Dell Dismisses Faulty PC Issue An Old Problem

Dell officials are working to stem the fallout from allegations that company representatives several years ago knowingly sold faulty PCs and then tried to cover up the issue when it was raised by customers.

In a Direct2Dell blog post July 1, Dell spokesperson Lionel Menchaca said the problem of faulty capacitors supplied by a third-party vendor affected other OEMs as well, and he questioned the way the customer that filed the lawsuit against Dell over the faulty OptiPlex PCs was using the systems.

The question arose because of a 29 June article in The New York Times that described Dell as knowingly selling faulty OptiPlex PCs and its employees as attempting to pass off an industry-wide problem as “individualized” to each customer. The article and ensuing media coverage have created a difficult public relations situation for Dell.

Ongoing Lawsuit

The PCs—which had a 97 percent failure rate over a three-year period, due to faulty capacitors manufactured by Nichicon—are at the centre of an ongoing lawsuit that AIT (Advanced Internet Technologies) filed against Dell in 2007.

In the blog post, Menchaca acknowledged the Times article and said he wanted to make a few points clear. To start with, he pointed out that the “issue is one we addressed with customers some years ago” and that it “does not involve any current Dell products.” That point, however, isn’t really one under contention—the Times article followed from legal documents related to the suit that were recently unsealed and unflattering to Dell.

Other points of note, Menchaca wrote, are:

“— Dell did not knowingly ship faulty motherboards, and we worked directly with customers in situations where the issue occurred.

— This was not a Dell-specific issue, but an industry-wide problem.

— Dell extended the warranty for up to five years for customers who had affected machines.

— This is not a safety issue.”

The majority of these points, too, are not being generally contested. What is being called into question in light of the new documents is Dell’s knowledge of the situation at the time and the intentions with which it addressed it.

“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,” stated a plaintiff’s memo, filed on 28 May in a U.S. District Court in North Carolina. “Dell consciously avoided emulating this example. Instead, Dell orchestrated a policy of obfuscation.”

The released documents, despite dealing with Dell’s past, are proving to be a public-relations disaster in the present. Dell has worked hard in recent years to reshape itself, and it’s these changes that Menchaca would like to keep Dell customers focused on.

Customer Satisfaction

“We’re proud of our recent strides in service, such as Gartner ranking us as the leader in global enterprise desktop PCs … and as the leading PC supplier across all professional segments,” Menchaca wrote. “And just today, [Technology Business Research] survey results show that Dell ranked No. 1 for customer satisfaction among corporate IT users.”

He went on to write that Dell suspended its use of the Nichicon capacitors after discovering a problem in its manufacturing process, and that it voluntarily extended the warranties on devices potentially affected by the Nichicon capacitors.

“It’s also important to note,” Menchaca added, shifting the burden a bit, “that AIT was using the OptiPlex systems as servers, a use for which they weren’t designed.”

He noted, regarding the Gartner and TBR accolades, “While this reflects our progress, we understand that we must continually improve.”