Hard-Drive Makers Cut Warranties

With three of the largest hard-drive vendors cutting warranties on a key drive category, white-box builders are now re-evaluating the warranties they offer.

Maxtor, Seagate Technology and Western Digital reduced the warranty period of the basic ATA hard-drive lines to one year. The previous standard was three years.

Last month Maxtor became the first to change its warranty policy. Seagate and Western Digital followed shortly thereafter with similar policies on ATA hard drives.

Maxtor, Seagate, Western Digital all cut the warranty for basic ATA hard drives to one year.

Richard Rutledge, vice president of marketing at Western Digital, said his company started the move toward three-year warranties on basic hard drives, which were put in place when the average drive was sold for $175 and offered 20 percent margins.

"Our move was based on erroneous data. We thought this was an inexpensive feature. I'll admit we were the idiots that started this mess. I'll also admit that Maxtor was the bravest to end this mess, followed by Seagate. I'm a little chicken, following the others," Rutledge said.

The drives are not changing, the vendors said. The change is rather a way to cut the expense of tracking hard-drive warranties.

Darrin Bulik, technical marketing manager at Western Digital, said the cost of handling warranties exceeds sales and marketing expenses, and can eat 2 percent to 3 percent of revenue.

Stephen DiFranco, vice president of corporate marketing at Maxtor, said the warranties were adjusted to be in line with standard desktop PC warranties. "Customers were buying desktop PCs with one-year warranties and hard drives with three-year warranties."

Maxtor and Western Digital recently instituted programs to sell extended warranties for basic drives.

Customers do care about warranties, said Dan Nester, president of Build To Order Manufacturing. The Atlanta-based white-box builder's desktops came with two-year warranties, but the company is now changing promotional materials to reflect a one-year warranty.

Nester said he may offer an additional upgrade warranty for $10, but it's hard to change a policy. "People buy from you for certain reasons," he said. "Service warranty,there's a perception issue."

The new warranties come at a time when more businesses are using entry-level drives for workstations and rack-mount servers, said Andy Kretzer, director of sales and marketing at white-box builder Bold Data Technology, Fremont, Calif.

Kretzer said he will re-evaluate warranties. "This will definitely cause us to consider offering extended warranties for hard drives."