Archived Copies of Warranty Week

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December 2002 to Today

Solar Equipment Warranty Expense Rates: It's a bit of an actuarial nightmare. Relatively young companies in new and unproven industries issue very long warranties for which multiple years or even decades can pass before claims arise in volume. But eventually, products mature and claims exceed accruals, and reserves begin to deplete. Then the actuaries break the bad news: it's time to raise rates.

August 30, 2018

HVAC & Appliance Warranty Report: The appliance makers have higher warranty expense rates but the HVAC makers spend more. They also maintain warranty reserves that are much larger than the appliance companies, because the warranties on their products have longer durations.

Extended Protection Plans:
Breaking Down Risk Management Options: Service contracts sold by dealers or manufacturers to buyers of commercial products such as construction equipment can increase resale value, raise customer loyalty, boost uptime, and lower operating costs. But before extended protection plan sales can begin, the advantages and disadvantages of various risk management options must be considered.

Semiconductor Warranty Report: In this industry, the makers of the factory machinery that fabricates and tests the actual products seem to have much higher warranty expense rates than their customers. But they also have reduced their expense rates significantly over the past 15 years, while the expense rates of the device makers have remained more or less the same.

Automotive Supplier Recovery: While the OEMs are enjoying lower warranty expense rates, it's not all good news for their suppliers. While some of the cost reduction comes from OEMs manufacturing better products, some could be the result of increased reimbursements by suppliers. A few of the relevant warranty metrics hit new records in 2017, suggesting increasingly successful supplier recovery efforts.

Fifteenth Annual Product Warranty Report: All the metrics are down this year, including product sales. Some companies continue to cut their warranty expenses by huge amounts, producing better products with lower failure rates. But others are getting better at shifting more of their warranty expenses back onto their suppliers.

ServiceBench Signs Cross Country: While the appliance service contract and home warranty businesses have remained separate and distinct, the products they protect are frequently the same. Now, the crossover between the two is increasing, with home warranty companies linking to the network used by many service contract administrators, and retailers selling home warranties in their stores.

February 8, 2018

Extended Protection Plans: Service contracts sold by dealers to buyers of products such as construction equipment can increase resale value, raise customer loyalty, boost uptime, and lower operating costs. But before extended protection plan sales can begin, dealers have several risk management options to consider.

November 30, 2017

Construction Equipment Warranties: While most of the top industry players are diverse manufacturers of a wide variety of products, some make little besides construction and mining equipment. And these "pure plays" can provide us with clues about the typical warranty expenses of those manufacturers that don't include any details about their claims and accruals in their financial statements.

August 17, 2017

Civilian Aircraft Warranties: The manufacturers of large commercial airliners seem to have lower warranty expense rates than the companies making smaller business jets or regional jets. Is that because their products are built better or is it a function of how most aircraft warranties are provided to customers in sections?

New Home Warranty Report: With products such as single-family homes, it's possible to measure warranty accruals not only per dollar of revenue, but also per unit sold. And then it becomes clear which companies have mastered their warranty cost estimation process and which are still making it up as they go along.

Service Contract Pricing: Wi-Fi Doorbells: One of this holiday season's hottest products is likely to be those video doorbells that let homeowners see who's knocking even when they're away. But they're so new to the market, the technology is so unproven, and the risks are so unknown, that a large part of the service contract industry seems reluctant to offer protection plans for them.

November 17, 2016

Service Contract Pricing: Digital Cameras: Some service contract providers charge more than half the price of an inexpensive camera to protect it from drops and spills. Others charge less than the sales tax for service contracts that cover cameras selling for multiple thousands of dollars. There seems to be much less consistency in the pricing strategies for digital camera protection plans than there is for the products themselves.

October 20, 2016

Thirteenth Annual Product Warranty Report: As the latest charts clearly show, American manufacturers are spending less on warranty than they used to. But is it because of better products, less costly repairs, or fewer sales? Now that the 2015 warranty expense data collection is almost complete, it's time to figure out why claims and accruals are declining.

Big Data at WCM: Rather than a data warehouse, which is built to spec and then filled in an orderly fashion, WCM keynote speaker Richard Vermillion wants to fill a "data lake" with information and then figure out how it might be useful. For warranty and service contract industry professionals, this will allow new sources of data to help analysts predict what happens to products in the field, and how and why they fail.

PCMI & Ancillary Products: As the protection plan industry broadens from just break/fix coverage, new software platforms have enabled sellers to more efficiently make their offers and print the paperwork, and new ways of delivering those platforms have allowed smaller startup companies to launch and administer innovative new products.

February 4, 2016

International Aircraft Warranties: The bigger the plane, the higher the price, and the lower the warranty expense rate as a percentage of that average selling price. The products of the top seven aircraft manufacturers in the world can basically be ranked in size order, with the largest paying under 0.4% on warranties and the smallest paying 4% or more on warranties.

International Consumer Goods Warranties: One good reason that not much is ever written about the expense of covering consumer electronics with product warranties: costs generally aren't that high. Except for laptops and smartphones, the expense rates for most consumer electronic products are generally quite low. But there are some big gaps in the amount of warranty data that's available, outside of a handful of top industry brands.

Semiconductor Industry Warranty Report: While the companies making semiconductors and printed circuit boards have kept their warranty expenses below one percent of revenue, the companies that make the machinery that actually manufactures the products pay much more. Even so, over the past decade the machinery makers have been much more successful at cutting their warranty expenses than their customers.

Asian Manufacturers' Warranties: While most consumer electronics products have relatively low warranty expense rates, as a percentage of revenue, computers generate as much warranty cost as passenger cars and major appliances.

August 14, 2014

Aerospace & Appliance Warranties: From airplanes to air conditioners, each industry has a typical cost of warranty based on the product it makes and what kind of customer it attracts. Business-to-business products such as airplanes have lower expense rates than consumer-facing products such as home appliances.

February 6, 2014

Medical & Scientific Equipment Warranties: Most of the manufacturers in this industry have low warranty expense rates, except for those whose products use lasers or X-rays. But while their expenses are higher, they've also done the most to reduce warranty costs over the past decade.

Semiconductor Warranty Report: Unlike in most industries, with integrated circuits the production machinery generates most of the warranty cost while the actual products made by those machines generate less. However, the machinery makers have done a much better job of reducing their warranty expenses over the past decade.

Computer Warranty Report: In terms of streamlining the warranty process so it can be as efficient as possible while making more reliable products, computer manufacturers and their suppliers are doing a great job. But at the same time, they went from spending the least on warranty in 2009 to the most ever in 2012. How can both statements be true?

Tenth Annual Warranty Report,
Totals & Averages: The automotive manufacturers are cutting their warranty expenses while the computer makers are seeing higher costs. But put them together, and they're paying the smallest percentage of their revenue ever for warranty work on their products.

Warranty Keynotes: The typical warranty manager is going to transform from a data processor into a data communicator, according to the predictions of the keynote speakers at next month's WCM Conference. They're going to become the eyes and ears of the corporation, advising other departments how their products are being used and what's causing them to break.

February 14, 2013

Japanese Electronics Warranties: Four electronics manufacturers that are based in Japan but export their products worldwide show below-average warranty expense rates. Part of the reason is what they make. But could part of the reason also be where they make it?

How to Buy Extended Warranties: Step One: Read the contract. Research the terms and conditions of the service contract while you compare the prices and features of the products themselves. Then use your common sense and Google to decide if the extended warranty offer is a deal worth adding, or if you should shop elsewhere.

August 25, 2011

Medical & Scientific Equipment Warranties: Though warranty costs have remained within a tight range for eight years, there's a definite seasonal pattern to the data that's tied into the school calendar. And though these equipment makers typically spend a small percentage of sales on warranty costs, some products have much higher averages.

December 16, 2010

Retail Auto Parts Warranties: While many of the major auto parts chains are willing to go above and beyond the warranties that manufacturers offer on products such as batteries, most are reluctant to begin selling service contracts. But at least one retail chain has taken that step, and has also begun to offer extended warranties on its own labor services.

Design for Warranty: Products can be designed so that not only can they be fixed faster, but also so they can be fixed by customers themselves. Given that labor is the major component of warranty claims, product designs that plan for customer self-repairs can cut costs.

Warranty Service Providers: It's all mixed up. Retailers are selling products under their own brand names and manufacturers are selling their own service contracts. Bankruptcies have exposed how precarious product warranties can be, while insurance has demonstrated how extended warranties can survive even a liquidation. Perhaps it's time for OEMs to think about partnering with administrators and insurance companies?

Aerospace Warranty Trends: Unlike the computer and passenger car industries, in the commercial aviation industry the customer-facing brand names and their suppliers share warranty costs much more equitably. Then again, these multi-million-dollar jets and helicopters are hardly consumer products. And since safety and reliability are such top priorities, consistently low warranty costs are to be expected.

Warranty Experts: It's one thing to hear software salesmen talk about the benefits of their products. It's something else when that company's own customers stand up and say how happy they are, despite the challenges they had to overcome. And when warranty professionals gather next month in Orlando, multiple warranty experts from major manufacturing companies will do just that.

February 20, 2009

Security Equipment Warranties: Although big ticket military contracts don't usually include what we'd call product warranties, the maker so numerous other products that help protect people and property do pay claims and maintain warranty reserves. What follows are snapshots of the past six years of warranty expenditures for four of the market leaders in their respective corners of the security marketplace.

December 5, 2008

Extended Warranty Shopping: Everybody knows that prices vary from one retailer to the next, but the prices they charge for extended warranties vary even more. And while some retailers sell their products low and their service plans high, others discount both while a few overcharge for both. So while some bundles are rip-offs, others could be seen as compelling bargains.

November 28, 2007

HVAC, Appliance & Building Material Warranties: Since so many manufacturers straddle the plumbing, appliance, and HVAC industries, we're profiling them together. But warranty occurs at very different rates for each product type. And some of the most expensive products from a warranty point of view seem to be small kitchen and personal grooming appliances.

CD & DVD Warranties: Only Sony is willing to back its optical disc products with multi-year warranties, and only its high end units benefit from the five-year coverage. Everyone else issues manufacturer's warranties of one year or less.

August 29, 2006

High-Tech Warranties: Designing products that can be fixed easily or replaced quickly will reduce warranty expenses. What's required, though, isn't so much better software as better teamwork and planning. Meanwhile, a hunt for patterns and anomalies also works for fraud detection.

Aftermarket Financial Products: Auto dealers who reinsure their vehicle service contracts are pleased by a recent IRS ruling.

Global Services: Solectron helps major electronics companies design and manufacture their products, but in the future it sees a major opportunity to expand its operations in warranty repair and even recycling services.

Setting Warranty Policy for Products That Generate Annuity Streams: Most warranty-management analysis concerns warranty as cost, the effect of warranty on customer satisfaction, or the signaling impact of warranty on customers. This article describes a study where the focus was not on the product under warranty, but rather on the effect that warranty length might have on the sales of related peripherals and supplies. These sales generate annuity streams for the manufacturer as long as the product remains in operation. However, cost savings from a shorter warranty period must be weighed against potential lost profit from reduced annuity streams. A shorter warranty policy might cause products to drop out of active use sooner, and the cost savings from a shorter warranty policy therefore might be outweighed by the lost annuity profits.

Warranty by Industry: While automotive warranties continue to account for half of all claims, a diverse mix of other industries makes up the balance, from air conditioning to airplanes. Manufacturers grouped by the types of products they make exhibited distinct personalities during the past year.

Warranty Software: There's no heading in the software catalog for it, yet all manufacturers of warranted products have to use it. At Hewlett-Packard, two companies that don't even call themselves warranty software vendors are helping the company manage its warranty costs with analytical tools that weren't designed with warranty in mind.

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