Published in May 2007

When a Warranty Isn't Really a Warranty
By Gary Kayye, CTS

The commercial anomaly.

    Over the past four years, I have visited more than 320 dealers in the US and Canada. The purpose of my tour was, hopefully, to help the commercial AV dealer with the convergence in technology (i.e., AV/IT) and the changes in distribution that are on the horizon from many of the leading manufacturers. Both these changes in technology and in distribution will, forever, affect the typical profit model for most commercial AV dealers.
    And, as dealers begin to transition from a model where most of their revenue and profits come from product sales to one where most of it will come from services such as design/engineering, integration of systems and service contracts, it’s probably a good time to discuss an issue that not only is an anomaly in our market, but one that actually makes it virtually impossible in some cases to even sell a profitable service contract to an installation that needs one.
    What’s the issue/anomaly? Simply put, it’s over-bloated, confusing and just plain stupid long warranties from manufacturers.
    When was the last time you bought something that came with an actual, real five-year warranty? Or, how about even a two-year warranty? Not too often. OK, maybe a car, but if the AC breaks down in the Summer or the automatic window gets stuck half open, at least the car owner is fully capable of getting the car to the dealer for repair. A projector can’t de-install itself with a ladder, pack itself in a box, ship itself to the manufacturer and then re-hang itself in the room. And you certainly don’t want the customer messing with your install products. The fact is, there are additional costs associated with repairing installed AV products, costs that, as of now, seldom are covered in the warranty, yet represent a real burden for the dealer.
    OK, I know it’s the thought that counts and projector manufacturers must think that what they are doing by offering these long warranties is appreciated (and it makes for a great marketing push)—and I am sure it is—by the traveling presenter. Portable projectors basically are treated like virtually any other accessory to the PC and simply can be packed up and shipped in for repair at a moment’s notice. But, dealing with a projector that’s hung in the ceiling of a $50,000 boardroom that fails, costs someone, somewhere, some money.
    And, enter the service contract. Good AV Dealer tells Happy Customer that he can provide a proactive service contract on Cool Installation for a mere $200 per month. This $200 per month guarantees that, should the install break at any time, Good AV Dealer Person will come out there and fix it within 48 hours. No problem. And, Good Dealer also will go one step further and provide Happy Customer with four preventative maintenance visits a year to make sure that Cool Installation never even gets to the point of breaking down. Wow!
    But, then, Happy Customer frowns and says, “But I thought all my products came with a three- and a five-year warranty. Why do I have to pay you for repairs?” So, Good Dealer, being the good dealer that he is, explains that, although the product is under warranty, that warranty doesn’t cover the cost to de-install it, ship it and re-install it when it comes back. And, the system will be down while that is happening.
    But, Frowning Customer then says, “I thought my warranty covered anything; my car warranty does.” So now, Good Dealer has to explain the difference to Frowning Customer.
    The car repair arrangement is an agreement understood by all parties: The owner is responsible for getting the car to the shop and the shop’s only responsibility is to repair it. In AV, the dealer has to explain, and sell, repair service just to make sure they don’t lose money. They have to explain and sell this even and, especially when, warranties are valid, and it’s made even more difficult when warranties are long.
    And in the anomaly known as the commercial AV market, our products have ridiculously long warranties. Consider these comparisons: A PC, one year parts, 90 days labor; a projector, three years on both; a TV, 90 days parts and labor. A matrix switcher, three to five years—some, even a lifetime. Ever take a matrix switcher out of a rack? Who is burdened with that service? The dealer. He’s expected to warranty it and service it. OK, sure, the dealer gets that service for free, from the manufacturer, because it’s included in the warranty, but almost no one reimburses for labor and time taken for travel, and to troubleshoot, de-install, ship, re-install and re-program the system to get it up and operating.
    Realize that this is a revenue stream for the commercial AV dealer because it’s a service that is selling the customer peace of mind and an assurance that it won’t break down and, if it does, it will be fixed. But the uncovered costs of long warranties are confusing customers.
    As I said earlier, I see the value of a long warranty for traveling presenter-type products and am proud to be part of an industry that offers a warranty like no other in any technology segment—but that is also a hindrance for anything that’s installed.
    Don’t believe me? Call any of your competitors and ask what they think of these long warranties on systems products and how well it helps them to sell service contracts.
    I think manufacturers of systems products should rethink their warranty policies and either cover the real costs of what it takes a dealer to support a broken switcher, DA, projector or control system in a rack, or do what every other manufacturer in every other industry has done and shorten the warranties.
    Just my opinion. Oh, and the opinion of about 320 commercial AV dealers.



Gary Kayye, a member of Sound & Communications’ Technical Council, is principal of Kayye Consulting. He was InfoComm International’s 2003 Educator of the Year. Send comments to him at gkayye@testa.com.