[rescue] Slightly OT: Bad Cap Saga

Geoffrey S. Mendelson gsm at mendelson.com
Mon Aug 18 16:07:43 CDT 2008

On Mon, Aug 18, 2008 at 12:54:04PM -0700, Curious George wrote:
> And that rate is determined historically?  Or, just "wishful
> thinking"?  I.e., if you don't have any recourse with your
> supplier, how can you come up with a practical business
> plan?  "Well, *hopefully* we won't have too many defects
> and then we'll make X% profit..."

It's often historical data, but how do you rate a new product, or
a new company? How many companies had big problems because they
assumed the new company's caps would fail at x% per year, and it
turned out they were way off, it was 100%. :-)

> I.e, does Dell not care what's going on inside their "warranty
> failure" machines?  (I've never dealt with a Dell machine
> that had to be returned under warranty so I don't know if
> they expect you to return the unit or just ship you a new
> one, etc.)  How do they refine their statistics to decide
> which of their vendors are giving them problems (i.e. warranty
> costs) if they don't examine the product to determine *where*
> the failure was?  (I assume Dell contracts a given machine out
> to several different suppliers)  Don't they care about their
> *process*??  Or, are you saying the nature of the business is
> such that they *can't* care (i.e., that it is largely out of
> their hands -- they are just MARKETERS)

I don't know. I think that Dell would get statistical reports on computers
sold in the U.S., but I have no idea of how detailed they would be.
It may just be main board failure, or video sub board failure, or so on.

Do they troubleshoot each one to let's say go down to "c47 failure"?

My guess is that they have a limit. If a particular model goes beyond that
limit they start to look at them. Or maybe not, they just close them out on
their website. :-)

How long do they actually sell a particular model? How long do they warranty
items? If it's a year, it's not very likely they have any left to sell
anyway. If it's 90 days. they may have some. 

>From what Mr Bill and others post on here, they often have short term
sales for items that are delivered and sold out in a few days. 90 days
later, there are none left. If they all crashed and burned, there is nothing
to do but post mortems, and try to get the manufacturer of the assembly
(I don't think Dell buys any single components) to make good on their

If it's Sony and a zillion batteries, they would push them. If it's the
"Long March DVD Player and Hoisin Sauce Company", they just stop doing
business with them.

> So, you're saying they rely on their *art*, instead.  :-/

Doesn't everyone? 

> <frown>  So, where is the magic number?  $300?  $500?
> When does it make sense to vendor to check his hole card
> before placing his bet?

Depends upon the item.

> That I would probably concede.  A $200 PC is really pretty
> cheap (i.e. crappy).

Yes, but lots of people sell them. But I think $300 is the price point,
for that you can get a dual core Intel chip, 1g RAM, 250g SATA drive
and a DVD burner. Motherboard with 100mbit ethernet, USB 2 ports, sound
and DX10 video (but not high end graphics)

> But, these same vendors are making all sorts of kit.  Does
> Dell use *radically* different suppliers for its high end machines?
> (I'll concede they bottom feed on their low end machines but
> is there much of a difference between the middle and upper ends?)


> So, how does a vendor like Dell decide where to care?  Is it
> driven by cost?  Sell price?  Quantity?  Or, just "margin"?


> So, they operate like a Bank Robber, Confidence Man, etc. -- i.e.,
> reaping whatever gains they can *while* they can yet, all the
> time *expecting* to get bit sooner or later?

It's called self insured risk analysis. If you figure that in the
end 10% of the units you sell are going to have to be replaced,
you charge 10% more to break even. If you can cut that down to 5%,
you charge 5% more. 

But it also has to do with cost per unit for the device itself. To use
a different analagy, if a McDonald's hamburger costs them 25% of 
what you pay for it, if EVERY hamburger had to be replaced, it would cost
them 25% to 30% more. 

If four in a hundred has to be replaced, then they can charge a percent
more and break even, and so on.

> That assumes their is something inherent in each of these classes
> of suppliers that is immutable.  I am not sure the Cynic in me
> believes that.  E.g., there was a time when American quality meant
> something.  Now, americans are just as happy to produce crap as
> anyone else.  What's to say the Japanese won't follow the same
> pattern?

I'm sure they do. However the Japanese (and generally oriental) system
is to sell you the good stuff as Matsushita, and the crap out 
another door as "Rising Sun Electronics".

So as long as you walk in the Matshushita door, and talk to the Matsushita
reps, you get the "good stuff". You also pay the "good prices". :-)

The Chinese and Koreans have perfected this to an art. If you don't 
plan on it you WILL be screwed. 

> Hobart obviously has a "good brand (name)".  An asset to a firm
> but one that can quickly be lost and *slowly* recovered.  So,
> the trick (?) is to ride the name *down* the curve for as long
> as you can...  then hope it is someone else's problem.  (cf the
> US car industry)

Ok, but Hobart is a bad example. If you are not a professional cook, you
have never heard of them. All you have heard of is KA, which they have
had nothing to do with for about 15 years.

You're right about the US car companies. However they still have a good
name outside of the U.S. where their products have gone down in price
30% in the last year. Which is why they are in such bad shape. 

> And, you have to reflect that in how you approach your business.
> If you don't care if you are DBA <name> two years from now, you
> can probably make a killing screwing over customers.  That may,
> in fact, be what's hqappening currently as there are lots of
> new brands in the marketplace now -- many of which I suspect
> will not be around for very long (either by design or by lack
> of concern)

You should see it here. DVD players change brands and due to the falling
dollar, prices each week. :-)
> Yes.  But I don't want my inattention to what's happening in
> The Industry to leave me any more exposed than I need to be...

True, but as a design engineer, you should leave that to the business people.


Geoffrey S. Mendelson, Jerusalem, Israel gsm at mendelson.com  N3OWJ/4X1GM

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