Western Digital on Tuesday voluntarily recalled about a half month's production of Caviar hard drives, its flagship product, manufactured between August 27 and September 24.
Although the initial problem may be Western Digital's, PC manufacturers must face the ire of customers and the expense of replacing affected drives, said analysts.
"It's a problem, because customers don't blame the drive maker, they point the finger at whose name is on the system," said one PC manufacturer, who asked not to be identified.
PC makers generally applauded Western Digital for acting before too many drives made it into customer systems. Privately, the prospect of replacing potentially defective drives outraged them.
"It puts a heavy burden on [PC manufacturers], because they don't normally get reimbursed during the warranty period for the cost of sending someone out to replace the defective part," said Mark Bates, analyst with PC Data.
Large PC makers such as Compaq Computer and Dell Computer, which have established customer service organizations and the buying muscle to pass some cost onto Western Digital, are best suited to handle the problem.
"But if I'm a small mom-and-pop shop, I sold 15 systems and I'm my own service and support. That obviously puts a much heavier burden on me," said Bates.
Western Digital estimates drives will fail within 6 to 12 months, potentially stretching out the support problem and jeopardizing customer data.
Western Digital discovered the problem during stress tests that put the drives through rigorous and continual use. About ten percent of the 6.8 GB per platter drives failed during testing due to a faulty drive motor chip.
PC manufacturers are dealing with the problem in a variety of ways.
Compaq estimates the recall affects about 4,600 business PCs manufactured in Scotland and shipped to Europe and Asia in September. Faulty drives went into several thousand Presario consumer PCs as well.
Compaq recommends that users contact customer service if they suspect they have a faulty drive.
"Given the number of systems we ship during a month, this is really just a drop in the bucket," said Compaq spokesperson Hedy Baker.
Gateway would not say how many systems are affected, "but it is a very limited number of U.S. business desktop line customers," said a spokesperson.
The faulty drives are 6.8 GB and 13.6 GB models running at 5400 revolutions per minute.
Gateway recommends customers go to Western Digital's Web site and download a utility to test their hard drives. If they find a drive is faulty, they can call Gateway customer service for exchange instructions.
Micron is working with Western Digital on a solution for the few hundred drives sent out.
Dell is contacting customers directly. "Because of our direct business model, we know exactly where the bad drives are," said Dell spokesperson Tad Druart.
Dell will dispatch a service technician to replace faulty drives with a new one. "If you don't hear from us in a reasonable amount of time, you can rest assured that you don't have an affected system," said Druart.
Dell would a not give specific number of systems, other than to say it is a "couple thousand" Dimension consumer and OptiPlex business PCs.
Apple Computer got about 4,000 faulty drives, about half of which it has returned, said a Western Digital spokesperson. Many of those drives went into Apple's new PowerMac G4 systems, already in short supply because of an unrelated chip shortage problem.
Other PC manufacturers, such as Hewlett-Packard and IBM, do not use Western Digital drives and thus aren't affected by the recall.
Most of the defective drives went to PC manufacturers, but some also made it to retail and mail order shops, where Western Digital had 31 percent of sales in August, according to PC Data. Maxtor ranked number one, at 34 percent.
Western's deals could be strained
Short term, Western Digital faces serious problems resulting from the recall, said analysts. The company warned PC makers it could not immediately replace defective drives because of a shortage of parts.
Although Western Digital pulled back only 400,000, the defect affects 1.1 million units, or about one month's supply. The company must restock good parts before it can resume full production, said analysts.
"They have lost a substantial amount of a month's production, it will be replaced by their competitors and they may have trouble with their customers the next month or two," said Jim Porter, president of Disk/Trend.
Western Digital will have to go a long way to making the recall up to PC manufacturers, said Porter. "[PC makers] will have no trouble getting drives from the other drive makers. There is no shortage of drives."