Dell faces the prospect of a massive public-relations battle thanks to unsealed court documents alleging that the manufacturer knowingly sold nearly 12 million defective OptiPlex desktops between 2003 and 2005. While the case awaits trial, the attendant media buzz presents headaches for a company that has been trying to reverse negative perceptions.
Dell faces a potentially massive public-relations battle in coming weeks, as
recently unsealed court documents allege that the manufacturer knowingly
sold nearly 12 million defective computers between 2003 and 2005. The OptiPlex
PCs in question reportedly had a failure rate of 97 percent over a three-year
period, due to faulty capacitors manufactured by Japanese supplier Nichicon.
Those defective computers are the focus of an ongoing lawsuit filed against
Dell in 2007 by AID (Advanced Internet Technologies). Legal documents in the
case, recently unsealed and profiled in a well-circulated June
29 article in The New York Times, described Dell employees' alleged
attempts at a cover-up after the computers, which were sold to major
enterprises such as Wal-Mart, began to break down.
"Dell documents indicate strenuous efforts to attribute OptiPlex
failures to customer use and site conditions even when Dell knew that defective
capacitors were to blame," reads a plaintiff's memo, filed May
28 in U.S. District Court for the Eastern District of North Carolina,
Western Division. "Dell documents indicate that Dell concocted
'individualized' solutions to what Dell knew to be an 'industrywide' problem
that affected all customers alike."
The memo continued, "Dell documents show that its competitors, notably
Hewlett-Packard, and even Dell's suppliers who provided the defective
capacitors, had proactively communicated the capacitor defect to their respective
customers. Dell consciously avoided emulating this example. Instead, Dell
orchestrated a policy of obfuscation."
Furthermore, it added, "Dell was providing limited warranties and
obtaining consequential damage waivers from customers knowing that its computers
were defective and that replacement parts were continually in short
Although the shipments of defective computers took place years ago, the New
York Times piece and attendant media buzz-more than 100 articles had been
written about the topic by the afternoon of June 30, according to Google
News-present headaches for Dell at a time when the company is trying to reverse
negative perceptions. The manufacturer is currently in negotiations to settle
allegations of financial misconduct brought
by the Securities and Exchange Commission.
"The Nichicon issue is old news, and the implication that this
situation affects Dell currently is incorrect," a Dell spokesperson wrote
in a June 30 e-mail to eWEEK. "The AIT
lawsuit is three years old, and the Nichicon capacitors were used by Dell
suppliers at certain times from 2003 to 2005. Dell worked with customers to
address their issues, and Dell extended the warranties on all OptiPlex
motherboards to January 2008" in order to address the issue.
Moreover, the spokesperson added, "Faulty Nichicon capacitors affected
many manufacturers. It is speculation to suggest that Dell was affected more
than other companies. The AIT lawsuit does
not involve any current Dell products."
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.