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Lawsuit Against Dell Reveals Company Knew About Bad Components

by Matthew Zuras on June 29, 2010 at 05:26 PM

Dell FailBuilt-in obsolescence has been a common business strategy among electronics makers for the last half century, at least. Why make a gizmo that can last forever when you could make one that fails in a few years, leading to repeat purchases and bolstered revenue? Dell, the notoriously economical computer maker, took the opposite track; when it found out that 11.8 million of its desktops were filled with faulty components, it decided to sell them anyway -- and even tried to conceal the dangers that these failures could cause.

The New York Times reports that when the University of Texas complained to Dell that its math facility's computers were dying, the company told them that they were simply exhausting the CPUs with their fancy equations. In reality, Dell was completely aware that it had sent the school faulty electronics, riddled with problems like leaking capacitors procured from Asian suppliers. And while Dell wasn't the only company affected by these ramshackle components (since Hewlett-Packard and Apple both use the same supplier, Nichicon), it did receive the lion's share of bad electronics, which it then stuck into its OptiPlex desktops. Even the legal firm representing Dell in a current, three-year-old lawsuit -- initiated by a company called Advanced Internet Technologies that had received 2,000 bad workstations -- unknowingly got the damaged goods for its own offices.

An internal report from Dell found that 97-percent of the OptiPlex computers fitted with the faulty capacitors would cause malfunctions over a three-year period. The problem with capacitors, however, is that they are responsible for regulating current across the motherboard; leaking ones can not only cause data loss, but can also start fires. Still, according to the Times, Dell employees went to lengths to conceal the issue. According to e-mails revealed by the lawsuit, customer support reps were told to "emphasize uncertainty" to concerned customers and "to avoid all language indicating the boards were bad or had 'issues'." When Dell decided to finally address some of the complaints, it only replaced the bad motherboards with other bad motherboards.

But all this constitutes only one of the major problems that Dell has faced in the past several years. As complaints about the company's customer service began to increase exponentially, the New York State Office of the Attorney General filed a suit against Dell, which found in 2008 "that Dell [had] engaged in a variety of deceptive, fraudulent and illegal practices in connection with its sale, financing and servicing of Dell computers" and accessories. The company also partitioned $100 million this month in anticipation of a settlement with the SEC, which is looking into Dell's accounting. The Times posits that this "will most likely result in federal accusations of fraud and misconduct against the company's founder, Michael S. Dell." Once the exemplar of tech business strategy, Dell is now foundering under its own missteps. Dude, don't get a Dell. [From: The New York Times]

Tags: badbusiness, capacitor, computers, dell, dell optiplex, DellOptiplex, faulty, lawsuit, OptiPlex, PlannedObsolescence, top

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