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Warranty Coverage: Retail, OEM and Stolen Drives

You can't spend more than a few weeks on technical discussion forums without running into someone who has had The Rude Awakening [tm]. It usually goes something like this:

"I have a drive made by manufacturer 'M' that I bought from retailer 'R'. It died, and since it was within the 3-year warranty period that 'M' offers on their drives, I called them for a replacement. They told me immediately that this was an OEM drive and they could therefore not provide any warranty coverage for it. So now I am stuck, and I have to go buy a new drive even though this one was only 15 months old. I am really ticked off!"

(And that's a sanitized version. :^) ) The same thing can just as easily happen with a drive in a "PC bought from company 'C'". Welcome to the hard disk "warranty caste system". As far as warranty coverage is concerned, all drives are not always created equal, even if the drives are physically identical.

The reason that this happens is that manufacturers sell drives in two distinct ways: retail and OEM. "OEM" stands for original equipment manufacturer and refers (in this context) to a company that builds PCs. Hard drive makers package some of their drives for sale directly to the public, and some for sale in large lots to big companies that make thousands of PCs a month. Due to the very different needs of these two types of customers, the packages are very different. If you are not familiar with the difference between retail and OEM packaging, read this page before continuing.

Aside from the contents of the drive package, the other big difference between OEM and retail hard drives for some manufacturers is the warranty provided on the drive. Most drive makers with big OEM contracts sell those drives at a lower price to the OEM because they are specifically excluding warranty coverage from them. Nothing comes free in this world, including warranty support. The OEMs save money by not buying warranties on the hard disks they use in their systems. The condition of the deal is that the OEM will provide warranty coverage for the drive. It's important to understand that this is commonly done not just for hard disk drives but also for many other components used in PCs: optical drives, memory, video cards and even CPUs. If OEMs did not do this, the people who buy PCs would be paying for all these individual warranties. Instead, the PC maker provides a warranty that covers the entire system, and the buyer of the system is supposed to go to the OEM for service.

The problem is that many of these parts being packaged for OEMs with no warranty are ending up on the retail market; they are sometimes called gray market components. Buyers who do not understand that OEM parts often do not come with warranty coverage purchase them thinking they have the same coverage as retail drives bought in their local computer superstore. They think they just got the deal of the century and wonder why other people pay extra for those retail-boxed drives. These are the people who are most susceptible to The Rude Awakening [tm].

The same thing often happens with PC buyers, because of another little problem: the warranties most PC vendors provide for their systems are one or two years, while most drive warranties are three or five years. PC buyers think they can call the drive manufacturer to get the drive replaced if it fails after the PC warranty expires but before the drive warranty does, or if the PC maker goes out of business or is just a pain in the butt to deal with. Well, sometimes you can and sometimes you can't.

While similar in so many ways, the big hard disk manufacturers are very different in their policies towards OEM drive warranty coverage. Some companies intentionally provide a "no questions asked" warranty policy: if they made the drive and it is within the warranty period, the drive is covered. Others will refuse to cover any drives not specifically sold with warranty coverage included. Warranty policies can change, so you must check before making your purchase to see what the warranty policy is of the manufacturer you are selecting.

It seems strange that the hard drive makers, who are so competitive and are in a market with relatively low margins, could be so different on this issue. How can the companies that cover all their drives afford to provide warranty coverage on OEM drives when other companies don't do this? Well, there's a simple answer: they can't. Their coverage of all OEM drives means they can't cut their prices on OEM drives nearly to the extent that the companies that refuse to cover OEM drives can. This means in general that they are not cost-competitive with those companies and forego some of the big OEM business in order to have simpler warranty policies and to engender the goodwill of the end user base.

As for the companies that refuse to provide end-user warranty coverage on OEM drives: while the frustration of being surprised on this matter is understandable, I think these companies get just a bit too much flak on the subject. Is it really reasonable to expect a company to sell a drive at a lower price because no warranty is included, and then expect them still to provide warranty coverage? Most of the people who expect hard disk makers to do this don't expect it from the manufacturers of most other products. (I will say this however: it is in my opinion inexcusable that companies such as IBM do not provide any way for users to tell easily by looking at their drives whether or not they come with warranty coverage. Surely putting some clear notation on the drive would not be that difficult to do. At least, an online serial number warranty status check facility would give hard disk buyers a fighting chance. Unfortunately, the party line on this issue usually seems to be "if you want to be sure you have a warranty, buy a retail drive from an authorized dealer". That's true, but they know that users are buying their drives OEM and they should make it easier to check warranty status. Instead, they are turning a blind eye to this problem.)

OK, now you understand what the issue is. The question then becomes: how do you avoid making a mistake in this regard? Well, if you are buying a drive separately, the simplest way is to either buy a retail boxed drive, or buy a drive from one of the manufacturers that has a "no questions asked" warranty coverage policy. If you are buying a PC, the situation becomes a bit more complicated. If it's a large brand-name PC, the chances are close to 100% that the drive it contains is only covered by the PC maker's warranty--plan for this. However, if you buy a PC from a small local shop, it's possible that they will be using drives bought in small lots that do come with a full retail warranty. You have to ask. Even if buying from a big mail-order company, you can sometimes ask to have a drive from a "no questions asked" vendor substituted for a small charge, but again, verify the status of the warranty.

Another issue related to warranty coverage has to do with stolen drives. Since hard disks are so small and so expensive, large lots of drives are often the target of thieves who steal the drives and then dump them back on the market for resale. Manufacturers who lose drives this way will often refuse to honor the warranty on such drives. The only protection from this is the first step you should always take anyway: buy from a reputable dealer with a good reputation. If you are unsure about a drive you have just bought, contact the drive maker's technical support department and they will probably be able to check the drive's serial number against their database and tell you its status.

Next: Third Party Warranty Support

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