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When Hard Drive Warranties And Expectations Collid

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October 14, 2002 12:27:42 PM

Patrick and I would like to hear your thoughts on the new article "Rant-O-Matic: When Hard Drive Warranties And Expectations Collide" -

<A HREF="http://www.tomshardware.com/column/02q4/0210141/index.h..." target="_new">http://www.tomshardware.com/column/02q4/0210141/index.h...;/A>

We think that some of the companies skirted some of the questions, but did provide some answers to our questions.

We look forward to hearing your feedback!

Thanks!
October 14, 2002 1:09:42 PM

The argument of the three firms seems to be somewhat contradicted by their own data. If the vast majority of returns occur within the first several months, how will shortening the warranty period save costs? I was itching for you to ask that question!

The point of a warranty is not to cover goods which are faulty on arrival (i.e. faulty manufacturing or damaged in transit) as those should be replaced without question.

A warranty should indicate what is the reasonable time period over which to expect an unfaltering product. It should also cover a long enough period that the majority of possible systematic long-term defects in the product manufacturing become apparent before the warranty expires.

The cost saving must be minimal in this case - if any of the companies were getting a high percentage of returns toward the end of the warranty period then the answer would not be to change the warranty but the product/manufacturing process. Shortening the warranty with poor products will just hit sales and I can't imagine this is the case with any of Maxtor, Seagate or WD. I could understand shortening from 10 to 5 years, but not 3 to 1.
October 14, 2002 2:30:12 PM

Firstly I am impressed with you involving this community for this article. Good job.

However after reading the replies from the 3 manufactures I got the impression you got the standard run of the mill speil as I would expect from any large company and in fact it was a good opertunity for free promotion of their products using your article as a vehicle. I am still no better re-assured than before the article and feel like the wool has been pulled over our eyes even further.

I am happy enough with the 3 year warranty for top end drives such as the Western Digital caviar series etc and I think that should be at least be offered by all other manufactures.



<A HREF="http://www.btvillarin.com/phpBB/index.php" target="_new">A better place to be</A> :wink:
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October 14, 2002 3:59:47 PM

I agree with Matrg 100%. On top of that, HD prices are *NOT* decreasing as of late. HD capacities are increasing, but getting a decent HD will cost you a lot more now. Look at what happened to the 120GB models. Also the low-end drives aren't that much cheaper than 80GB models.

I wonder if IBM warranties will transfer over if they sell their HD business.
October 14, 2002 4:14:10 PM

I'm an employee of small sized V.A.R. We provide complete pc solutions, as well as networking, printer repair, etc. To our benefit, we have recently seen an increase in the number of new system we have been selling. We have nearly always sold and supported the use of Maxtor hard drive, and almost exclusively use their 7200-rpm drive series. However, as of the last 3 to 5 months, I have been returning almost 20% of the hard drives we receive (this is just an estimate, I haven't indexed the returns). At the moment, I have a box pile of at least 6 more hard drives waiting to get authorization for RMA. I just sent out my last shipment of defective drives only 4 days ago. My point is that, though these OEM's claim failure rates of only 1%, in light of personal experience, I find that claim to be completely ludicrous. I could understand a failure rate of 6% to 7%. I can't make any claims as to Seagate's reliability, but know from experience, that Western Digital is not much better. Beyond this, Western Digital's exchange process typically exceeds a 4-week period, and takes an average of 2 weeks for an "Expedited Advanced Replacement". To Maxtor's credit the complete RMA process typically takes no longer than two weeks. This has been one of the reasons we have continued to use Maxtor for so long.

Anyways, in response to the shortening reliability of IDE hard drives, and the frustration of our customer's loosing their data and waiting on replacement product, we are very seriously considering switching to Samsung's IDE hard drives. We called and spoke with a Samsung product representative, and their response is that they see no need to shorten their 3-year warranty policy. We have previously used Samsung, and found the performance and reliability to be adequate.

Just interested in hearing everyone else's opinions.
October 14, 2002 6:20:50 PM

"The argument of the three firms seems to be somewhat contradicted by their own data. If the vast majority of returns occur within the first several months, how will shortening the warranty period save costs? I was itching for you to ask that question!"

That's what I was thinking. Out of the three companies you interviewed the hardrives I've liked the most are Seagate drives, but I haven't used Samsung hard drives yet.
October 14, 2002 8:53:05 PM

The vast majority of MY hard drive failures have occured at around 2.5 years of service, just a few months before the 3-year warranty expired. And all those were Western Digitals. I did have ONE Seagate fail at just over 1 year of use, and it was an OEM grey market drive with NO factory warranty to the end user. My experience tells me that if the drive passed testing at the manufacturer it will probably live a year. Drive failures for extremely new drives are probably due to shipping damage, something I don't see a lot of. So in conclusion, I must say that these companies are lying.

Proof of that conclusion for drives from another manufacturer? My friend Bruce Balconi is a systems administrator. His home PC has a Maxtor drive. It has for around 9 years now. He originally purchased a "huge" 480MB drive, it failed at around 2.5 years, so they sent him the smallest replacement they had in stock, a brand new 2GB unit. That one failed about 2.5 years after the manufacturing date, so they sent him the smallest replacement they had in stock, a 4GB unit (manufacturing date about 6 moths old). That one failed after 2 years, so he got a new replacement, the smallest they had, 8.4GB I believe. He told me how HAPPY he was that these drives were failing at a predictable rate of about 2.5 years after the manufacturing date, because they always sent him a larger drive!

He works here at Central Michigan University and is in the campus directory if you would like to verify this information. Back to the conclusion-a lot of drives die at 2.5 years, not <1 year, this is just a way for manufacturers to get out of dealing with their garbage.

<font color=blue>You're posting in a forum with class. It may be third class, but it's still class!</font color=blue>
October 14, 2002 10:37:43 PM

I really do not like it when people give a perfect political answer - the question about the savings being passed on was answered with one of those political answers - I am in the hardware biz and an answer like that would get me laughed at when I am trying to sell a pc - at least I will have something to quote and laugh at with along with my customers
October 15, 2002 1:31:58 AM

I agree totally with theonlyphreak..
"Customers will benefit from the industry leading technical advances that these savings will afford".. what an absolute load of FUD!!! useless marketing dribble. they completely avoided the question.. not that I really expected to hear of a HD price drop after saving costs.

In a way, it's just a waste of time expecting to get helpful answers from marketing people. They only reword the regulation sales-pitch to match the question. But, conversely, I don't expect HD companies to give me stuff for free.. if they are honestly having difficulty then of course they're gonna shave a few corners off.... .

I don't really want to jump on their case for trying to make money. I might not neccessarily agree with the way they save a few bob, but then they don't owe ME anything do they?!?!!?

balzi

"Meet me on Platform 10 in 3 minutes... or Platform 3 in 10 minutes, whichever you prefer!!"
October 15, 2002 3:57:00 AM

The question of hard drive warranties is tough. For anyone out there who is a system builder, VAR, etc., you know just how hard it is to make money on hardware at today's margins. For hard drive manufacturers, R&D costs and fab costs are higher than ever. Life is a bitch.

BUT what the change to a shortened warranty is telling us is that drive manufacturers see the majority of their market as driven almost solely by price: i.e most buyers for their product don't understand or don't care about reliability. Or performance, or quality in any sense of the word. Look at the current offerings from the big name computer vendors if you don't belive me.

Unconcern with mass-market drive performance/ quality has been apparent for some time. Sure IDE performance has gotten better, but how many 10,000 and 15,000 rpm IDE drives are available? Can you say "None"? Sorry, but this isn't due to inherent technological barriers. It gets down to market perceptions. To put it another way, SCSI warranties stick at five years because the buyers for these drives won't put up with the [-peep-] that commodity drive buyers will.

Just because most hard drives offer one year warranties doesn't mean we have to buy their products. There are alternatives, and people who care will vote with their money. Everyone else will educate themselves or get what they deserve.
October 15, 2002 4:06:07 AM

All 3 of them made sure there is enough advertising that they are the best and/or most advanced in every answer. After a couple of lines they all started sounding like used car sales people with a gold tooth, none of them sounded like people who give straight, true answers.

I did not expect them to be straight and tell the truth, after all which large corporation's lawyers and/or advertising agents do?

Still want to know which one is better, hear the truth? Just ask people who build and sell computers and see which drives they have the most and least problems with.


p.s.

My 30G 7200 Rpm Maxtor died about a year ago, got it replaced, then had to have the replacement replaced because it was almost D.O.A.. But now this replacement making a loud whining, I just want to pull it out and toss it. In the other hand, my old WD low Rpm 5G drive still making my little sister happy. Also thinking of the next buy to be a low Rpm drive and see if they still last longer than high Rpm drives. Don't care about the performance drop if it mean way longer life, after all this computer not doing anything so important that drive speed would make a huge difference. Well guess with my experience which drive I will say away from. Even though they sent me a "new" drive in two days after first call.

<font color=red>Got a silent setup, now I can hear myself thinking.... great silence</font color=red>
October 15, 2002 4:19:31 AM

I would agree that drive manufacurers reliability claims are a joke. Kinda like saying, "Since our quality is perfect, we offer no warranty since none is needed." My personal experience differs some from your in that I have had more return on Maxtors then WDs and quicker turnaround times than you have found to be the norm. But then, your individual mileage may vary. As a system builder, I know that you cut your warranties only when you believe that the percentage of your components failing prematurely significantly impacts your profit margin. No one actually builds a beter product and cuts warranties.
October 15, 2002 5:53:32 AM

Well, responses to the question "Could you tell us what factors seem to cause the majority of hard drive failures, and within what time frame do you see most of these failures occur?" were disappointing.

All but Maxtor basically said "Stop bouncing our perfect drives you morons, they're not basketballs", whereas Maxtor was the only one to state the fact that failure modes vary with time.

As expected, they all blabbed about commitment to quality. But the fact is, they all have more or less copped out on their best method of assessing overall long-term reliability: the analysis of returned old drives. Words and deeds do not match.

Except for Seagate, those manufacturers at least try to stay in touch with the long term reliability by offering "premium" or "special edition" models. However, my concern is that in terms of reliability, those go through the exact same QA processes as their one year warranty counterparts. If that's the case, tech savvy early adopters simply get turned into long term reliability field test crew which <i>pays</i> for that "privilege". IMO WD's ludicrous $20 extended warranty rip-off is the most blatant example of that.

I can understand the business aspect, and as long as they are just streamlining their logistics, I'm OK with it. But their answers didn't exactly convince me. None of them really said, not to mention proved, anything <i>clear</i> to the effect "Look dudes, we are and will stay in the business of manufacturing high-end IDE drives with 3 year warranties. Therefore, all our Quality Assurance processes are and shall stay based on that timeframe, and the 1 year warranty thingy is just to cut logistics cost with the OEMs and give them more choices."

Basically it seems to come down to us to vote with our wallets. If the sales of those 1 year warranty drives slump, the message should be clear. I for one will definitely stay away from one year wonders. Anyway, their move will definitely help competition. If they start ripping us off for the 3 year warranty drives too much, Samsung gets a chance...

IMO, those three HD manufacturers just wasted the opportunity to give solid, technology based justifications to a reasonably <i>tech</i> savvy audience as to why the warranty cut wouldn't affect reliability. Instead, we got a good game of <A HREF="http://mcs.une.edu.au/~norm/bsbingo.cgi" target="_new">Bullshit Bingo</A>.


<font color=red><b><i>You want WHAT on the [-peep-] CEILING?!</i></b></font color=red> -Michelangelo
October 15, 2002 7:13:26 AM

Another reason to reduce the warranties may be to sell more extended warranties at stores like Best Buy, Circuit City and CompUSA or even on-line retailers like Buy.com. With the previous standard 3-year warranty it is hard to convince a customer they need to add a couple years to that warranty for "just" a few dollars more.

The largest profit margins at retailers are often the extended warranties. With the new standard 1-year warranty they should be able to sell far more extended warranties. It would not surprise me if it was the large retailers that convinced the drive manufactures to reduce the warranties in order to sell something that would likely never be needed or something that could go uncollected.
October 15, 2002 11:18:35 AM

I would agree that they didn't answer the questions they way that I would have liked them answered, but in many ways ther was as much in what they didn't say in what they did.

Yes, there was a good amount of marketing hype. We could not have expected to avoid that. Any chance that like this that a company is given to reach a large buying audience, they are going to try to sell product.

What I found most quite strange, is the way in which the questions were answered. On some questions, it seems like one company would answer it well or at least some what better than the other companies.

It also did appear that in the case of some questions, they ignored the question or the spirit of the question, in fact this was the case about the cost savings being passed on. - It is obvious that they drive makers are not going to want you to realize that because of the reduced warranty they are going to do better than break even on IDE drives. If I were them, I would not commit in writing to pass these on either, but if you read between the lines it is obvious that another price war on the one year drives isn't too far off.
October 15, 2002 5:38:05 PM

In the drive makers' defense, the thought occurs to me that as average hard drive prices go down, the overhead costs related to warranty returns get higher as a percentage of that cost. Thus, it could be entirely true that hard drives are getting more reliable and yet warranty costs are more painful to the drive makers than in the past.

It also occurs to me that in most cases, replacing a two-year-old drive with an identical model (as a warranty exchange would do) probably makes very little sense. The "sweet spot" in cost-vs.-size is constantly moving toward bigger and bigger drives, and it would usually make sense to replace the old drive with a newer, bigger, and (as a side effect of higher density) probably faster model.

Given the nature of economics, it's going to be hard for the drive makers not to pass on at least most of the savings to customers, at least eventually. That's part of the nature of price competition. And competition will also pressure the drive makers not to play too fast and loose with reliability because being seen as an unreliable brand would hurt sales.

One last thought: anecdotal evidence giving a particular person's experiences should always be taken with a grain of salt. Indeed, with an article such as this one, it is probably the people whose experiences are most atypical who are most likely to post personal experiences because they're the ones whose experiences don't match what the hard drive makers said. (I haven't had a hard drive failure personally since around 1993 or so, and the failures I'm aware of on drives at work do fit the "most occur shortly after purchase" model, but I never would have written a post just to say that.)

Nathan
October 15, 2002 6:04:22 PM

Not to try and beat a dead horse or anything, but I must concur with some of the other posts which point out some contradictory statements and positions of the 3 manufacturers.

If, in fact, most of the failures occur well within the one year period and if, in fact, hard disk reliability has truly improved each year, it would rather stand to reason that the cost of offering a 3 year warranty should have decreased each year, as presumably less and less drives would be failing beyond the 1 year mark. I, for one, find it disturbing that all 3 vendors (and others?) reached the same conclusion.. and, oh by the way effective on the same date of this year(?!),.. and that conclusion was to drop their warranty period on their consumer-grade drives. I don't argue that the cost of supporting a 1 yr. is not less than that of a 3 yr. period.. that should be obvious, for if one single drive fails after year 1, it costs more to replace that drive than to not (duh). What I do argue is their across-the-board concerto about how (paraphrasing) "since drives are better, last longer, are more sturdy, the need for a 1 year warranty is diminished". Hmm.. that is precisely when I would expect a manufacturer to offer a LONGER warranty, not shorten it up. A consumer, given a financial choice, might opt out of a longer warranty if it were an 'at cost' option, in this situation.. but it's somewhat contradictory that the asserted improvements in reliability and tolerance to g-forces and other effects would naturally lend themselves to a shortened warranty period. I don't but that, one single bit. It's a matter of a 3 yr. warranty being more expensive to honor than a 1 yr. Period. End of explanation. Next question, please. Spare us the smoke screen.

The other thing that occurs to me, and this is where I hope the market takes these companies to task, is that for the past year or two, IBM consumer-grade ATA drives have been arguably the most attractive performing AND most attractive price/performance drives on the market (WD 8MB owners, pls refrain.. that's a 'special edition'). What's kept IBM from stomping the likes of WD, Maxtor, and Seagate are IBM's reputed RELIABILITY issues, lower MTBF ratings (admitting to reliability issues?). Few would argue that IBM's drives were at the top of the heap, consistently, but many potential owners (myself included) were turned off and traded some measure of performance in exchange for a perceived reliability increase in one of the other makers which was, in turn, backed by a 3yr warranty (in Maxtor's case, a "no quibble" that was very attractive). So, I would ask aloud, how many potential IBM buyers might NOW be swayed to one of these other makers now that their perceived reliability + warranty advantage is GONE. I, for one, will certainly have IBM back on my shortlist moving forward. Whereas before, they were not on the list, now with a 1 yr from all makers and the playing field even, I will probably jump at the performance of IBM and leave the "safety and comfort" of Maxtor behind me.. a choice they have just made on my behalf. Gee, thanks. Hope that works out well for you. Now that they must all compete on performance and almost solely on performance, I would expect IBM sales to rise against those other three as a result.

If you cut throught the spin the vendors tried to create, almost as perfectly in sync as their announced warranty reductions (does anyone else smell "collusion"?!), then it's clear the one and only reason is to lower their operating costs. Nothing more. Forget about the rhetoric they spun their story (it is, afterall, one single story you will note). It's purely a non-customer benefitting cost cutting measure. If you're a shareholder, it might make you happy. If you're a customer (or potential customer) it does nothing to make you happy, even if you are understanding of their need to trim expenses. Personally, I suspect all the vendors making the same change, effective the same day (uhm, 'scuse me?) is proof of collusion, especially when you consider the likelihood of what would happen if only one or two of them made the switch... those dropping warranties to 1 year would loose a fair bit of business to those who kept it at 3 years (assuming similar price/performance ratios were met). The only thing that makes sense in this is that they MUST have consulted, directly or otherwise, and reached an agreement (formal, or otherwise) to do this in concert with each other. Of course, you will NOT likely find this on paper anywhere... afterall, that might be illegal. =D

-icmp
Future IBM Hard Drive Owner?
October 15, 2002 6:50:23 PM

As perverse as it may seem, longer life expectancies may indeed make shorter warranties practical. If the only way you're willing to trust a drive to have a high probability of lasting three years is if its manufacturer offers a three-year warranty, that makes a three-year warranty a major marketing advantage. But if all drives have an excellent probability of lasting three years (especially assuming no damage or defects show up in the first few months), the warranty becomes nothing more than an insurance policy.

As for the timing, there may be a, "We'd love to do it, but there's no way we're going to be first" element involved. In such a situation, once one company decides to take the plunge and be first, that makes it a lot more palatable for other companies to follow suit. Such situations show essentially the same outward appearance as collusion.

Nathan
October 15, 2002 7:07:05 PM

Does I'm the only one to think that the 3 biggest hard-drive manufacturers are <b>ALL</b> changing their warranty on the same date is a <i>little</i> strange?

In the normal way of thing, one would have changed is warranty and the 2 others after a couple of months would have realized it was a good idea and would had done the same, not the 3 on the same day!

Secondly if only one of them would have changed is warranty customers and OEMs would have boycut the manufacturer just like IBM a couple of months ago. But now the 3 biggest harddrive manufacturer have changed their policies so you have not a lot of other reliable harddrive manufacturers to choose from (so far less boycut possible).

Perhaps I should put the Fair Trade Office on that one, it don't smell good.

(And sorry for my poor english)
October 15, 2002 10:31:42 PM

Precisely, previous poster. One could try and "rationalize" (ie. SPIN) the situation as did the previous poster with ill-reasoned (or, unreasoned) arguments to support a desired conclusion (it only LOOKS like collusion, but it's not!), or one can examine the facts (3 major makers all decide to forego 3 yr warranty), understand the conditions (purely a money saving, bottom-line helping move), apply a reasoned judgement (it's not likely they all would reach the same conclusion, independently, and all "happen" to make the effective date exactly the same date!), and draw a reasonable conclusion from those observations. It doesn't just have the appearances of collusion, it has the DNA fingerprint of it.

This happens all the time.. in my town (a small town with a relatively captive audience) there are two gas stations (used to be 3, but one is having it's tanks replaced). Oddly enough, they both charge about 16 to 17cents per gallon more for gas than the stations outside of town (when there were 3, it was the same story). In an affluent town that's laid out in a manner that makes it "inconvenient" to leave town just for gas, this works quite well for the station owners. No doubt, some people (like myself) are careful to avoid the need to get gas in town, but plenty of others line up at their pumps to fill their tanks with inflated fuel. Oddly enough, when one raises prices, the other "msyteriously" follows suit. In fact, I've never seen one change and find the other to have not changed. You'd think the same person were changing the signs at both stations.

Now, one might reasonably think that one station owner would get a leg up on the competition and lead a price war of sorts, lowering prices enough to grab up the lion's share of the business in town (ya'd think, but you'd be wrong). Instead, there is the outward appearance of collusion.. in all likelihood it's a "gentlemen's agreement" designed to sustain both businesses, lest only one "get what they want" (take all/most of the business) and drive their own profit margings into the basement in the process. In order to protect themselves from themselves, they keep prices equally high and in very-near lockstep at all times.. thereby preserving the high-margins they both currently enjoy. No doubt, if one sat with a calculator and figured the money they made currently, factor in the prospect of stealing away the bulk of the business (for a short while only) by engaging in a price war of sorts which would ultimately force all prices down lest one of them go out of business, well, that's too unattractive to them all (again, normally 3, currently 2). So, to avoid such an ugly (and unprofitable) mess.. the prices remain steadily high. Hmm. Something's just not right. Again, you would think one would undercut another to take business away. It doesn't happen. It's a very controlled situation. Unlike outside of town, where prices are very competitive and there appears to be competition and an effort to offer the lower price than one's neighboring station. Here, it's quite different.

Collusion? I'll take bets on it.. but I doubt you'd find the smoking gun. Collusion RARELY takes the form of a signed agreement, incriminating memo, or damning email. It's against the law and they know it. To engage in a literal agreement would lead to investigations and legal fees. Not a good thing for one's business. So, when you see what looks and smells like collusion, it very often is. And it's equally often veiled with the spin we all saw from all 3 companies (gee, all their answers sang in concert like their announcements) which are designed to take your eye off of the ball. ie. "Hey, look, things are so good now that it's actually BETTER for everyone to reduce our service level to you, the customer! It's a win/win! Who needs that pesky 3 yr warranty, anyways?! why pay for something you don't need/want?" (huh?! wha?!? is my price going down as a result, Mr. Marketeer? I didn't think so. Thanks).

-icmp
October 16, 2002 12:06:34 AM

I'm sorry icmp I just realized that I praticly repeated word for word the last paragraph of your previous post.

Is it possible to fill a request to the Director General of Fair Trading?
October 16, 2002 12:22:25 AM

It's making me think that there's a big contradiction going on here. While there is obviously a lot of advancement towards larger capicities and higher efficiency drives, but in the same sense, the life span of drives has been at the very least, "questionable" of late. This makes one wonder if the extra space is truly worth the money we pay and the gigabytes you are getting. Is the extra space worth the possibility of lower reliability? In my opinion, no, it's really not. I'd rather have a group of lower capacity drives linked in a RAID 0 array to make a larger one, if they had a higher lifespan. Maybe more expensive, but the extra reliability pays for itself when you consider not having to worry about losing data. This is probably not the best solution, but it is just an example.

Heck, i'm probably

Soon enough, Intel will make the i845s...imagine dual channel Sdram...*shudder*
October 16, 2002 1:37:54 AM

I think the article doesn't focus the the most important issue (to me) in this matter, that this is obsviously a concerted action between these companies, rather than a concorrencial problem. They arranged an agreement between them to improve profit without risking nothing. The date (1 out 2002) equal for all speaks for itself. It's a cartel procedure that doesn't benefit the consumer because it brakes the market laws.
October 16, 2002 1:48:32 AM

Indeed.
It seemed as if 90% of what i read in their responses was offical company PR garbage devoid of any humanity.
"the customer is valuable to us"
"we are committed to delivering value quality products"

I still want to know why it's ok to charge for an extra warantee when last month it was free.

<b>Plaid will NEVER go out of style! :cool: </b>
October 16, 2002 5:19:31 AM

ignore the Re:****

If the drives are so great, at least they make them sound like they are. Give 5 years warranty just so people buy more of yours than the competition, if they're so great then it makes no difference. Look at car companies, they don't cut warranty times and claim they do it because their cars are better, they add more years and milage. Duh, time to stop and realize that customers aren't dumb just because you got a couple of advertising agents together to word answers to make sound like your product is above the rest.

Need more money, cut everything that cost, screw the customer, let's lay off people..... the usual money hungry company policy.

Where is the little guy who's trying hard to stay above the water, I'm going to support them instead. For real, I need another drive so I'm looking. :) 

Anyway, free country, whatever. Just don't be surprised when your sales drop and your company starting to worth nothing. Just because you made 280 billion of the forecasted 400 billion profit, it doesn't mean you lost 120 billion that you have to recover somehow! Want to save, fire your advisors, change policy to attract more customers.

(The numbers I used are not real!!!)

<font color=red>Got a silent setup, now I can hear myself thinking.... great silence</font color=red>
October 16, 2002 1:43:34 PM

What it is called in this country is a violation of the Sherman anti-trust act. These corporations colluded to set the price (or in this case the value for price) to the detriment of consumers. Check out:

Section 1 of the Sherman Act prohibits "[e]very contract, combination ..., or conspiracy in restraint of trade...." 15 U.S.C. ยง 1. To establish a civil cause of action under Section 1, a plaintiff must prove four elements:
(1) that the defendants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced adverse, anti-competitive effects within the relevant product and geographic markets; (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy. Tunis Brothers v. Ford Motor Co., 763 F.2d 1482, 1489 (3d Cir.1985). (Taken from Link v. Mercedes-Benz of North America, Inc. 788 F.2d 918 (3rd Cir. 1986))

I think there is a prima facie case here that the hard drive manufacturers colluded based on their answers to the questions posed by THG. Isn't it convenient that suddenly every one had to shorten the warranty on a class of products, and it all happened at the same time? Isn't it convenient that the entire hard drive market has suddenly changed to the benefit of a class of producers?

I have neither the time nor inclination to investigate this further, but let me suggest to any OEMs reading this who have realized damages you should talk to an anti-trust lawyer. This is not about these poor companies with small profit margins who are just trying to stay in business (like poor Microsoft), this is about illegal trade practices (Wait, did I already say Microsoft?).

With all due respect to the author of the piece, I don't think eliminating competition through collusion will help the market at all. If a company needs to raise its profit margin...so be it. That is completely different from every supplier making an agreement to raise their profit margin together.

(And just in case anyone was confused this is not legal advice, it is merely an observation. If you want legal advice you should get an attorney.)
October 16, 2002 3:04:21 PM

Some years ago, the big 3 auto makers started shortening their warranties.

Auto sales lagged.

Lee Iacocca introduced a new, longer warranty.

Chrysler auto sales soared, while other manufacturers continued to experience lower than normal sales, until they lengthened their warranties also.

Consumers voted with their wallets, it's too bad the big-3 HD manufacturers don't see this. They might get one wave of initial sales, but that will last the 1 year of their new warranties, and when the drives they know will fail start to do so, they will see the same thing happen to their sales.

Paul

p.s. Michaelangelo had carpal tunnel syndrome


I am me, me I am, I've never had green eggs and ham
October 16, 2002 6:01:05 PM

That's it! Boycott! No more hard drives. We're all going to stop using hard drives from now on! That'll show them!

Seriously, this article told me nothing. It was all PR nonsense that did nothing other than to assure me that they think their customers are stupid.

If their hard drives all die in the first year then it sure wouldn't cost them more to keep the warranty at 3 years. Keeping track of sales is something they have to do anyways so what's the issue? This isn't a paperwork issue, this is about their hard drive returns after the first year costing them money they're not willing to spend.

It's amazing that their warranty could drop to one year. One year is nothing.

<font color=red>I'd like to dedicate this post to all my friends, family, and fans. Without them this post would never have been possible. Thank you!</font color=red>
October 16, 2002 6:54:05 PM

I certainly won't rule out the possibility of some form of collusion, and I wouldn't be surprised if decision-makers at the drive companies sounded each other out in some fashion before the move. But neither do I regard it as implausible that such a situation could arise with the three companies acting without prior knowledge of what each other will do. Consider the following three questions:

1) How would the first company's announcement affect the others? Once one company announces an intention to shorten warranties, that would certainly have to make the proposition of doing the same more attractive to others than it would be otherwise. Right?

2) Since the companies are in the same business, would not the same economic and other factors that make it attractive for one company to shorten its warranties make it attractive for others to shorten their warranties as well?

3) If other companies after the first would decide to follow suit, they have two basic choices with regard to the effective date: the same date, or a different one. If they choose a different date, they have a day that web sites will report as the day that they and only they have shorter warranties go into effect. But if they choose the same date, the fact that someone else is doing he same thing at the same time would tend to provide some cover against being singled out individually. Which makes more sense?

The fact that companies' decisions affect each other does not automatically imply collusion, and it is perfectly legal for companies to take competitors' actions into consideration when planning their own. Playing "follow the leader" is illegal only if there is some sort of a priori agreement or understanding involved; not if a company just goes out and does it.
October 16, 2002 9:46:15 PM

At least one poster on this thread just seem like a PR Bunny that is just trying to save is company ass.

Talking about that the customer will benifit form this annoncement and that it's have nothing to do with collusion on the part of the 3 manufacturers.

People with "stranger" rating that registered their user on the 14 or 15 of cotober 2002) lol (good try)

(And yes, I just registered on 15 oct 2002, so say what you want I don't care)
October 16, 2002 11:14:21 PM

Your points are good, but I would add that "sounding each other out" is probably illegal. Imagine CEO-1 says to CEO-2, "gee our profits are down, we were thinking of cutting costs by limiting warranties for consumers," amd CEO-2 responds "Interesting idea CEO-1," and proceeds to do the same thing. That is probably a priori collusion.

It is plausible that these three companies all were faced with a certain business need. The apparent problem here is that they all chose the same method of addressing it, and they even chose the same time to implement that method.

What really stinks here is that if company 1 announced the restricted warranty on day 1, and company 2 announced the restricted warranty on day 2, company 2 would probably get some substantial profits as people suddely started realizing that the warranties on these almost interchangable products were very different. By colluding ahead of time these two companies make sure that no one company bears the burden of this change.

It might be legal for these companies to do what they have done. On the other hand I think it is much more likely that there is some Martha Stewart stuff going on here...hence my suggestion that someone that suffered some real damages (an OEM like Dell or a smaller one) file suit and get into the nitty gritty of what they did.
October 17, 2002 2:02:44 AM

I may be a "stranger" to the forums here, but I've been involved with computers since 1982 and was watching computer technology and prices in Computer Shopper long before there was a Tom's Hardware Guide. I built my first of three computers a bit over five years ago, and have been reading THG very regularly since not long after the Pentium II came out. Reading too much into how long someone's been on the forums is a mistake. Also, just to make it clear, I have no vested interest beyond as a customer.

Frankly, my first instinct on hearing of the warranty cuts was, "If you can't trust your drives to last long enough to offer a three-year warranty, why should I trust them with my data?" But I was willing to listen, and as I listened and thought, I realized that there were other issues involved.

Think about it: in the long term, money for hard drive warranties ultimately has to come from customers. We can pay more and get longer warranties, or pay less and get shorter ones. Short-term market dynamics might defy that trend temporarily, but long-term market dynamics won't. And personally, I'm not so sure I want to pay extra just so if my hard drive crashes after two and a half years, I'll get another drive like it that's seriously undersized and relatively slow compared with the newer drives I could replace it with instead.
October 17, 2002 3:58:52 AM

EXACTLY
I was thinking the same thing.

If the large majority of drives die within the first year then how are they saving money by shortening the warantee period?
Just doesnt make sense.
To me their statments just read either
A. we arnt so confident in our drives no more
or
B. look at these new ways of gaining extra revenue (premium price drives with full warantees or by the 3 year warantee for an extra $20)

What i just can't fail to see is a cheap money grab. IDE hard drives have margins that are too slim, so they are taking steps to 'unslim' them.
I imagine the shareholders will be pleased though.

<b>Microsoft is good for you. MS has your best intrests at heart. MS products are easy to use, Reliable, Bug free and Secure. MS says so. What possible reason would they have to lie to you?</b>
October 17, 2002 4:10:01 AM

Why keep the warranty at 3 years for the special editions then? How long are they going to call them SE and when will they cut the warranty on those?

<font color=red>God</font color=red> <font color=blue>Bless</font color=blue> <font color=red>America</font color=red>
October 17, 2002 4:11:52 AM

Dear dear...


Let's not fall in the Conspiracy Theories Hall of Fame.

There is a difference between normal business behaviour like talking to your competitors and a conspiracy. I bear in mind that the sudden result of those talks ended in basically telling everybody to go and take a walk on the wild side. "Conspiracy" is a fairly huge word.

But let's face it, like LHGPooBaa said: "It seemed as if 90% of what I read in their responses was official company PR garbage devoid of any humanity". My point exactly but this is where I'm going to mess things up a bit:

In August, in a truly enlightening article from Tom, we where made aware of how nVidia was trying to use THG for their own marketing. The paragraph that caught my attention is the one after the first letter and begins with: "I would do nothing but NVIDIA's marketing job".
More: <A HREF="http://www4.tomshardware.com/blurb/02q3/020825/index.ht..." target="_new">Tom's Blurb - Battle of Hypocrites</A>

To the point, the answers from the now "SMALL 3" were inexcusable and should not have been published. IMHO, it was not worth the time to put it up on the site. They reiterated the same marketing mumbo jumbo over and over again. Mostly stuff I could have found through the SMALL 3's web sites. I'm discussed because as I write this, I'm waiting for Windowz to finish installing itself on a new D740X to replace the crashed 91360D8 that was bought in June 2000. That drive was to replaced the one that was installed originally.

Despite what others might say, as a hardware/Os tech, my "particular personal experience" tells me that this is the hardware that always breaks in a computer. It uses to be screens, now it's hard drives. Yes it happens that a few MoBos or CPUs, a few CD-Rom drives... or a modem quits on you but when half a dozen Hard Drive go by you suddely start asking questions. I understand that I am small time and I do I try to resell stuff that I can put my name behind. (in the re-read I saw the plug for Maxtor... not intended... I'm not rewriting this)

They are cutting their warranty simply because they are cutting quality to achieve lower prices. Don't believes that they were losing money with their ATA sales. Now that I've been running my own IT business for a good while, I understand that I am in business and I sell at a profit. It's my opinion that if anybody tells you otherwise... you're either listening to a "story teller" or looking at a dumb ars. The Small 3, even if they act like one, don't really look like one so be advise, to the top of their lungs they are yelling "Bullshit Bingo" the nano second they hear "Client focused". Remember that the end user has to become enchanted with his brand new hair-pulling machine of a white box he just bought. We need data, information, longer MTBF but only for this lower speed what ever!

Humanly, you actively search for the advancement of the human race not for the advancement of corporations. Further away... we are often changing laws at a rate that begins to be mind boggling even to the eyes of this Moore's Law advocate. IMHO, the throttle has to be brought back just a tad. The Sherman Anti-Trust Act. of 1890 seems to have passed the test of time and like many others, they might just save our own arses. The problem will reside with our governments and if they will do anything about it. When the laws are broken, the perps will pay. Again, that is if your country's judicial system works. Since it's corporate government, it won't happen with out a lot of fuss.

If marketing hype like that is supposed to satisfy the normal user of a technical Internet web site like THG then WO! Did I miss our evolution to the "docile Internet consumers" level or something?

Anyhoo... If you don't like my ranting, fine... please, just bear it in mind from time to time.

BTW, Maxtor did red off 201 mil last year and that's without the 445 mil "loss" of the Quantum merger! Seagate and WDC are in better posture though.


Thank you.


Nbarclay... you work for who exactly???
October 17, 2002 4:59:50 AM

If anyone has any hard evidence that the companies plan to cut quality, I'd be interested to hear it. Companies like Maxtor, Seagate, and Western Digital have their names and reputations as valuable assets, and cutting their quality would risk squandering those assets.

That's why it's easier for me to believe that this is merely a cost-cutting move than it is to believe that it's part of a sinister master plan to cut quality. The amount of money per drive might not be a lot, but even an average of a dollar or two per drive could make a real difference with margins squeezed thin.

In reguard to the inquiry as to who I work for, I work for Teledyne Brown Engineering, a subsidiary of Teledyne Technologies. The company is involved in several different things, but the area I work in involves defense contracts. My main job is as a programmer, but one of the teams I've worked on was small enough that I also got involved in areas ranging from system administration to changing out hardware on computers to networking.
October 17, 2002 5:54:56 AM

* I too think this looks like cartelism, and I really hope someone does something about it.

* If anything, it seems to me like modern hard drives are less reliable compared with older ones. Last I checked, an old 40MB WD I have still worked. And recent examples for modern drives would be a 45GB IBM and a 10GB Maxtor, both developed "unwanted behaviors" at the tender age of 4 months.

* Maybe now is the time for a new company to come up with a modern-age storage device. How about Iomega or even Syquest or Castlewood? Removable drives should keep your data safe, no? If the media is separate from the electronics and mechanics, you data stays intact even if the drive fails.

* The last page of the article ("Conclusion - Like it or not, these new policies will help preserve competition") seems like marketing hype, just like the replies in previous pages. No?

// E.
October 17, 2002 2:48:27 PM

Come on, go fill a "File a Complain Online" on the <A HREF="http://www.ftc.gov/" target="_new">Federal Trade Commision</A> you are only 2 click away.

Take 5 minutes to denonce this collusion between the 3 manufacturers (Western Digital, Maxtor, Seagate), the problem is not that they drop the warranty but that they all agreed to reduce the choice and/or the price/quality ratio of the same products(ATA IDE hard-drives) thus reducing the customer in is fundamental right to choose the best product and to be in a fair trading country.

enough :) 
October 17, 2002 4:24:57 PM

Knowing how the Seagate HD were made - an advantage I gained by living near the Seagate HD plant, and knowing lots of people working in there - I often wonder how Seagate can make any money giving 5 years warranty on HDs which "passed" crappy QC routines.

Oh, there're lots of "stories" on how the drives "passing through the so-called QC." Suffice to say that the term "QC" in Seagate plant, at least the one I used to live couple of stone throws away, is really a pathetic joke.
October 17, 2002 5:11:22 PM

Aside from the absurdity of the manufactures' answers, shouldn't the fact that all three manufacturers decide to do this all at the same time raise some red flags about a collusion of some sort? I don't know what the combined market share is of these companies, but if it above a certain threshold, then they've broken the law, and if it is not, it is still something that is clearly geared toward putting consumers at a disadvantage.
October 18, 2002 4:08:46 PM

I know this has had to be said before somewhere on here but by shortening their warranties they are simply telling the consumer that their products are faulty and don't last and that they have NO CONFIDENCE in their own product lines. IF they were confident they produce excellent products then they should be EXTENDING the warranty instead of shortening it.

I WONDER IF THIS IS AN ATTEMPT TO SELL MORE EXTENDED WARRANTIES!!!! Since we're talking about high speed moving parts that have to operate at very precise levels...I can't see how I wouldn't wind up spending extra on a HDD extended warranty.

On another note: Fujitsu is no longer making HDD's (YAY!) cause there HDD's sucked big time and they had an above average failure rate around the offices I work (A lot of stores I had to take them in to said they've seen more Fujitsu drives than ANY OTHER HDD manufacturer), not mention they will not replace the drive but only give a small cash back incentive as they no longer fully honor warranties involved with their drives.
October 18, 2002 11:03:45 PM

"cutting quality"

Ok... wrong choice of words.

Look at it this way. Corporation rules, they do what ever they want.

If one of the Small 3 would sell at "questionable margin level", one could probably gain a huge chunk of the market and then decide when and what to pull back down the road. Never forget, in vertical markets... nothing is ad hoc.

The "all consuming" HDD marketing race has pretty much focused on size of drives and not much else. I just think that the present advertised numbers are passed our present "commercial level" of technology. I remember seeing in a show a fully working 10in by 14in "parchment" style flexible foil mobile computer that only mesured 10*4*1.5 all rolled up. That is not about to hit the road. The amount of R&D to achieve mass production of future drives is probably horrendous.

They are starting to pull the plug because the MTBF data of future drives will get to wide, vary to much from one drive to the other of the same series, and will not be insurable no more. Remember... nothing is ad hoc but then again this is only my personal understanding of it all.

In my opinion, compared to a few years ago, HDD are not built like they use to be.

Oh that parchment PC, it had no hard drive and IBM presently has 125gig on a plastic postage stamp that is due out in 2005.
January 2, 2003 9:34:35 PM

I got one of the Samsung 120GB 1204H drives in late October. It is indeed whisper quiet, and runs cool. However, within a few weeks the drive developed a click of death and started timing out. I sent it off for a cross-ship replacement. Samsung was basically disingenuous and kept saying "Drive will be shipped next week". Actually, some of the CSRs were very helpful (when I could contact them) but some were downright obnoxious.

The drive finally arrived on December 29th. In between, some doofus there also managed to send me a 20GB replacement. And don't try calling them -- their "voicemail box is always full". Eventually I got the night watchman ("Tom") who explained to me that the "guys in receiving" usually just turn off their phones and voicemail when they are gone.

So in short... Samsung, nice drives but you're hosed if you look for warranty service. They say it's a 3-year warranty period -- that was what attracted me -- but I was beginning to think that "three years" was how long it would take for them to send a replacement drive. In ten years of dealing with hard drive manufacturers, this was definitely the worst ever. Astoundingly bad in fact.

Irish Guy in San Francisco
January 3, 2003 7:19:12 AM

Umm i dont know about u guys but i find the service of samsung to be quite good. I havent had any HDDs to fail on me yet but my friend did have a samsung and a seagate. The samasung was exchanged from a 20 Gb to 80Gb for a very small amount within 2 weeks. As for the seagate well theyre having difficulty in replacing it and we have been waitin for it for like 4 months now.
I need some adcive too. i have to buy a new HDD i've found the 80GB 7200RPM ones to be inside my budget and needs but the problem is in INDIA tha market share is like this---
Seagate -- 50%
Samasung -- 40%
REST(WD,Maxtor,IBM)--10%
I've heard Rave reviews about the WD80Gbs but being sucha small player here i have some doubts about their after sales service. What is the failure rate for these drives??? i'm inclining towards samsung because it outperforms seagate counterpart and also has the 3 yr warranty thanx in advance.

My computer NEVER cras...DOH!.
January 3, 2003 8:57:54 AM

I wonder how they can do this in Europe.

Since jan 1 2002, all electronic devices are required to have a 2 year warranty.

Somebody who can shed a light on this?

If you need anything, don't hesitate to ask someone else first. ;) 
January 3, 2003 4:04:11 PM

What to you mean by 'Europe'? England? Germany? France? I doubt that a 2 yr warranty law passed in every country in Europe at the same time.

My answer to your question is that anywhere where it is required by law, they would still have a longer warranty. Just like in the USA, on almost every sweepstakes, offer, or anything that is valid in several states, there are exceptions listed for different states where state laws require different things or make different things illegal.
!