Path: utzoo!attcan!utgpu!jarvis.csri.toronto.edu!mailrus!ncar!asuvax!mcdphx!mcdchg!ddsw1!karl From: karl@ddsw1.MCS.COM (Karl Denninger) Newsgroups: comp.sys.amiga Subject: Re: Amigas -- why the 90 day warranty? Summary: More bushwa. Message-ID: <1989Nov7.173926.4796@ddsw1.MCS.COM> Date: 7 Nov 89 17:39:26 GMT References: <23416@cup.portal.com> <61.filbo@gorn.santa-cruz.ca.us> <1989Oct31.180829.8054@ddsw1.MCS.COM> <76.filbo@gorn.santa-cruz.ca.us> Reply-To: karl@ddsw1.MCS.COM (Karl Denninger) Organization: Macro Computer Solutions, Inc., Mundelein, IL Lines: 127 In article <76.filbo@gorn.santa-cruz.ca.us> filbo@gorn.santa-cruz.ca.us (Bela Lubkin) writes: >In article <61.filbo@gorn.santa-cruz.ca.us> I (Bela) write: >>I would GUESS that the cost for a 1-year extended >>warranty for an A500 or A2000 would be about $80; about $20 for an >>external drive, also about $20 for a CBM-supplied hard disk; near zero for >>memory expansions. 2-year versions would go for about 40% more than 1-year. > >In article <1989Oct31.180829.8054@ddsw1.MCS.COM> Karl Denninger writes: >>Let's look at this: >> Cost Warranty Fail % >> External drive: $150 $20 13% (!) >> A500 System unit $700 $80 11% (!) >> >>Is this realistic? If it's 1 in 10 to break in the first 12 months, I'm >>not buying it. Those are TERRIBLE odds, far worse than any of the PC lines >>we handle, and far worse than any consumer product I have ever owned. > >I thought I already posted about this. If you think a $20 warranty on a >$150 item suggests a 13% failure rate, you're crazy. Nope. Not at all. See below. >I'm assuming a parts-and-labor warranty. If it takes the technician half an >hour to reseat the Denise chip, Commodore pays for it. If a switch goes bad >on the keyboard and needs to be replaced, Commodore pays for labor as well >as the part. In the rare case of a total failure, Commodore pays for >several hours worth of investigation, then for an entire replacement machine. >Let's look at $20 on a $150 external drive. Let's say we start with 100 >drives, or $2000 to pay for warranty stuff. $20 is probably a pretty typical >charge for having the technician look at something. So if that's all that >was being done, we could assume a 100% "look-at" rate. Which is rediculous. Nowhere near reality. > Now, some of those >drives are going to need more than just a cleaning, like perhaps an >alignment. If 10% need a $50 alignment, that eats $500 of the warranty >money. If 10% need alignment in a year, the drives are JUNK. We sell, use, and buy floppy drives (5.25 & 3.5") by the hundreds here, and I don't see more than half a percent back in warranty for work. Those that do come back are trashed and replaced. It's cheaper to replace them; remember, that $100 drive only cost the maker something like $50, if that. It might cost us something like $70-80. The tech time to >replace< it is about 10 minutes. The time to >fix< it is more like an hour or more, and it may break again. With the low failure rate we >actually< have, it pays to junk them and give the customer a new one. Every time. These drives are used in >business< applications 8 hours a day, 5 days a week. Not a couple of hours a night once or twice a week! Before you say "cozy environment" I'll let you know that most of the machines are in use in warehouses and other places where dust is a >real< problem. We get machines in for service that have enough dust in them to choke a person five times over. Yet they still keep working..... The only way you'll have a horrible failure rate is if (1) the parts are crap to begin with, (2) assembly and initial test is deficient, leading to a high failure rate, or (3) the consumer "cokes" the drive (spills something in it). 1 & 2 are dealt with by not buying from those manufacturers. #3 is dealt with by charging the customer for the replacement, since he/she abused the equipment. >Realize that if a consumer product has a comprehensive >warranty, some owners are going to bring their product in even if it doesn't >have a specific product, just to get it "tuned up". Sure. Some will. But not most. Most people don't want to be without their gear for any period of time. Besides, warranty means "something broke; you fix it". If you want us to just "look it over" you can pay for the tech time. Our machines (and everyone else's) work the same way. So do Television warranties, VCR warranties, etc. >Yes, all the numbers are bogus. I don't know actual figures, I just know >that the warranty money gets split up a LOT more ways than just straight >replacement cost. Only if you have products that need attention a lot. >>Hell, my $1200 laser disk player has an extended warranty -- it was $80. >>But that warranty covers EVERYTHING, including routine cleanings, for FIVE >>YEARS. What you're proposing isn't a warranty, it's another profit center, >>and a darn good one at that (or the product's failure rate is unacceptable). > >This says to me that the cost of such a warranty is already figured into >your *$1000* laser disk player and that you'd be a fool not to pay the small >incremental amount to actually qualify for what you've already payed for. Wrong. The player lists, retail, for $1200. I paid $1000, or about 20% off list price. The >store< (Highland Appliance, for those who are interested) sold me the extended warranty for $80. THEY eat the cost of repair or replacement; not the manufacturer (Pioneer). If they can't fix it within 5 days if it should break, I get a NEW unit -- for FIVE YEARS after purchase. Yet I can still bring it in for cleaning if it needs it. No charge. Considering that the other stores in the area (including American in Wisconsin, which is often regarded as the "price setter" in consumer electronics) are selling these units for the same price, and they tend to be about 5-10% over cost, this is not a bad deal at all. This tells me one thing - that the units don't break often, and the $80 fairly represents the actual costs that the warrantor expects to pay. Have you ever had a laser-based product fixed? The laser head alone on those things cost over $300 -- for the PART. Labor, including a mandatory alignment on a change of that part, is somewhere in the area of 1 hour at a nominal charge of $50 or so. So one failure is at least $350 -- and that is for one part of the system. Electronics failure? $200-500, depending on what blows. Now you tell me -- how often is that player expected to break? I know one of the people who works there -- he had ONE unit back for service in over a year of selling them. One out of something like 200 units sold. Out of all the AT-class & 386 machines we have sold in the last year, we had one (1) fixed disk failure (in the first 30 days), and no other problems. If we charged an extra $100 for a one year warranty $95 of that would go straight into our pocket. Instead we add $5 to the cost of the machine and offer the one year warranty standard. As Commodore should do. -- Karl Denninger (karl@ddsw1.MCS.COM, !ddsw1!karl) Public Access Data Line: [+1 312 566-8911], Voice: [+1 312 566-8910] Macro Computer Solutions, Inc. "Quality Solutions at a Fair Price"