Madshrimps Forum Madness - ATI warranty reduction explained

Quote:

I've given the warranty situation a bit more thought and I can only arrive at the following conclusions, let me run them by you and see whether you agree, but let me first summarize the gist of the matter:

'In essence it comes down to the fact that there would be no point to reducing the warranty if ATI didn't feel it would significantly reduce warranty fulfillment costs. In other words, they do it because they expect cards to fail which will need to be replaced or repaired which cuts into their revenues.'

Let me illustrate this with an example. Suppose you work at a car manufacturing plant and you machine a part for the gearbox that makes sure it is properly lubricated. For some reason you manage to machine these wrong which will cause them to break within 100K miles and ship a box of 1000 off to manufacturing. The next day you report your error to management and they investigate. The company does an analysis and determines that in 10% of the cases the gearbox will break down while the car is still under warranty. Therefore it is less expensive to only repair warranty claims than to have a full recall for all the cars made that day to replace the part.

So, a warranty is simply a cost item for a manufacturer. The longer you warrant something the more failures you will have to pay for. Especially when you cut corners by using lesser quality parts, as illustrated above, which could very well be the case here. Shorter warranties means less cost, but you have to ask yourself does it come with a price reduction for the consumer? If not then the company is simply trying to up their revenue by cutting costs. Either because they use cheaper, lesser quality parts that have a shorter lifespan, hence the product is now of lesser quality overall, or because current warranty claims eat up a (substantial) part of their revenue. A reduction in warranty should go hand in hand with a price reduction, if not, then the above is true.

Regards,

Sander Sassen
CEO, Founder - Hardware Analysis
http://www.hardwareanalysis.com