. That means:
- Three year (next business day, on site) warranty.
- Not shipped with a bunch of useless programs that need to be uninstalled.
- Built solid, with quality parts.
- Fast enough, powerful enough, and with enough memory to last three years.

These simple rules eliminate
- Crap that sells for $399
- Junk you buy from Best Buy, Walmart, etc.
- Low-end Dell junk
- Even low-end HP

You get the point, I hope. Quality equipment saves you money. It saves the client money. And, most importantly, the technology becomes just part of the background. Clients don't pay attention to it because nothing goes wrong. You don't pay attention to it becuase nothing goes wrong.

You can have that. Times five hundred machines.

Life is good.


  1. So what's the very good warranty we'd have to use often? (I just want to make sure I'm not using them myself. =D)

  2. I really cant agree with you more.
    The biggest problem is that people can't measure downtime.


  3. Anonymous11:17 AM

    I assume you're talking about Dell as the problem-manufacturer.

    I just wanted to make a few comments:

    Dell uses Intel brand (Foxconn manufactured) motherboards, with a Dell sticker over the Intel logo. These are well-regarded as the most reliable, though not the fastest, motherboards.

    HP bids their boards for each machine -- I've seen HP machines with motherboards from Asus, Intel, Foxconn, MSI, Gigabyte, ECS, et al.

    You mentioned the two failing HDDs... but they both use the exact same hardware: Seagate, Western Digital, and Maxtor 7200 8mb 3.5in HDDs.

    HP certainly treats their partners better than Dell, but I find your intense brand preference (and suggestion that one truly produces MUCH better machines) a little absurd.

  4. Anon makes an excellent point about parts. At some level they might be the same.

    But you have to add two variables to the equation. First, there are different levels of parts. Just as each PC maker has a home class and a business class, the same is true with Intel motherboards and Seagate drives.

    We've all seen homemade servers with desktop motherboards. Works great until you decide to install one more NIC and there are no expansion slots.

    The second variable is the production process. I don't know how boards and drives are handled, installed, or tested.

    I just know that when it's all put together into a complete machine, the HP will have fewer problems, burps, and calls to tech support than the other brand.

    If you're willing to spend unbillable time on the phone with tech support, then it doesn't matter what you sell.


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