Seagate ups drive warranties to five years

Longer warranty for internal drives shipped through distributors and retailers should pressure rivals, analyst says.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
3 min read
Disk drive maker Seagate Technology announced on Monday a longer, five-year warranty on certain products, a move that could prompt an industrywide change in warranty policy.

Seagate said its internal computer hard drives shipped through distributors and retailers now carry a five-year warranty, up from its former one-year coverage.

Other major disk drive makers have one-year warranties on drives shipped through distributors such as Bell Microproducts or retailers like CompUSA, said Dave Reinsel, an analyst at researcher IDC. About two years ago, drive maker Maxtor led a charge from three-year warranties to one-year warranties, and Seagate's shift will likely force rivals to adopt similar policies, he said.

"I think everyone has to follow suit," he said.

A representative from Maxtor did not immediately return a call for comment.

A spokesman for drive maker Western Digital said the company was analyzing Seagate's new warranty policy. Western Digital's warranty policy is based partly on the need to remain competitive, he said.

For now, Western Digital has one-year warranties for standard drive products sold through distributors. The company offers a three-year warranty for special edition drives, and a five-year warranty on Raptor drives used in server computers and data storage devices. In retail sales, most kinds of Western Digital drives have a one-year warranty, although Raptor products have a five-year warranty. Some extended warranty options are available. Warranties may vary in the European Union, according to the company's Web site.

Seagate said its new warranty applies retroactively to hard drives shipped through its distribution and retail channels worldwide since June 1.

Distributors and retailers are important customers for drive makers. Nearly half of the desktop PC-class drives shipped flow through these venues, according to IDC. Distributors, in turn, sell drives to smaller companies that put together off-brand, or "white box" computer systems.

Disk drive makers also sell their products to so-called original equipment manufacturers, or OEMs, such as Dell and Hewlett-Packard.

Seagate and Maxtor have been struggling. Both posted net losses for the recent quarter, and both have announced job cuts.

Seagate claims that "reliability and quality leadership" are synonymous with its name. The company over the years has invested in so-called "six-sigma" processes intended to improve design and quality. It has also upgraded manufacturing lines to increase the level of robotics for greater speed and precision.

"One of Seagate's greatest strengths is that we can leverage our operational excellence to bring the newest technology and products to market first--while always ensuring the highest product quality," Seagate CEO Bill Watkins said in a statement.

Disk drive quality is already fairly high. IDC's Reinsel said annual return rates are less than 1 percent for the industry.

Even so, he said, the new policy should lead to higher costs for Seagate, in part through the need to maintain higher inventory levels for replacements. Still, Seagate's rivals could make out worse. "If I'm Seagate," Reinsel said, and I think that my drives will beat competitors on reliability, "it may cost me money, but it's going to cost my competitors more."