A batch of court documents The New York Times pressed to unseal has more details about a flood of faulty computers the company sold in 2003 to 2005.
The documents include a 2004 Dell study that projected customer problems with 45 percent to 97 percent of the SX270 Optiplex systems, up from its earlier forecast of problems with a minimum of 12 percent of the systems. It ended up replacing 22 percent of the motherboards on 21 million of the Optiplex systems sold during that period, according to the story.
Problems arose because Dell received poor capacitors that bulged and failed when they got hot. But the bigger question surrounds the way Dell responded, and its decision to not issue a recall when it became aware of how widespread the problem had become.
Dell took proactive steps to help customers who bought 50 or more of the machines and had high failure rates, but individual buyers were left to report problems to the company. (I think I heard from a few of them who were having customer service challenges.) At the same time, technicians were advised not to bring the problem to customers’ attention and to “emphasize uncertainty,” according to the story.
A Dell spokesman told the paper the projected failure rates were theoretical, and the company replaced motherboards on broken systems and extended warranties. He noted that other companies that sold the bad capacitors also declined to issue recalls.
I wonder how much this problem contributed to Dell’s loss of its perch on top of the PC manufacturing business. Less than a year after the Optiplex problems, Dell lost 6 percent of its dominant share of the market, and HP is now world’s biggest PC seller.
Customers that had extensive problems include the city of New York, which had incidents with 20.2 percent of the 5,000 PCs it bought during the period, and Microsoft, which had problems with 11 percent of 2,800 PCs it bought.
Kudos to the Times for sticking with this story, even after Dell settled a lawsuit over the situation in September.
Hopefully exposure of Dell’s cheap response will help PC and electronics companies do a better job when they start seeing double-digit failure rates.