Dell Wants Everyone to Forget It Knowingly Saddled People With Bad PCs

Last Updated Jul 2, 2010 3:20 PM EDT

A three-year-old lawsuit has revealed that from 2003 to 2005, Dell sold millions of PCs that employees often knew were likely to go bad. Dell allegedly had employees mislead customers about the nature of the problem and the fact that, as a result, Dell was at fault.

Now Dell has decided to prolong this roiling public relations nightmare. How? By denying that any of this was Dell's fault and by ignoring the way it tried to snow customers. The company does make some fair points:

  • Bad capacitors, which made PC motherboards go bad, were an industry-wide problem at the time.
  • Dell stopped selling the affected computers years ago.
  • The company extended the warranty for the machines.
  • It did work with customers where the situation came up.
At issue, though, is how Dell worked with customers -- a point the company deliberately ignored in its post. For example, Dell told the University of Texas math department that the machines went bad because intense calculations overtaxed them.
Dell, however, had actually sent the university, in Austin, desktop PCs riddled with faulty electrical components that were leaking chemicals and causing the malfunctions. Dell sold millions of these computers from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic and small businesses.
Dell's actions to remedy the situation were poor. An independent analysis, commissioned by Dell, suggested that the company underestimated the number of affected machines by a factor of ten, and that Dell had replaced at least some bad motherboards with similarly defective parts.

According to the court filings, Dell instructed customer service representatives to avoid mentioning the ongoing problem with the computers and to avoid bringing the issue to a customer's attention. Dell also did not recall the devices, so many customers may have had problems without being warned of the strong possibility. There are also experts who contended that the capacitor leakage could actually cause a computer to catch fire, flatly contradicting Dell's assertion on its blog that there was no safety issue. In fact, the post actually blames company that brought the suit, Advanced Internet Technologies, for being at least partly at fault for the problems it had:

It's also important to note that AIT was using the OptiPlex systems as servers, a use for which they weren't designed. The company also admitted in its complaint that Dell fulfilled its warranty obligations to AIT until AIT decided to stop paying for the OptiPlex computers.
In other words, AIT was at least partly to blame because it stressed those poor OptiPlex systems by having them work as servers. Dell does itself no good by continuing to blame customers and deflect responsibility. This is the sort of gigantic screw-up that requires companies to adopt entirely new ways of doing business and heads to roll. That would presumably include Michael Dell, who was an active chairman of the board, even if not CEO. But that's never going to happen at the company Dell founded, which means that Dell may never recover from this blunder.

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Lemon image: RGBStock.com user jmjvicente, site standard license. Photo editing, Erik Sherman.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.