Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!wuarchive!gem.mps.ohio-state.edu!tut.cis.ohio-state.edu!rutgers!att!cbnews!cbema!las
From: cbema!las@cbnews.ATT.COM (cbema!las)
Newsgroups: comp.sys.ibm.pc
Subject: Re: status of warranty on mail-ordered equipment
Message-ID: <9960@cbnews.ATT.COM>
Date: 5 Oct 89 17:54:24 GMT
References: <1265@adobe.UUCP>
Reply-To: cbema!las@cbnews.ATT.COM (Larry A. Shurr,20650,cb,9a110,6148605851)
Organization: AT&T Bell Laboratories, Columbus, OH (actually an AGS consultant)
Lines: 50

In article <1265@adobe.UUCP> saenz@adobe.com (Rick Saenz) writes:
>My father-in-law ordered a Compaq system from a mail-order house...
[His hard disk failed, Compaq did not wish to honor the warranty]

Sounds like your father may have bought a "gray market" machine.  Many
manufactures sell their product only to "authorized dealers" at a
contract price with discounts based on volume purchase, phase-of-the-moon,
and who-knows-what-else.  The authorized dealer concept is supposed to
protect the self-same authorized dealers and the manufacturer from the
consequences of "less reputable dealers" who would sell the machines
with no intention of offering customer or warranty support, thus increasing
their margin (profit on each sale) by avoiding the associated costs for
these services.  It also protects prices, and hence profits for dealers
and manufacturers - and not necessarily to the general public's advantage,
especially in regard to the fact that authorized dealer contracts may
provide for limiting or prohibiting the dealer's option to discount the
price.  

A dealer who does not offer customer and warranty support offloads the 
overhead for those services on other dealers who do offer them and the
manufacturer if it offers services to the end user.  Thus an argument 
can be made for requiring sales only by authorized dealers who provide 
complete services.  However, the price protection aspect tends to reduce
competition in the market place and I don't know of anyone who would say
how wonderful they think that is.

Of course those machines came from somewhere.  Very likely an authorized
dealer is bending - if not breaking - his/her contract with the manufac-
turer by reselling some of the machines directly into the gray market.
This is one way for authorized dealers to increase their own margins:
buy a larger quantity than you can sell through your own dealership and
then resell the excess machines into the gray market, which presumably
sells the machines to people who wouldn't come to your store to buy them
anyway.  The manufacturer probably sets a discount schedule based on
volume and so buying the larger a quantity gets you a more favorable
per-machine discount.  When you recover the costs of buying machines you
wouldn't have been able to move from your dealership buy selling them to
the gray market, you've ended up paying less per machine in your sales
inventory and increased your margin since you aren't necessarily marking
down your prices to your customers - something you may not be allowed to
do in your authorized dealer contract anyway.  Of course, selling to the
gray market is probably not allowed in the contract either, but they have
to catch you first, right?

regards, Larry
-- 
Signed: Larry A. Shurr (cbema!las@att.ATT.COM or att!cbema!las)
Clever signature, Wonderful wit, Outdo the others, Be a big hit! - Burma Shave
(With apologies to the real thing.  The above represents my views only.)
(Please note my mailing address.  Mail sent directly to cbnews doesn't make it.)