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Web sales create export, warranty woes

The Internet is dissolving international boundaries, and, as Compaq learned, it's becoming a headache for PC manufacturers and dealers.

The Web is dissolving international boundaries, and it's becoming a headache for PC manufacturers and dealers.

In their collective zeal to increase sales of computers over the Web, computer makers and dealers are running into conflicts with long-established commercial policies, nitty-gritty details such as electric-voltage variations in different countries, and potentially problems with trade regulations, regarding overseas sales.

Because of sales via the Web, consumers in Dubai or Kiribati can now buy discounted computers and peripherals from U.S. companies directly or through dealers. The problem is that the companies aren't necessarily prepared to handle the situation.

Compaq Computer officials, for instance, acknowledged last week that ad-hoc exports of its Presario computers through online resellers earlier this year conflicted with its warranty policies, and were a factor in Compaq's decision to temporarily suspend Presario sales across the Web. Compaq has reinstated online Presario sales, but it is requiring dealers to warn customers about the warranty issues. Some retailers, however, say that this does not cure the problems.

"It is totally impractical. There are no global boundaries anymore," said Darrell Peck, chief executive of Cyberian Outpost, a large Compaq dealer. "The Web did away with that."

"This is going to be more and more of an issue. I don't think that anyone is ready for cross-border sales," said Steven Baker, an analyst at PC Data. "It's not just the computer industry."

In Compaq's case, overseas customers earlier in the year had been buying computers from U.S. Internet resellers, and later discovering that Compaq's warranty only applies when the equipment gets sold into the same geographic region, according to Leslie Adams, Compaq's director of marketing for consumer PCs in North America. Like many electronics manufacturers, Compaq limits its warranty by geography. European customers can get warranties, but only if they buy products authorized for sale in that region.

"Some Internet resellers were trying to grow their business through exports," she said. "People were complaining that they thought they were buying products with warranties.

"What we want to avoid here is unhappy customers who contact Compaq after the fact," she added.

Compaq suspended dealers from selling Presarios over the Internet in February. The company last week lifted the ban but also slapped restrictions on its dealers. Among the new regulations: Dealers have to inform consumers about Compaq's warranty policies.

Power issues
Companies divide their customer base into geographic regions for administrative purposes, but also for technical and marketing reasons, said PC Data's Baker. Electric voltage varies between nations and the quality of power can vary. Some nations are subject to a far greater number of brownouts. Computers not ready for this contingency could suffer damage.

Legal problems could occur as well. A nation may have health and safety regulations when it comes to PC monitors. These sales are also subject to export regulations.

"From the manufacturer's standpoint, they want to control who gets what, but there are some customer-service issues as well," Baker said. Similar problems have come up in the battery industry, among others, he said.

Cyberian's Peck, however, believes that companies have a long way to go in adjusting their rules. Overseas customers, especially those living in markets with more expensive electronics equipment, will inevitably come to U.S. sites offering low prices. Many will run into problems.

Some manufacturers are already dealing with the situation by accepting cross-border warranties on an case-by-case basis, said Peck, and some peripheral companies are even considering revamping warranty terms.

"The vendors have to realize that it's a global economy," he said.