Court documents released Nov. 18 backed up earlier claims that Dell officials did not warn customers about widespread OptiPlex problems between 2003 and 2005.
The issues of faulty PCs and Dell's slow response to dealing with them are
finding their way back into the news.
Documents
released by a Federal District Court judge in North Carolina Nov. 18 gives
greater details to accusations that Dell officials tried to hide issues
surrounding faulty
OptiPlex PCs sold to a wide range of businesses, government agencies and
educational institutions between 2003 and 2005, according to a report
in The New York Times.
According
to the court documents, which are part of the lawsuit that AIT
(Advanced Internet Technologies) filed against Dell in 2007, the PC maker
replaced the motherboards of 22 percent of the 21 million OptiPlex systems-the
GX280, GX270 and SX270-that it sold during those two years. The motherboards
needed to be replaced due to faulty capacitors, which came from third-party
suppliers.
The
part of the story that is continuing to haunt Dell is the contention that
people within the company knew about the issues, but hid the extent of the
problem from its customers while continuing to sell them.
In
the case of AIT, company officials said that
in 2003 and 2004, they bought more than 2,000 OptiPlex desktops from Dell,
which at the time knew of the problems yet still continued to sell the systems.
An internal audit conducted by AIT after the
problems began to arise found that all of the OptiPlexes sold to them by Dell
were faulty. When AIT officials brought the
problems to Dell, the PC maker offered a warranty support program that included
motherboard replacements, rather than recalling the failed PCs.
AIT
sued Dell in 2007, and reportedly settled with Dell in September. Terms of the
settlement were not disclosed, according to The New York Times.
The
paper reported that the court documents offered numerous incidents in which
Dell customers saw widespread failure of their OptiPlex systems. For example,
the city of New York bought
5,000 PCs during those two years and had problems with more than 20 percent of
them. Microsoft had problems with 11 percent of the 2,800 PCs it bought.
The
documents also indicated that Dell officials were reluctant to inform customers
of the motherboard problems, even though they were getting flooded with reports
about the issues. According to the paper, Dell salespeople and technicians were
pressured to keep quiet about the problems and not tell customers.
Dell
even went so far as to triage their customers, ranking them by importance
depending on how likely they were to leave Dell for another vendor.
Dell
and other PC makers, including Hewlett-Packard and Apple, saw some of the
computers they sold to customers fail because of faulty capacitors sold by
component makers in Asia. Capacitors are used to help
regulate the electricity inside the systems, and the faulty capacitors would
bulge when they got too hot, causing the PCs many times to fail.
However,
while most PC makers-including Dell-tried to track and isolate the problem and
either replace or fix the failed PCs, Dell continued to use bad capacitors,
according to The New York Times. The report said that the court documents show
that Dell officials felt that, despite the large number of OptiPlex systems
failing, the issue did not rise to the level of recalling PCs, but instead only
of replacing the motherboards.
Dell
reportedly took a $300 million charge in connection with the fixing or
replacing of failed computers, The New York Times reported.
A
Dell spokesman told the Times that the PC maker replied properly to the issue.
"Dell
actively investigated failures, we fixed computers that suffered a capacitor
issue, and we extended the warranties on all the possibly affected
motherboards," the spokesman said.
Though
AIT filed the lawsuit against Dell in 2007,
the case garnered a lot of attention this summer due to reports regarding Dell's
reluctance to tell customers about the failures at the time they were happening.
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