Dell has taken steps to improve support and services, but past episodes of poor customer support are coming back to hurt the company, an analyst said on Friday.
Court documents unsealed Thursday and examined by The New York Times detailed charges that Dell knowingly sold thousands of desktop PCs with faulty components to customers between 2003 and 2005.
According to documents unsealed in a case filed by Advanced Internet Technologies against Dell in the U.S. District Court for the Eastern District of North Carolina in 2007, Dell avoided telling many of its customers about the extent of problems, and failed to recall systems that contained faulty components.
The problems stemmed mainly from some bad capacitors on the motherboards supplied by a company called Nichicon, which were installed in OptiPlex desktops. Dell shipped around 11.8 million OptiPlex computers between May 2003 and July 2005. Customers who experienced problems included the city of New York, Microsoft and General Electric, according to The New York Times.
The same issue affected many PC makers, but the problem has been resolved, Dell has said. The company has fixed the computers and extended the warranty of systems containing faulty parts. AIT and Dell have settled the case.
Selling PCs with faulty parts can create a negative impression, and poor service can keep customers away from buying more PCs from the company, said David Daoud, research director at IDC.
Dell has acknowledged support issues it has faced in the past and tried to fix the problem. But the negative impressions linger for a while, and issues highlighted in something like the AIT case could hurt the company's reputation in the long run, Daoud said.
"Fixing that takes a long time, and changing attitude and sentiment takes years," Daoud said.
Dell is now selling more PCs through retail stores, which participate in providing support. The company has also tried to address support for enterprises through new programs and through the acquisition of service provider Perot Systems in November last year.
Dell is providing a more cohesive means to solving problems by bundling services and support for enterprises through Perot, but it must be careful as hardware glitches tend to come back, Daoud said.
David Milman, CEO of computer repair firm Rescuecom, agreed with Daoud, saying that ghosts from the past don't go away easily. He also said that Dell is still viewed as a low-cost PC vendor with poor support, a label that hit the company earlier in the decade.
By comparison, Apple, which sells computers at higher prices, has garnered a reputation of offering strong support through its retail stores and AppleCare support program. The acquisition of Perot Systems has improved Dell's support for its enterprise customers, but they're still catching up with competitors like Hewlett-Packard, Milman said.
Dell still sells PCs at low prices, and support takes a hit as the company tries to trim cost and improve profit margins, Milman said.
"They are hopeful they have a high-end image, but they've always sold on price," Milman said.