One Further Note on IBM Service

I blogged the other day about the nice service I got on having my IBM laptop repaired. The second commenter on the post, “Kent,” wrote this:

Why is the co-author of Freakonomics buying overpriced insurance/ warranty for a computer?!

He then goes on to cite our friend Tim Harford as arguing that add-on insurance for things like computers, cell phones, etc., is “grotesquely inflated.”

That may be true — but, for the record, I didn’t buy any such insurance for my ThinkPad. The repair was done under the original manufacturer warranty. It’s interesting to me that Kent’s assumption was otherwise; I’m not sure why that is so.

FWIW, the comments about my IBM experience here, on Consumerist, were in general so pro-IBM that I wondered if they’ve got some BzzAgents working for them. But if that were the case, they probably would have hit the comments on our blog a little harder.


justakim

well... generally speaking, the thing that dies on a laptop that must be replaced, is the motherboard, and a motherboard is like buying a whole new computer, $800+. I buy 3 year $300 complete coverage (spills included!) from IBM. In that time, I am almost guaranteed to need my motherboard replaced. This is a better deal than buying 2 cheaper laptops in that time frame. IBM makes good stuff, but this machine takes a lot of abuse and is exposed to many risks over the course of three years.

Skip the coverage if you don't take your laptop out and keep it away from all liquids.

fomu65

at a former employer, i was the primary analyst for implementing a new world-wide system to sell and track base and extended warranties. it is ironic that is what i was asked to do, given my general disdain for anyone who would waste their money on such 'insurance.'

that was, until i saw what happened to my girlfriend's laptop.

her HP, purchased at best buy about 2 years ago, has already had the motherboard replaced, battery replaced twice and the power supply replaced. all 4 services have been manufacturing issues, not something she has broken. ouch.

given that she spent only a small fraction of the total cost on that extended warranty plan (something like $50 out of the $1000+ for the laptop), and how many service calls it has needed, she has more than made her money back by purchasing the warranty.

so, while i can't give any hard economic figures here, let me try to show factors i think about if i determine if the warranty is worth it or not:

1) is the price of the warranty a small % of the total purchase price?
2) is the total price of the item comparatively large to my earnings potential during the life of the item?
3) is the item too complex or specialized that self-repair is unlikely? (repairing a cheap stool is easier than an iPod)
4) what is the opportunity cost of purchasing the warranty v/s the possibility of lost time/effort/knowledge if the item dies?

basically, these are all calculations that come down to a single question: am i willing to undertake the risk of the component dying prematurely upon myself or do i want someone else to assume that risk for me? the numbered questions are just guides for me to determine the answer to this ultimate question.

question 1 is really asking about how the purchaser perceives the cost of the initial purchase. if the extended warranty makes the purchase of the combined item more than the purchaser is willing to pay, then the warranty will not be selected and the person will just take the item.

question 2 is more about replacement. if the item is inexpensive relative to my time-adjusted income, then a warranty is not useful as i could purchase a new item instead.

question 3 determines if the warranty itself is a desired thing for the individual buyer. if i am a computer geek, and build all my own PCs, then a warranty probably isn't worth it to me (at least not for most components) as it is easy for me to interchange them.

question 4 is probably the most complex because it really depends upon not only the user but the item. if Dubner's hard drive had totally died and was unrecoverable, then warranty or not, he lost. if it was recoverable, and he didn't have the skills to do it himself, then the warranty is a savior. if Dubner kept nothing on his laptop of use (or always had backups), then a hard drive crash is only an annoyance, thus the opportunity cost would only be in the time spent without it, thus the warranty probably isn't worth it.

obviously i've put way too much thought into this over the 4 years i helped implement that system. anything you guys see that i missed? (i actually edited this down, too!)

Read more...

egretman

Dubner, I thought YOU were the Bzzagent.

prosa

Why is the co-author of Freakonomics buying overpriced insurance/ warranty for a computer?!

A more intriguing question: why is the co-author of a smash best selling book still using a 3-year-old computer? I'd say that it's due to some sentimental attachment, but hardly anyone feels any emotional ties to a computer.

dw

No bzzagents... IBM (I guess now Lenovo) is widely known to have the best customer service of any laptop manufacturer. I had pretty much the exact same experience as you when my screen died. That's why people are willing to pay more for them (they cost more than similarly spec'd laptops of other brands).

majikthise

Not that Consumer Reports is omniscient, but at least they qualify their stance against extended warranties: extended warranties are worthwhile *only* for laptops, because of how frequently they break down.

Of course, the answer depends on a lot of empirical data. Though I'm confident that the data would turn out against extended warranties for most products, I'm actually unsure in the case of laptops. Mainly because every laptop I've ever seen has had significant problems within about two years.

edelrc

A user for many years now I don´t get anything but a ThinkPad... the looks and mostly the service is unique! Here is posted that IBM's service is the best. I thoroughly agree! Having working with literally hundreds of laptops (due to my IT career) and reporting numerous incidences IBM's service has always been the best.
However I noticed that in Consumer Reports IBM was not always been the best rated... (!) Something must be wrong here, I thought… Then, after researching in forums I discovered why… ThinkPad users are perfectionists… they expect the best laptops, and the best service… That is why they are unlikely to give great marks for ´just' a job well done… they expect more than that! That is the flaw that consumer rates on magazines such as CR has… the users are giving rates with different expectations.

Rick Klau

Stephen - Lenovo has a customer for life in me... I blogged my experience last year when I had a hard drive fail, details are here:

http://www.rklau.com/tins/archives/2006/05/11/props-to-lenovo.php

A few months later, my experience got used in a presentation in Australia, which led me to post a quick follow-up:

http://www.rklau.com/tins/archives/2006/11/30/lenovo-rides-the-cluetrain.php

Bottom line: Lenovo is committed to building great products, and even more committed to ensuring that we buy from them again. And again. Given what I've heard about other manufacturers, I can't imagine buying from anyone else.

btosch

None of the service plan cost analysis' ever look at the potential time savings when you are covered. They simply look at how expected repair bills compare to the cost of the extended service.

For laptops I pretty much always buy the most comprehensive plan available. When something goes wrong there is no question about whom to call and I don't have to spend time convincing them its not my fault. I always get on site service so I don't have to mess around with shipping.

The time savings from a single support incident will generally cover the cost of the plan.

DanSwis

IBM is the best. I've had a ThinkPad for close to three years now and every time I've ever needed to get something repaired it's been simple.

I live in NYC, so I never have to send in my computer to get it repaired. If I ever have a problem, I just call Customer Service, and they send a repairman to my apartment within two business days with a new part. I have replaced my LCD monitor, my video card, my keyboard, my DVD-ROM, and my power cord, no questions asked.

My warranty expires in August and I am definitely going to revamp the computer again before that happens. I'm positive this computer will last me for another year at least.

Kent

I'm the famous "Kent" that is the protagonist of this post so I thought I'd tell a little bit about myself to offer some color.

I like cats, even the nefarious ones and especially the benign ones. And I like ice cream with sprinkles. But the sprinkles should be mixed in otherwise you're just eating plain ice cream once you consume the top.

no way out

pretty good I wonder if apple does the same?

egretman

Infamous, Kent, infamous.

RandyfromCanada

now we tell a little about ourselves ..
ok l like long walks , l cry watching "ghost" and am looking for a long term relationship for my wife , long way from me that is ............

The Consumerist

Pretty sure they're not Bzzagents. The post asked for people to chime in as to whether this experience was common, which would help account for some of the number of positive comments left.

justakim

well... generally speaking, the thing that dies on a laptop that must be replaced, is the motherboard, and a motherboard is like buying a whole new computer, $800+. I buy 3 year $300 complete coverage (spills included!) from IBM. In that time, I am almost guaranteed to need my motherboard replaced. This is a better deal than buying 2 cheaper laptops in that time frame. IBM makes good stuff, but this machine takes a lot of abuse and is exposed to many risks over the course of three years.

Skip the coverage if you don't take your laptop out and keep it away from all liquids.

fomu65

at a former employer, i was the primary analyst for implementing a new world-wide system to sell and track base and extended warranties. it is ironic that is what i was asked to do, given my general disdain for anyone who would waste their money on such 'insurance.'

that was, until i saw what happened to my girlfriend's laptop.

her HP, purchased at best buy about 2 years ago, has already had the motherboard replaced, battery replaced twice and the power supply replaced. all 4 services have been manufacturing issues, not something she has broken. ouch.

given that she spent only a small fraction of the total cost on that extended warranty plan (something like $50 out of the $1000+ for the laptop), and how many service calls it has needed, she has more than made her money back by purchasing the warranty.

so, while i can't give any hard economic figures here, let me try to show factors i think about if i determine if the warranty is worth it or not:

1) is the price of the warranty a small % of the total purchase price?
2) is the total price of the item comparatively large to my earnings potential during the life of the item?
3) is the item too complex or specialized that self-repair is unlikely? (repairing a cheap stool is easier than an iPod)
4) what is the opportunity cost of purchasing the warranty v/s the possibility of lost time/effort/knowledge if the item dies?

basically, these are all calculations that come down to a single question: am i willing to undertake the risk of the component dying prematurely upon myself or do i want someone else to assume that risk for me? the numbered questions are just guides for me to determine the answer to this ultimate question.

question 1 is really asking about how the purchaser perceives the cost of the initial purchase. if the extended warranty makes the purchase of the combined item more than the purchaser is willing to pay, then the warranty will not be selected and the person will just take the item.

question 2 is more about replacement. if the item is inexpensive relative to my time-adjusted income, then a warranty is not useful as i could purchase a new item instead.

question 3 determines if the warranty itself is a desired thing for the individual buyer. if i am a computer geek, and build all my own PCs, then a warranty probably isn't worth it to me (at least not for most components) as it is easy for me to interchange them.

question 4 is probably the most complex because it really depends upon not only the user but the item. if Dubner's hard drive had totally died and was unrecoverable, then warranty or not, he lost. if it was recoverable, and he didn't have the skills to do it himself, then the warranty is a savior. if Dubner kept nothing on his laptop of use (or always had backups), then a hard drive crash is only an annoyance, thus the opportunity cost would only be in the time spent without it, thus the warranty probably isn't worth it.

obviously i've put way too much thought into this over the 4 years i helped implement that system. anything you guys see that i missed? (i actually edited this down, too!)

Read more...

egretman

Dubner, I thought YOU were the Bzzagent.

prosa

Why is the co-author of Freakonomics buying overpriced insurance/ warranty for a computer?!

A more intriguing question: why is the co-author of a smash best selling book still using a 3-year-old computer? I'd say that it's due to some sentimental attachment, but hardly anyone feels any emotional ties to a computer.

dw

No bzzagents... IBM (I guess now Lenovo) is widely known to have the best customer service of any laptop manufacturer. I had pretty much the exact same experience as you when my screen died. That's why people are willing to pay more for them (they cost more than similarly spec'd laptops of other brands).