Monitor warranty costs ramped up
Overestimating warranty accruals could provide a 30 per cent safety margin
Monitor vendors are overestimating their future warranty service costs by nearly 30 per cent, according to an EMEA monitor warranty report by analyst Meko.
Azhar Mohd-Hashim, warranty services manager at Meko, said monitor vendors in EMEA will make warranty accruals of about $300m (£185m) this year, versus eventual actual service costs of $230m. This gives them a safety margin of 30 per cent, which companies could put to better use in the current conditions.
“They will get the money back,” Mohd-Hashim said. “But it is both good and bad – all those numbers are actually audited by the financial side, so you have to justify it.”
Vendors that overestimated their warranty accruals could find themselves in trouble if it was suspected that they were attempting to disguise their actual level of profit by doing so, Mohd-Hashim noted.
Meko’s Desktop Monitor Warranty Report examined warranty service and pricing across Europe, including historical data going back to 1995. It also revealed that the cost of mainstream service delivery has gone down by 18 per cent to 21 per cent since the last report in 2007.
However, vendors are seeking to cut their costs further, according to Mohd-Hashim.
“I can say that vendors are looking to provide services more cost effectively,” he said. “For example, rather than a courier coming around to the end user and picking up a defective product, they are looking at having the end users dropping the product off at a post office or collection depot.”
Some vendors only have one service centre for all of Europe, but arguably sometimes better service could be offered on a country-by-country basis. Three-year warranties are pretty much standard, he said.