Secret docs reveal Dell knew PCs were faulty

Dell is in court accused of knowingly selling thousands of computers which it knew were likely to be faulty.

Documents seen by Ashlee Vance at the New York Times show Dell staff were aware that problems with capacitors from Nichicon were likely to hit at least 11.8 million OptiPlex machines shipped to customers between May 2003 and July 2005.

An internal review by Dell itself found that 97 per cent of the machines were likely to fail over three years. The problems got worse when Dell managed to replace the faulty motherboards with other faulty ones.

Staff were told not to warn customers proactively and to "emphasize the uncertainty", the NYT reports.

Complaints from the University of Texas were fended off by Dell staff blaming the university for overloading the machines with difficult maths problems. Even the law firm currently defending Dell got burned when the direct seller refused to fix 1,000 computers bought by the lawyers.

Dell, once the darling of the industry, has tried to put the problems behind it - settling this month with the SEC, and paying out $300m in 2005 for problems with the OptiPlex desktops at the centre of the current lawsuit.

Dell's model of tightly controlled inventory and Japanese "just-in-time" logistics was meant to provide a way to make a profit from turning out hardware and reduce the impact of this kind of failure.

The company lost its way in reacting to consumer demand and watched most of the rest of the industry mimic its supply chain.

Dell must now deal with a consumer lawsuit without sparking a larger class action case, or action from disappointed shareholders. ®