Now it's official: IBM has a quality problem... see article.

[beeblebrox]

FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)

{Admin edit 03-mar-05: i am TIRED of looking at this meaningless hyperbole'..
it is NOT "official", it IS conjecture and it only shows that ibm spends more on warranty and support than other competing companies! which means to me that ibm puts more effort into keeping customers happy!
I have more to add but wife person says it is time for DINNER!!}

IBM Data Reveals Rising Warranty Costs

Costs have increased steadily in recent years, causing some to wonder about quality.

Laura Rohde, IDG News Service
Wednesday, December 08, 2004

In detailing its agreement to acquire IBM's personal computing division, China's Lenovo Group revealed data about growing warranty costs for Big Blue's PC business, and in doing so raised questions about quality control issues.

The companies announced this week that Lenovo is to pay $1.25 billion in cash and equity for IBM's PC business. The deal also calls for IBM to take an 18.9 percent stake in Lenovo, which is China's largest personal computer maker.

According to the 38 page statement from Lenovo detailing the agreement, IBM faced increasing warranty expenses between January 2003 and June 2004 due to faulty components in some of its PCs.

"Recent financial performance of [IBM] has been adversely affected by exceptionally high warranty expenses for the financial year ended 31 December 2003 and the six months ended 30 June 2004, due to certain Personal Computer products with problem components produced and sold previously," Lenovo says in the statement.

The company did not specify which components were causing the problems, what the problems were, or which PC products were affected. Lenovo also didn't say if the problem has been resolved.

Lenovo says warranty costs were approximately $452 million or 4.5 percent of net revenue in 2001, $430 million or 4.7 percent in 2002, $586 million or 6.1 percent in 2003, and for the first six months of 2004, the costs were $365 million or 7 percent.

"[IBM] estimated the warranty costs based on historical warranty claim experience for eligible products under warranty," Lenovo says in the statement.

IBM declines to comment on the Lenovo statement and adds that IBM does not discuss profitability or revenue of its warranty coverage. Representatives from Lenovo could not immediately be reached for comment.

Difficult to Analyze

In general, it is difficult to break down warranty expense costs in diversified companies, says Eric Arnum, editor of Warranty Week, a newsletter for warranty management professionals.

"Lenovo, or IBM, for that matter, have all the internal numbers, so for instance they can start with just ThinkPad revenue, and with warranty expenses just for the ThinkPad line, and calculate their percentage for that line alone. Then they can do it again just for desktop PCs. I think that's what they're saying here," Arnum says in an e-mail response to questions. "While the overall warranty expense for IBM may be around 3 percent of hardware revenue, it's much higher for the PC line. One can safely infer that it therefore must be lower for servers, mainframes, and other hardware, if the overall corporate average is close to 3 percent."

As a loose comparison, Dell, Gateway, and Apple Computer consistently maintained overall warranty claims rates below 3 percent, Arnum says. Hewlett-Packard has remained in a range of 3 percent to 4 percent, though it has a nonstandard warranty cost structure for its printers, he says.

The only large computer-related manufacturers with overall warranty claims rates over 5 percent of hardware revenue are Sun Microsystems, Lexmark International, and PalmOne. "In my experience, 5 percent has been the demarcation line for danger, anything above this level suggests a problem," Arnum says.

Arnum warns that direct warranty cost comparisons between companies can be tricky because so much of what is and isn't classified as a warranty expense is left up to each individual company to decide. Additionally, the overall company average may not reflect the true experience of just the PC line of business, for example warranties for Gateway's plasma TVs and for Apple's IPods have to be factored in.

[rocketman]

FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)

I have my T42 for almost a month and haven't had to send it in for service yet.

[K. Eng]

Could you post a link to that article? It would be interesting to know what products are affected. Too bad Lenovo won't say

[JHEM]

FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)

Based on a sample size of what? One?

Whatever it is I'll trump it with a client's population of more than 250K and a hardware failure rate of 3.4%!

James

[jdhurst]

FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)<snip>

I do hope that was just a bit dramatic on your part. In ten years with all kind and manner of ThinkPads, I have never had one require service within 5 days of purchase - never.

Actually, aside from normal failure rates for this and that, the only two repetetive problems have been (1) the T30 memory bank error requiring an engineering fix and (2) every 30Gb drive failed after about 2 years of use.

... JD Hurst

[Edit] - I should say that I agree with the article in that I see the normal failure rate rising over time, and so that must affect their repair costs.

[beeblebrox]

Sample size is quite low and statistically not significant.
But significant for myself:
all privately bought Thinkpads ended at service (560, 2x T20 (4 times), T23 (2 times) , T40p (3 times)

Of 10 Thinkpads that arrived at the office 6 months ago, 4 went back to service.

(So far, the Compaqs in the office fared much better.)

The best performance was my first T20: in the end IBM had to exchange everything but the bottom case and the trackpoint cap, the rest (LCD, DVD, HDD, motherboard, keyboard, power brick) gave it its ghost, of course all within warranty.

[ian]

I find this extremely interesting as I too have NEVER had trouble with the Trackpoint caps...

[lvlolvlo]

interesting, the only problem i had was with a bad motherboard on my t40....i've had other coputers namely Dell, and Compaq which was needing replacement after 8months.

[BILLCROCKER]

We don't know what was affected, it could have been monitors or AC adapters, who knows...something else is going on. That Dell would have a lower percentage is simply unimaginable.

Most important sentence:

[D]irect warranty cost comparisons between companies can be tricky because so much of what is and isn't classified as a warranty expense is left up to each individual company to decide

[edelrc]

I don’t doubt those numbers given at all, the other way around I am surprised about the "only" 5% mentioned.
Warranty costs cannot be easily compared among product lines, not to mention brands.

IBM costumers are the pickiest ones; we want the best product first, and followed with the best service. We ask for replacements very easily, laptops are used by multiple employees and abused in the road. We expect to be in the phone briefly and no hassles in replacements. With all these variables and only the numbers given above, how can you expect to compare IBM’s costs with Toshiba’s?

[bevross]

PCWorld just came out with their analysis of 42,000 users

http://www.pcworld.com/reviews/article/ ... 514,00.asp

IBM laptops came in about "average" for reliability & "better than average" for service. Naturally, if they are paying more attention to service (& making customers happier), then it's probably costing them more. The IDG article above discusses the cost, to IBM, of service.

[sugo]

That Dell would have a lower percentage is simply unimaginable.

not really, people returned their "beloved" Dells right away without wasting time on sending them for service

[admsteiner]

With Dell, waiting on hold for an hour also leads to a cut down on how many laptops are returned for service...

--Adam

[n3il]

3 words:

Motherboards - Bulging Capacitors.

Desktop computer motherboards - across the industry, not restricted to IBM.

[Plinkerton]

FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)

Yeah, I had my first one at least a week before I sent it back... I had my second one almost 2 weeks before I sent it back.

So far, my 3rd one is still kickin [censored]. [/quote]

[edelrc]

Again, please, be aware that comparisons cannot be made that easily among brand when it comes to costs or satissfation levels.

About satisfation level, these could be compared if all brands had the same segmentation of target custumers. When an Compaq costumer donot want to pay more than $1200 for a laptop, and an IBM more than $2700, obviously, we are not talking about the same segment.
IBM costumers may rate very poorly IBM if technical service is not reached within a 30s call. And a Compaq one will rate its brand great if a technical agent picks up the phone within 5min.

Satisfation level measures the level of needs sattisfied by the manufaturer versus the expectative that the customer had. It cannot be compared in terms of "who is better"with other brands without more data.

[Champ]

if they start worrying and reduce their service then they're the biggest idiots i know. there does $1 bil down the drain once your lenova=crap from china they'll call home to texas

also ibm margin is larger. they could have easily just made a warantee portion for accountin purposes into the cost to reduce these reported expenses

[darrenf]

It's all because of those darn Chinese keyboards and Sanyo batteries!

-d

[Champ]

or the three computers that get returned here for pixles and what not

[JohnDrake]

In addition to the motherboard capacitor issue, IBM got burned by some specific bad harddrives in the T21-T22 line that would fail early.

All of this involves products 2+ years or older still under warranty. Much of the problems were undetectable, because they would only reveal themselves over time due to age...not through intense testing.

[BillMorrow]

i probably use as many different thinkpads as anyone here and i have never experienced such a failure rate.. not even close..

meaningless hyperbole' like this one: "FYI: (BTW:I haven't seen a Thinkpad yet which had not to go back to service within the first 5 days after purchase.)" shows something more than a dispassionate opinion..

if i had the same experience then i sure would not be buying anything but DELL or some other brand..

[Ghostrider]

NONE of the Thinkpads we have in our company had to be send to service.
My private T42p is also in a good condition and I won't send it back (if nothing unexpected happens).

[skyfish]

I view this as IBM stands behind their products.

[mdarnton]

The problem might be the customers, not the product. I've never seen as much whining about small perceived defects in any product as I have on this board, about things like people not getting the keyboard they wanted, the battery they wanted, that dead pixel over on the screen margin, that type of stuff. Since IBM treats all these complaints with a smile rather than the more deserved "gee, fellow, get a life", I can see why their service costs are so high. What other computer maker will let you trade back your keyboard because you don't like where the one you got is made???????

All they really need to do is say "You bought an IBM, and that's an IBM battery/keyboard/whatever you've got, and it's working to our specs. There isn't a problem with your computer, and so we're not going to fix it." Then let their customers go to, uh, who??

[beeblebrox]

oops... now I started a discussion which was not intended.

But here is my opinion on that.
IBM has a quality control problem. All the defective Thinkpads that I had or we had in the office were defective because of poor testing.
I mean, can anyone be satisfied when you unpack the computer and the keyboard doesn't work (I had that), or that the WLAN card has a range of 5 meters?
Or that half of your memory can not be recognized?
And this is out of the box! Turn on, does not work!

Come on, that is simply not acceptable, because this reminds me of extremely poor TQM practice.
I never used Dell, but we have thousands and thousands of Compaqs (I guess, it is the same manufacturers as for the Thinkpads sometimes, at least the Armada 7400), which were very reliable, with a few exceptions. As a company you have the same support as with IBM, which is well paid for. Support is part of a Service Level Agreement (SLA) which you set up upfront and pay for it.
That's why sometimes Dell is excellent or extremely crappy. It is written in the SLA. You get what you pay for. Same with Compaq. If they are less comprehensive in services, then they are way cheaper. It is just a part of your contract.
As a private user you don't have any contract, that's why you pay for it separately.

I honestly and sincerely love Thinkpads and prefer them over any other brand. However, again, I had to send almost every notebook back for simple (!) repair. After that they where very reliable for years.
Maybe I always get the Monday morning machines, but it seems to be symptomatic that whole batches of machines have the same problems (e.g. all WLAN cards of a T40 batch we got did not work properly and had to be replaced).

The problem I see is that, since IBM does not produce them or ever sees them before shipping, the whole TQM is on behalf of the ODM. I could imagine that some ODM staff possibly mixes up the quality setups between various system lines. But that's speculation.

It would be very interesting to find out how separate, for instance at Wistron Ltd., the ThinkPad X40 and the Dell m300 lines are. They could be in the same manufacturing hall, or be even intermittent batches in the same production run with different setups. Maybe someone has more knowledge about that. I only saw one manufacturing industry report.

However, folks should recognize that there is no difference between a ThinkPad, Dell, Compaq, Apple or whatever. It is the same manufacturing process, same production lines, but different configuration setups for production raw material, choice of chips (1st, 2nd, 3rd choice, which determines costs and reliability), burn-in and verification tests.

What makes me wonder most, is that no competitor ever came close to a similar great keyboard as on the Thinkpads. I can only imagine, that the IBM keyboards are quite expensive to produce, therefore competitors opt for cheaper alternatives.

[BillMorrow]

oops... now I started a discussion which was not intended..

you sure did..
inflamatory words often do..

But here is my opinion on that.
IBM has a quality control problem. All the defective Thinkpads that I had or we had in the office were defective because of poor testing.
I mean, can anyone be satisfied when you unpack the computer and the keyboard doesn't work (I had that), or that the WLAN card has a range of 5 meters?
Or that half of your memory can not be recognized?
And this is out of the box! Turn on, does not work!

your sample must be small..
i had ONE only dead thinkpad out of the box..
turned out it was not dead nor did it need to go back to ezserve for service..
rough shipping had caused the display cable to pop out of the system board socket..
the problem was corrected and the design was changed so that rough handling would not pop the cable out of its socket..
(this was on the top of the like T23's)

I honestly and sincerely love Thinkpads and prefer them over any other brand. However, again, I had to send almost every notebook back for simple (!) repair. After that they where very reliable for years.

if you LOVE thinkpads, why the inflamatory commentary..?
words can be like knives and bullets..
or they can be dispassionate, cool, honest and not given to sensational rhetoric..

Maybe I always get the Monday morning machines, but it seems to be symptomatic that whole batches of machines have the same problems (e.g. all WLAN cards of a T40 batch we got did not work properly and had to be replaced).

murphy's law must be in effect where you are..
i would not buy any lottery tickets, there..

The problem I see is that, since IBM does not produce them or ever sees them before shipping, the whole TQM is on behalf of the ODM. I could imagine that some ODM staff possibly mixes up the quality setups between various system lines. But that's speculation.

this is all speculation..
since you are not a fly on the wall you just do not know the true story..
from boardroom to factory floor it is all conjecture..
competitive pressure makes even the best do things they would rather not do..
or not do things they would LIKE to do..
IMO its all a balancing act between the YUGO (apologies to YUGO owners ) and the Rolls, Mercedes and Lexus..
good stuff just costs more to make and when the target audience is arguing about small change something will need to "give"..

However, folks should recognize that there is no difference between a ThinkPad, Dell, Compaq, Apple or whatever. It is the same manufacturing process, same production lines, but different configuration setups for production raw material, choice of chips (1st, 2nd, 3rd choice, which determines costs and reliability), burn-in and verification tests.

i think you are wrong, here..
there are dramatic differences between thinkpads and other brands..
have you not stated so.. ?

What makes me wonder most, is that no competitor ever came close to a similar great keyboard as on the Thinkpads. I can only imagine, that the IBM keyboards are quite expensive to produce, therefore competitors opt for cheaper alternatives.

YIKES..
finally, a positive comment..
could it be that the keyboard issue is one of stilted perceptions..
maybe the ordinary keyboard is just great and the thai made keyboard is superior..? and thinkpad owners being accustomed to the best is all things expect so much more..? so when someone starts something it takes on a life of its own..?
i have used both keyboards and i DO find that the thai made version has a slightly nicer feel to it..
would i call ibm and demand a different keyboard..? no.. and if i DID i would buy one, not hange their warranty with the additional charge..
why not..? because in my mind its just not fair..

if i were ibm i would find out why the difference between the two makers and see that alps (who have been in business for YEARS) does not produce the superior version that NMB(?) produces.. and buy that one..

i really think the initiator of this thread should consider editing his title from "Now it's official: IBM has a quality problem... see article." to something a little more fair..
like "Warranty claims cost up at ibm according to this article"..
which would strike me as fair and balanced rather than something out of soviet era journalism..

[beeblebrox]

Well, Bill,

I think maybe you can regard a relationship with Thinkpads like a relationship with your Mercedes.
Both are great products that you love. Nevertheless when they let you down you are surprised and confused.
Mercedes used to be a great car (myself driving a new one), but they suck. The onboard computer is more than annoying because it shuts down the engine whenever it wants. It can happen to you in the middle of nowhere. The maintenance (warranty) costs of Mercedes have skyrocketed because of poor TQM. They forgot to test a few electronic components in combination tests.
So Mercedes is still a great company. But it doesn't help when your new car does not work.

Same with IBM, great company, great products, but they have a problem. No doubt about it, it shows in market share, maintenance costs and ultimately in profits.

I see a Thinkpad as a business tool, that's what is paid for. I do not care about dead pixels or potentially better or worse Chinese or Thai keyboards. Don't have time for that and am not interested. The notebook should just work.

But if basic things do not work (dead keyboard, dead WLAN card) then there is a problem. And if it is on a larger percentage of delivered ThinkPads, it gives a hint about TQM.

I am not sure, but I have the impression that most folks here use a private Thinkpad. So of course, they complain about a too soft keybord or a dead pixel.

However, the major bulk of Thinkpads goes to corporates. Those folks don't care about dead pixels or a Chinese keyboard. They don't care whether it is Dell, IBM or Compaq.
They care about Total Cost of Ownership (reliability, item costs and Service Level Agreements). Computers are bought by purchase dept. and used by employees without their opinion. You can choose between a 12", 14" from the same brand. That's it.
Technical service is usually a very different channel with a special corporate account manager at IBM, Dell or Compaq.

I think we need to distinguish between corporate and consumer markets. I think this forum here is definitely a consumer oriented forum, so maybe a few observations on my side do not apply. But I observe Thinkpads and their production from a purely engineering and business side (being myself in that industry).
Complaints about dead pixels or Chinese keybords, etc. and the return of those few Thinkpads are neglegible in the total maintenance costs. I think the problem occurs when a large percentage (7% warranty costs at IBM is Huge!) of delivered products fails.

After 10 years of using ThinkPads I observe a rising failure rate of those in the past 2-3 years, which I was not used to. That can not be only on my side, but statistics tell so (and IBMs rising warranty costs).
I only heard from industry news that the IBM-LG joint venture was cancelled due to LG's poor performance, also Sanmina seems to be under observation. I only wish that Lenovo will be a much better candidate, because of their close ties with IBM and because they own the business in the long-term, instead of relying on a contract for a series.
That's what I think will help IBM tremendously. If you own something and have your name on it, you will be much more careful.

[SimonCC]

This forum is an interesting micro-cosm of the human condition. The plethora of issues mentioned in this forum have heightened everbody's expectations to such an extent that only a divine/godlike computer manufacturer could ever deal with it. Ask yourselves, if you did'nt know the thai keyboard was out there and 'better' would you care?? More importantly we all take it for granted how IBM always accomidates our petty problems and so even when we are given an inch, we take 100 miles!! How anyone could ever say that dells, compaqs etc are all built the same is beyond me - come on, have you worked on a Dell?? Feels like im working on some early learning laptop from Toys r us. Moreover, it makes me giggle when people spend hours typing away posts on how how to solve problems that are best reserved for IBM techs (the reason you all have warranties) and yet they do not think twice to call IBM hundreds of times so that one special person will track down a thai keyboard for them. Vanity is a [censored]!

[darrenf]

my 2cents on the keyboard issue. I had a T41 with the Thai keyboard and loved it. I "upgraded" to a T42 and received a laptop with keyboard that was trash compared to the T41. My typing speed was much worse and I didnt' enjoy using the laptop, so I compared the two keyboards and called IBM to see if I could get the T42 fixed. I have even at times ordered multiple T41s and received dramatically different keyboards with each! This is a defect, pure and simple. The cause is unimportant to an end user. One should not see that kind of variability in a product as refined and costly as a ThinkPad.

The keyboard, pointer and screen are where the rubber meets the road. They are the point of interface between the user and the computer so users are naturally going to be more observant about a change in that as compared to, say, what northbridge/southbridge chip(set) is in a laptop.

I agree that there is a higher expectation of quality in ThinkPads. IBM had cultivated that and, if they want to continue demanding a premium price, they will continue to meet those expectations.

-darren

[BillMorrow]

Well, Bill,

I think maybe you can regard a relationship with Thinkpads like a relationship with your Mercedes.
***SNIP SNIP**
So Mercedes is still a great company. But it doesn't help when your new car does not work..

ok, we agree. to a point..
which shows that, in spite of the shortcomings, mercedes and thinkpads, are not perfect..

a friend, with a new SC500 or something remarked to me that the MB factory rep told him that they had more warranty claims for the electronics than anything else..
interesting that a $100k + car with the rep of MBZ can have problems as well..
being something of a car junkie i have now and have hed in the past most of the finest cars available..
and they ALL had problems..
Silver Spur dies due to faulty electronic ignition buried in the distributor..!
SC400 (lexus) died because some fuse blew..
280SE 3.5 cabriolet died because a transmission band just broke..!
Aston Martin overstepped the technology and had $200k+ cars with disfunctional dash panels..
(but those still run because the engine HAS no computer. viva 1985 aston! )

Same with IBM, great company, great products, but they have a problem. No doubt about it, it shows in market share, maintenance costs and ultimately in profits.

I see a Thinkpad as a business tool, that's what is paid for. I do not care about dead pixels or potentially better or worse Chinese or Thai keyboards. Don't have time for that and am not interested. The notebook should just work.

But if basic things do not work (dead keyboard, dead WLAN card) then there is a problem. And if it is on a larger percentage of delivered ThinkPads, it gives a hint about TQM.

we BOTH know that if a LE (large enterprise) complained about 40 bad new thinkpads, there would be a tech or twenty tecs on the doorstep the next day..

I am not sure, but I have the impression that most folks here use a private Thinkpad. So of course, they complain about a too soft keybord or a dead pixel.

many users here are single users doing things from editing photos, wrioting code, writing school papers, taking their entire case to court for trial and so much more..
and others are IT managers or senior partners in accounting firms and law firms who do not like dead hardware, period.. and are not as picky as the starving student who just paid $2k out of his $5k budget for the entire school year, for a new thinkpad..
that is a helluvalotta money to these guys (and gals) and they want it perfect.. and they deserve as close to that goal as possible..

However, the major bulk of Thinkpads goes to corporates. Those folks don't care about dead pixels or a Chinese keyboard. They don't care whether it is Dell, IBM or Compaq.
They care about Total Cost of Ownership (reliability, item costs and Service Level Agreements). Computers are bought by purchase dept. and used by employees without their opinion. You can choose between a 12", 14" from the same brand. That's it.
Technical service is usually a very different channel with a special corporate account manager at IBM, Dell or Compaq.

i agree to a point..
a LE cares about the tool doing the job..
they all want a few spares on the shelf for those times a sales guy drops his thinkpad or infant mortality kills a chip or lightening kills a modem card..
and they want the SAME EXACT model..

I think we need to distinguish between corporate and consumer markets. I think this forum here is definitely a consumer oriented forum, so maybe a few observations on my side do not apply. But I observe Thinkpads and their production from a purely engineering and business side (being myself in that industry).
Complaints about dead pixels or Chinese keybords, etc. and the return of those few Thinkpads are neglegible in the total maintenance costs. I think the problem occurs when a large percentage (7% warranty costs at IBM is Huge!) of delivered products fails.

consumer market..?
sure.. but everyone wants value for their $$..

but you are here, too..
right..??
and you sure talk like an IT manager at some LE or close so it..

After 10 years of using ThinkPads I observe a rising failure rate of those in the past 2-3 years, which I was not used to. That can not be only on my side, but statistics tell so (and IBMs rising warranty costs).
I only heard from industry news that the IBM-LG joint venture was cancelled due to LG's poor performance, also Sanmina seems to be under observation. I only wish that Lenovo will be a much better candidate, because of their close ties with IBM and because they own the business in the long-term, instead of relying on a contract for a series.
That's what I think will help IBM tremendously. If you own something and have your name on it, you will be much more careful.

well, ok, we seem to be drawing close here..
i am not aware that the LG partnership did not produce the quality ibm needed..
and we all know that sanmina is history unless the lenovo group took on the sanmina contracts..
and i agree that this "deal" with lenovo can work to the advantyage of everyone (except sanmina) if lenovo handles it right..
and it IS in their best interests to do it right and it is in ibm's best interests to help, guide and teach lenovo so the deal is successful..

my only complaint is the title you choose..
not the content..
IMO it is better not to be needlessly strident..