August 2, 2006

Computer Warranties:

While most computers still carry a one-year warranty, some are covered for only 90 days while many office computers still cling to three-year warranty periods.

Last week's listing of U.S. passenger car warranties regrettably seems to have come out a week too early. For while last week we were merely projecting what effect the cost of longer warranties might have on Ford in the future, this week we can reflect on the news that Nissan North America's recent problems with four-cylinder engine warranties had caused the operating profit of its Japanese parent to fall 25.7%.

Meanwhile, General Motors announced that its net loss shrank in the second quarter, in part because it paid out less in warranty claims than it did last year. How much less? We'll have to wait and see when they file their quarterly financial report with the SEC, but the number to beat is $1.157 billion paid out during last year's second quarter (and $2.366 billion paid out in the first half of 2005).

Will GM Follow Ford?

The July 25 article also produced a flurry of correspondence, much of it reflecting on whether lengthy warranties really mean anything to the average customer. One writer predicted that GM will soon follow suit, and indeed if its warranty costs really are now falling, such a move to match Ford becomes more and more plausible. Another noted that it was truck warranties that stung DaimlerChrysler, not their longish powertrain warranties. And another pointed out that we had the wrong bumper-to-bumper warranty for American Honda. The correct warranty period is three years, 36,000 miles bumper-to-bumper and five years, 60,000 miles powertrain, which puts Honda into a seven-way tie with Ford, Mercury, Nissan, Scion, Subaru, and Toyota.

The letter that led to this week's article, however, was one that simply asked whether Warranty Week was planning to list warranties for other products besides passenger cars. You know, we never thought of that. It's a bit like warranty in general. They're so taken for granted that one just automatically assumes that somebody somewhere has made a list of all the warranty periods for all the warranted products you can think of -- from airplanes to air conditioners.

Well, we did a bit of probing and searching, and we found a list. But wouldn't you know it? It's for passenger cars only. It doesn't include commercial trucks, buses, RVs, emergency vehicles, motorcycles, off-road sports vehicles, construction machinery, or farm equipment. So those are obvious candidates for future Warranty Week columns.

Computer Warranty Tour

This week, though, we're going to take a quick warranty tour of the computer industry, from handhelds to workstations, for both business and consumers, and for both U.S. imports and domestics. We're going to defer listings of warranties for telephones, cameras, monitors, and printers to future columns, along with such related areas as datacomm equipment, semiconductors, disk drives and circuit boards. And we'll definitely take a survey of entertainment products -- consumer electronics for both the home and the car -- along with major appliances, sports equipment, office equipment, aerospace and marine, and medical equipment. So what are we forgetting? Send your suggestions to the editor @

There used to be a time when three-year warranties were for business computers and one-year warranties were for home computers. The difference between home and office used to be measured in power and price. But thanks to the horsepower demands of video games, movies, and music, many systems aimed at consumers are now quite powerful and expensive. And thanks to the easy availability of networking, the average office worker's desktop doesn't need to be so powerful any more. And so, we now can buy something called a "mobile workstation" to replace our notebooks, and something called a "thin client" to replace our desktop. And we can all watch videos on when the boss isn't looking.

In terms of warranty, one can now buy a handheld where the main reason for the $300 difference in price is the length of the warranty. And one can buy a desktop covered for anything between 90 days and three years. Nobody's tried 90-day warranties for notebooks yet, but as prices sing to $400 and below for the lowest of the low-end units, it's probably only a matter of time.

Higher Price Equals Longer Warranty?

What we've discovered, however, is that there are now plenty of "business" computers covered by one-year warranties, and the former correlation between price and warranty period has now broken down. While we assume that many of the base list prices for the units we surveyed are unrealistic and have no resemblance to the actual street price of a properly configured machine, we found cases where computers covered by three-year warranties were a bit less expensive than for comparably-equipped computers covered by one-year policies.

So let's start the list with a quick snapshot of the wares of three makers of handheld computers. As was mentioned, we're going to leave a discussion of mobile phones and digital cameras for another day, along with a list of what used to be called organizers or personal digital assistants. What's really on this list are merely the smallest units made and sold by companies that also make notebooks and desktops.

Handheld Computers

  Brand, Make & Model   Description     Warranty (years)
  Dell Axim X51 handheld 1
  Dell Axim X51v handheld 3
  HP iPaq rx1955 pocket PC 0.25
  HP iPaq hw6515 pocket PC 1
  Palm Z22 handheld 0.25
  Palm Tungsten E2 handheld 0.25
  Palm TX handheld 1
  Palm LifeDrive handheld 1

Handhelds break. That inescapable fact, no doubt, is one of the primary reasons that manufacturers such as Palm Inc. put aside 6.5% or more of their sales revenue to cover future warranty claims. It's probably the most warranty-prone sector of the computer industry, even though printer manufacturers also traditionally show high claims rates.

So it's no surprise to see Dell Inc. selling two different Axim models -- one covered by a one-year warranty and the other covered by a three-year warranty. Nor is it shocking to see Hewlett-Packard Co. selling one iPaq with only 90 days of warranty and another with a year's coverage. Their respective marketing departments could no doubt produce a long list of differences between the two models, but besides warranty the most obvious difference is about $300 in list price.

Representative Sampling

In all these charts, rather than list the entire product line of a given manufacturer, we've looked for a representative sample of the low and high end of a particular brand. Where all makes and models have the same warranty periods, we might list only one machine. The point is to illustrate whether a company has a one-warranty-fits-all policy like Apple, or a tiered warranty policy like HP and Dell.

In all these charts, we've listed the manufacturers alphabetically and their products in ascending order based on warranty period and list price. And that ordering works most of the time, until we got to Dell's lineup of laptops. There, we find several XPS models priced higher than Latitude units, yet having only a year's warranty. One could surmise that this policy makes it much easier to sell extended warranties to consumers looking to protect their investments. But it's wrong to single out Dell for this. Gateway and HP do it too. Their products in the list below that are covered by three-year warranties are in most cases less expensive than the one-year units right above them.

Notebook Computers

  Brand, Make & Model   Description     Warranty (years)
  Acer Ferrari 1000 notebook 1
  Acer TravelMate 4020 notebook 1
  Acer Aspire 9800 notebook 1
  Apple MacBook notebook 1
  Apple MacBook Pro notebook 1
  Dell Inspiron B130 notebook 1
  Dell Inspiron E1505 media center 1
  Dell Inspiron E1705 notebook 1
  Dell XPS M1210 notebook 1
  Dell XPS M2010 notebook 1
  Dell Latitude 120L notebook 3
  Dell Latitude D820 notebook 3
  Fujitsu LifeBook S2110 notebook 1
  Fujitsu LifeBook N3530 notebook 1
  Fujitsu LifeBook N6410 notebook 1
  Gateway M280 notebook 1
  Gateway M465-E notebook 1
  Gateway M685-E notebook 1
  Gateway M285-E notebook 3
  HP Compaq Presario V2000Z notebook 1
  HP Compaq nx6110 notebook 1
  HP Pavilion dv1000t notebook 1
  HP Compaq Presario V6000Z notebook 1
  HP Pavilion dv8000z notebook 1
  HP Pavilion dv2020us entertainment center 1
  HP Compaq nx9420 notebook 1
  HP Pavilion dv8380us entertainment center 1
  HP Compaq nc6220 notebook 3
  Lenovo ThinkPad R60 notebook 1
  Lenovo ThinkPad Z61t notebook 1
  Lenovo ThinkPad X60s notebook 1
  Lenovo ThinkPad T60p notebook 1
  Lenovo ThinkPad X41 tablet PC 3
  Sony Vaio VGN-SZ240 notebook 1
  Sony Vaio VGN-AR170 notebook 1
  Sony Vaio TX750P/B notebook 1
  Toshiba Satellite A100 notebook 1
  Toshiba Tecra A6 notebook 1
  Toshiba Qosimo G35 notebook 1

Notice also that several manufacturers sell no units covered by three-year warranties. That's also true to a lesser extent in the desktop list below. But what's more notable is the listing of a handful of units covered by only 90 days of warranty. Amazingly, they're not the bargain basement units. One, from Dell, carries a $649 list price, which is more than they ask for one of their media center PCs.

Desktop Computers

  Brand, Make & Model   Description     Warranty (years)
  Apple Mac mini desktop 1
  Apple iMac desktop 1
  Apple PowerPC G5 desktop 1
  Dell Dimension E510 desktop 0.25
  Dell Dimension B110 desktop 1
  Dell Dimension E310 media center 1
  Dell XPS 200 desktop 1
  Dell Dimension 9200 desktop 1
  Dell XPS 700 desktop 1
  Dell OptiPlex 210L desktop 3
  Gateway E-1500 desktop 3
  Gateway E-2600 desktop 3
  Gateway E-6500 desktop 3
  Gateway Profile 6 desktop 3
  HP Pavilion a1400 desktop 1
  HP Compaq Presario SR1900Z desktop 1
  HP Compaq dx2200 desktop 1
  HP Pavilion a1550e desktop 1
  HP Media Center m7660e desktop 1
  HP z558 entertainment center 1
  HP Compaq t5125 thin client 3
  HP Compaq t5720 thin client 3
  Lenovo 3000 J desktop 1
  Lenovo ThinkCentre A Series desktop 1
  Lenovo ThinkCentre M Series desktop 3
  Sony Vaio VGC-RC310G desktop 1

Finally, there are the workstations, a term that for most people implies business computing horsepower to spare. So imagine our surprise when we found Sun Microsystems selling several workstations covered by only a 90-day warranty. But rather than seeming to be a ploy to make extended warranties more appealing, this policy seems designed to spur more customers to register their products. Sun offers a no-cost warranty upgrade to one year for those who register their Ultra 25 and 45 workstations, and a no-cost warranty upgrade to three years to those who register their Ultra 20 and 40 workstations, which is why we've noted two figures for each of their units on the chart below.


  Brand, Make & Model   Description     Warranty (years)
  Dell Precision 690 workstation 3
  HP dx5150 microtower 3
  HP dc7600 microtower 3
  HP xw4300 workstation 3
  HP Compaq nw8440 mobile workstation 3
  HP xw9300 workstation 3
  Sun Ultra 25 workstation 0.25 - 1
  Sun Ultra 45 workstation 0.25 - 1
  Sun Ultra 20 workstation 1 - 3
  Sun Ultra 40 workstation 1 - 3

At first, we were going to list separate figures for parts and labor warranty periods, but amazingly we found no meaningful differences between the two among these manufacturers. There are of course cases where the manufacturer strongly suggests that the customer do the repair themselves, which one could say means that labor isn't covered. Some do it less overtly, perhaps by requiring the customer to pay the postage in both directions for units sent in for repairs, as opposed to offering to ship out a replacement part for free (along with a postage-paid return label for the replaced part).

In fact, we could probably fill another whole column with other differences between the warranty policies of these manufacturers. And we probably will, but not now. Suffice it to say that the means by which repairs are offered -- drop-off, mail-away, on-site, next-day, loaner unit, etc. -- can have as much impact on the customer experience as do the number of days or years a part is covered under warranty. But it's apparent from the data above that the benchmark warranty period in the computer industry is now one year, with the low end being 90 days and the high end being three years.

Other Stops on the Warranty Tour

Automotive Warranties

Computer Warranties

Consumer Electronics

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