Companies Slash Warranties, Rendering Gadgets Disposable

Tuesday, July 16, 2002

By JANE SPENCER
Staff Reporter of THE WALL STREET JOURNAL

A combination of shorter warranties and design changes means that buyers of even relatively expensive gadgets now have little choice but to throw them in the trash if anything breaks.

In the past year Dell Computer has slashed warranty periods from three years to one. Apple Computer's hot iPod digital-music player comes with only a 90-day warranty . And Sony requires purchasers to register to get a full year of support on a Clie organizer -- otherwise, they, too, get 90 days. In addition, many contracts on new consumer electronics are riddled with strict conditions: The one-year warranty on RCA digital camcorders, for example, covers only labor costs for 90 days.

Even if people want to pay for repairs out of their own pockets, some gadget makers are cutting off that option as well. Many hand-held organizers from companies such as Handspring, Palm and Hewlett-Packard have built-in rechargeable batteries that generally can't be replaced without sending the entire unit back to the company. (Typical cost: $120.) Two earlier Palm models, the V and Vx, were actually glued shut; the heat required to open them risks damaging the unit. Some Qualcomm cellphones also have batteries that are sealed inside the unit. But sealed units aren't limited to the small portable realm. VCRs throughout the '80s were built with a removable bottom plate. Now, they are typically made out of one plastic shell that is tricky to open even for a professional.

"We joke that we design landfills," says Darren Blum, a senior industrial engineer at Pentagram Design, which builds portable devices and computers for companies like H-P.

It's the latest chapter in the story of planned obsolescence, the term coined to describe the trend of building things not to last. As tech companies focus on pumping out new models, they aren't doing as much to help customers retain their current ones. They spend less time on product testing, and offer customers less help when the products break or malfunction. The result: Many cellphones, PDAs and other gadgets are essentially becoming disposable devices.

The pace of new-product development plays a big role. Palm, for example, introduced just six new PDA models from 1996 to 1999. Since then, it has come out with 16 new models. As the time allotted to designing electronics has dropped from years to weeks, testing cycles, too, have been compressed. "No one that I know exhaustively tests anything that's built," says Prabha Gopinath, executive vice president at TestQuest, which creates testing software used by Handspring, Palm, Motorola and Nokia. "That goes for PDAs, cellphones, any software that's out there."

Manufacturers say they do extensive testing and add that prices on gadgets have dropped so much that it's cheaper to buy new than pay for repairs. Between 1990 and 2001, average cellphone prices dropped from $600 to $162. The average price of a CD player fell from $220 to $85 over the same period.

But the newer the product, the shorter the life span: A black-and-white TV sold in 1979 lasted for about 12 years; today, a cutting-edge LCD-screen TV is replaced after five. Laptop computers need to be fixed every 16 months on average, while hand-held organizers last an estimated two years.

Faster than Peanut Butter

Kareem Shehata, an engineering student from Ontario, Canada, goes through Palm organizers faster than he goes through jars of peanut butter. He has had seven Palms in the past three years. One was "flaky," he says, and worked only if he shook it. Several developed "this digitizer schizophrenia thing" where the screen wouldn't register his stylus taps. Mr. Shehata opened up his seventh Palm and temporarily fixed a loose component with a piece of Scotch tape, but eventually, that one choked too. Palm replaced six of his broken hand-helds with refurbished units, since the failures began under warranty.

Warranty lengths tend to be standard within product categories. But some lesser-known companies are offering longer warranties to ease concerns about the reliability of their products. Budget PC maker Atlas Micro offers a three-year warranty on most parts, and a lifetime guarantee on labor. On the flip side, established companies may try to leverage their brand image to get away with unusually short warranties . Apple's iPod digital-music player offers just 90 days -- against a full year for many lesser-known MP3 makers.

Sony adds extra hurdles, requiring some hand-held customers to jump online and click through a battery of questions about their electronics-buying habits in order to get a full year of support.

Tech companies have taken the area of product support, once a standard service, and turned it into something customers have to pay extra for. The result is the current boom in the extended-warranty industry, with profits going to tech companies and the retailers that administer these programs.

High Repair Costs

Another way tech companies encourage upgrades is by setting repair costs prohibitively high. At Palm, getting a replacement for a cracked screen costs $125 -- even though Web-based repair companies like GetHighTech.com manage to fix them for closer to $50. The site also offers videos and guides to help users make basic repairs on their units. STNECorp.com, another Web outfit, offers life-extending repairs for Palms like button replacements.

But few customers know about these sites. In the end, many simply decide it's easier to buy a newer-model gadget than run the service gauntlet thrown down by the tech companies.

Updated July 16, 2002