Dell’s Faulty PCs Could Become PR Nightmare

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.

Passing the blame

“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 supply.”

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 email 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.”