WARRANTIES have become the latest weapon in the IT sales war, with Seagate Technology announcing a five-year guarantee for its hard drives and Kingston Technologies offering lifetime guarantees on some memory products.
However, rivals are dismissing the move as a marketing gimmick. And Tech Pacific, which distributes Kingston products, but not Seagate, questions the honesty of the Seagate offer.
The world’s largest manufacturer of disk drives controversially cut warranties on personal storage products to one year in 2002, but has boosted the cover period to five years on all drives made after January 2004.
Seagate South Asia and Australia general manager Robert Yang, who was in Auckland last week, says the company surveyed systems integrators, OEMs and other customers. Reliability and quality were their top concern and Seagate saw the guarantee extension as a way of backing up its own reliability claims.
In New Zealand, Seagate sells through distributors Datastor, Ingram Micro and VST.
Datastor owner Vic Dickerson welcomes the move, dismissing suggestions it might leave him and other distributors with stock on hand.
“It won’t impact on us at all. We have been selling Seagate for quite a while and the returns have been low. It can offer a five-year guarantee because its products are so good,” Dickerson says.
While resellers will be offered a full return or exchange coverage for the full five-year term, the fine print reveals that replacement drives will not be offered to distributors beyond three years. Instead, they can only expect a credit of 25% of the current value of the drive if the request is in the fourth year, or 10% in the fifth.
The sliding credit returns and credit-only periods have rivals wondering if the announcement will hurt the channel, already under pressure to retain margin.
Tech Pacific managing director Tony Butler questions if Seagate has thought through the strategy needed to offer such a guarantee. Technology is changing rapidly, he says, and in five years today’s disk drives might be “as rare as hens' teeth”.
With the company only refunding part of "current" value after three years, Butler says calling it a five-year guarantee is “an illusion”.
“It sounds like a three-year warranty to me,” he says.
Fujitsu New Zealand is declining to comment on the Seagate move, deferring to Sydney-based ANZ general manager Michael Yell, who doubts the guarantee represents a good deal.
“If you look at our large global accounts, most of them are asking for shorter warranties at a better price,” he told Australian Reseller News.
Samsung sales director of CE and IT, Norm Kreike, says it will be business as usual for his firm and he doubts whether others will follow.
“Seagate will have to ask itself if this gives it the increases in revenue it wants. I can see it reverting,” he says.
Other manufacturers told ARN that they were assessing the announcement and considering their position.
Following the Seagate announcement, memory manufacturer Kingston Technology announced lifetime warranties on Compact Flash, MultiMediaCard, Secure Digital Card or Smart Media products made after January 1 2004.
Kingston ANZ country manager Keith Hamilton says the replacement policy will have “no catches”.
Distributors send in a claim and the vendor will ship out another product.
As sole distributor of Kingston in New Zealand, Tech Pac’s Tony Butler is welcoming the Kingston guarantee. While the details of how the policy will work were still being finalised, Kingston products had the lowest numbers of returns of all the distributor's suppliers, Butler says.