Documents show beleaguered Dell was aware of bad components in millions of faulty PCs they peddled

MacBook Pro“After the math department at the University of Texas noticed some of its Dell computers failing, Dell examined the machines. The company came up with an unusual reason for the computers’ demise: the school had overtaxed the machines by making them perform difficult math calculations,” Ashlee Vance reports for The New York Times.

“Dell, however, had actually sent the university, in Austin, desktop PCs riddled with faulty electrical components that were leaking chemicals and causing the malfunctions,” Vance reports. “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.”

MacDailyNews Take: Hey, who needs quality computing at the Mayo Clinic? (dripping sarcasm)

Vance reports, “Documents recently unsealed in a three-year-old lawsuit against Dell show that the company’s employees were actually aware that the computers were likely to break. Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk.”

MacDailyNews Take: Wonder if any of those POS Dells that Dell employees knew were faulty ever put anyone’s life at risk?

Vance reports, “Even the firm defending Dell in the lawsuit was affected when Dell balked at fixing 1,000 suspect computers, according to e-mail messages revealed in the dispute.”

MacDailyNews Take: You cut enough corners, you end up like Dell.

Vance reports, “For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality and improper accounting. Dell has tried to put those problems behind it. In 2005, it announced it was taking a $300 million charge related, in part, to fixing and replacing the troubled computers. Dell set aside $100 million this month to handle a potential settlement with the Securities and Exchange Commission over a five-year-old investigation into its books, which will most likely result in federal accusations of fraud and misconduct against the company’s founder, Michael S. Dell.”

“A study by Dell found that OptiPlex computers affected by the bad capacitors were expected to cause problems up to 97 percent of the time over a three-year period, according to the lawsuit,” Vance reports. “In other documents about how to handle questions around the faulty OptiPlex systems, Dell salespeople were told, ‘Don’t bring this to customer’s attention proactively’ and ‘Emphasize uncertainty.'”

Vance reports, “In 2007, Dell restated its earnings for 2003 to 2006, as well as the first quarter of 2007, and lowered its sales and net income totals for that period. An audit revealed that Dell employees had manipulated financial results to meet growth targets.”

Read more in the full article here.

MacDailyNews Take: SIDAGTMBTTS.

[Thanks to MacDailyNews Reader “Joe Architect” for the heads up.]

43 Comments

  1. Well, at least they have some good deals on their online store. I recently purchased a 2TB SATA hard drive (the latest Western Digital Caviar Green 64mb cache) from Dell.com for $110, free shipping. Before that, they had a good deal on a 1TB FireWire/USB external drive, which was purchased for use with Time Machine. They also seem to have some decent to very nice displays, except that they say “Dell” on them too prominently. Maybe they’ll have a SIDAGTMBTTS fire-sale soon, and I’ll pick one up to replace my iMac’s second display.

  2. About time somebody listening. I knew this since 2003, but nobody care to listen. We all knew that work at Dell and was selling bad products. It was about the numbers. Man those days working there was a mad house. People was just pushing the crap out the door so that they wont get fired or they just didnt care cause working so many hours. Sometime the Dell people would work three weeks without a day off.There was times the machine will go down cause of different problems and they would just take the computers off the lines and just throw them in the boxes. Man it was the worst time in my life working for a company that pull the wool over people eyes. I’m so happy that I’m not working for them no more. It was just a job no more than that. Believe me I’m telling the true about what goes on at the place(Palmer lane building) and that just a corner of the big picture of what goes on at Hell I mean Dell as we use to say there.

  3. Faulty capacitors?
    I had to replace most of the electrolytic capacitors in en eMac, because they were underspec’d (Voltage spec barely over 5V), and as a result: leaky, swollen, and one had popped.

    Unsoldering them was the tricky part (should have cut the leads rather than trying to completely remove them and clearing the holes in the PCB from solder.
    Higher voltage electrolytic capacitors are bigger (Volume ~ Voltage^2), but after finally squeezing them in, the eMac worked perfectly (and still is).

    My point is: Apple has been putting underspec’d capacitors filtering the power supply accross the PCB, in various machines. People without electronic experience won’t be able to fix this (way beyond the warranty period), although the machines in se could have a much longer life expectancy.

  4. Years ago I worked for a Dell-like company (long gone now) that was an up-and-coming PC clone maker. My engineering task was to design a low-cost motherboard using the known defective chipset the company had “reverse-engineered” (not too well) with known faults and make the faults invisible to the casual user.

    Pretty common practice in the bottom line driven PC clone world.

  5. I recall Apple was also caught up in the faulty capacitor fiasco with it’s iMacs at the time. The difference is that Apple fixed those computers as identified, no questions asked.

  6. @ vanfruniken
    Good point, we had two of those eMac 1.25 GHz machines. There is a fix short of soldering on new capacitors: remove all ATI video drivers in the system library. One of our eMacs is running like this for over two years now and not a single freeze. Takes the fun out of YouTube, though. The video board does not deliver much performance without the specific drivers.

  7. Even though I know that bad capacitors plagued many companies during that period, I’m glad this news broke with Dell in the headlines and not Apple.

  8. I’ve always found it rather scary that all hospitals run on P.C.s. I don’t even trust my personal e-mail and mindless web surfing to a PC and I have to go into a hospital or Dr.’s office and trust my LIFE to the proper function of them?

    Also, the article mentions Apple:
    “They are not meant to pop and leak fluid, but that is exactly what was happening earlier this decade, causing computers made by Dell, Hewlett-Packard, Apple and others to break.”

    I don’t recall that problem for Apple. Anyone else heard of it?

  9. Sorry just had time to read some of the other replies and I guess others had heard of the problem. (Hard to surf MDN at work in between doing other stuff).

  10. 2003 to 2004 I started telling my clients to buy “anything but Dell” when they asked for manufacturer advice. It was clear at the time that Dell purchasing managers were trawling the factories of the far East, desperately trying to procure the cheapest components they could possibly get their hands on to bring down costs. As a result their return rate absolutely leapt. Laptops would go back four or five times in a year. Desktops would fail after six months. No way was I ever going to support businesses running that crap.

    I’d say whoever made that decision has cost the company billions in lost revenues and customers. Nice bit of economising eh?

  11. Do a little research on this issue. Look up eMac leaking capacitors on google. Same issue. Apple issued an extended replacement/repair program. Many desktop manufacturers were affected by this issue in that era.

    It’s infair to accuse Dell of this single issue.

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