Don’t Call Us
In their own quiet way, computer companies are sending a new and jarring message to the growing ranks of home PC buyers, especially those who spend more time dialing technical support than tapping at their new keyboards.
The message: Put down that phone or pony up.
Computer manufacturers have spent the better part of the 1990s ratcheting up their customer service programs. Fighting fiercely for market share, they added toll-free lines, boosted calling hours and stretched warranties in attempts to entice technology-timid customers with promises that help would be just a phone call away.
But just as those coveted customers started arriving in droves, computer makers began beating a hasty retreat. For the first time in the industry’s history, warranties are shrinking, toll-free numbers are dwindling and several companies are charging hefty fees for certain kinds of technical support calls that used to be free.
Compaq Computer Corp., the nation’s top personal computer manufacturer, led the way last year by introducing a $35 charge for questions about software--including the Windows operating system and other programs that come pre-installed on Compaq machines. Hewlett-Packard Co., the fastest-growing PC maker, has a similar fee in place, and others, including AST Research Inc. in Irvine, say they will soon follow.
Computer manufacturers say rapid changes in the computer industry have left them no choice. Profit margins have thinned, software bundles pre-installed on PCs have grown excruciatingly complicated, and the number of first-time computer owners has mushroomed. As a result, the cost of providing technical support has soared, and companies say they have had to pull back.
“We have created a cost monster here, and now we’re starting to think about how to contain this monster,” said Matt Doyle, vice president of customer service at AST. “I don’t think there’s a company in the industry that isn’t confronting this.”
Consumers aren’t likely to be very sympathetic. Many complain that technical support has long been inadequate, plagued by long waits on hold and poorly trained technicians.
In many respects, computer makers are confronting problems of their own creation, because they have presented their complex and sometimes baffling machines as carefree appliances for everyday people.
Some computer executives own up to those shortcomings. But they are quick to say that most consumers care more about price than service, and that trying to balance the two has become increasingly difficult.
Technical support costs have doubled at AST in the last year, Doyle said, and he used some basic math to explain why. The number of calls the company fields each month has soared from 81,000 to 127,000, and the average call length has jumped from 11 minutes to 14. As a result, the company has hired 110 operators in the last year, boosting employment at its call center to 248.
Executives at other companies tell similar stories. For instance, call volumes are up 84% at International Business Machines Corp. and 30% at Compaq, and executives there say the number would have been higher if the Houston-based company hadn’t started charging a fee.
Even Apple Computer Inc., whose computers are regarded as among the easiest to use, has not been immune. Call volumes are climbing, and the Cupertino, Calif., company is considering charging fees to answer software questions, even about its own operating system, said Debbie Carlton, director of customer service.
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Most calls are still handled free of charge, and computer makers are also rolling out Internet sites and other technologies they say will give consumers greater access to free and timely help.
But industry experts say consumers should brace themselves for a steady erosion of the generous technical support policies they have come to expect. Instead, the industry is moving toward stingier policies that use fees and incentives to route customers to the cheapest possible solutions.
“You’re going to see carrot-and-stick approaches,” said Roberta Furger, who covers technical support issues for PC World magazine in San Francisco. “It’s sort of like the way banks charge you to see a teller to get you to use the ATM.”
A few significant changes are already in place. Two years ago, the industry standard was lifetime free telephone assistance for almost any computer-related question. And warranties covered labor and parts for three years.
Today, a growing number of companies charge fees for support calls that don’t lead to the discovery of a hardware defect. And most warranties have been emptied of labor coverage--often the most expensive part of repair bills--beyond one year.
So far, consumer groups have been uncharacteristically ambivalent about the trend, perhaps because previous policies were far from perfect. Nobody wants to pay a $35 fee, they say, but it might be worth it if it means consumers no longer have to wait hours on hold.
“Any time the consumer gets less service for the money, it’s a disappointment,” said Dean Gallea, manager of the computer testing lab at Consumer Reports magazine. “But I would just call it something that has to be taken as part of the package when you buy a PC.”
In making these changes, PC manufacturers have started down the same path software companies traveled about three years ago. Among software makers, lifetime free technical support policies have generally given way to 60-day grace periods, after which consumers face $30 fees or per-minute telephone charges.
Unlike the software industry, in which almost every product is unique, the hardware industry has become a competition among companies building machines that are almost identical. As the differences among computer brands faded in the early 1990s, generous service plans became popular as a means for manufacturers to differentiate their products.
But, inevitably, the competition soon turned to focus on an attribute even more dear to customers’ hearts: price. And that put the squeeze on service.
Compaq’s profit margin was in the 40% range a few years ago, but now it’s in the low 20s. And Compaq is on the top of the heap. Companies such as AST, which has lost $328 million in the last 18 months, are struggling to survive.
Meanwhile, support costs have climbed. Service-related costs now eat up about 3.5% of industry sales, compared with about 1% in the late 1980s, said Stephen Clancy, who studies hardware technical support for research firm Dataquest Inc.
“And when companies are only making nickels,” Clancy said, “they can’t add even 1% and not feel severe pain.”
The problems of price pressures were compounded by the emergence of the consumer market.
Just five years ago, corporate customers were the mainstay of the industry, and the home PC market was so small that companies such as Compaq ignored it altogether. By last year, however, the home market had exploded, and 38% of the 31 million PCs shipped in the U.S. went to home buyers, according to Dataquest.
Many of those machines went to first-time buyers, who often depend on technical support to guide them through even the most basic tasks. As a result, computer companies say more and more of the calls they handle amount to a kind of technological hand holding.
At Hewlett-Packard, only 10% of the support calls are related to product defects, said Dona Rozhin, consumer support manager. The vast majority of calls, she said, involve “user training.”
“We have one caller who has logged 173 calls,” Rozhin said. “Most of his questions are ‘How do I move this window, or how do I do that?’ Obviously, this person is eating up more than his fair share of the profits.”
Officials at AST say the most common questions their technicians field have to do with computer games. A machine might be working perfectly, one AST technical support manager said, “but people want to know why their swing is slicing to the right on computer golf.”
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The growing power and complexity of machines make matters even worse.
CD-ROM drives, sound cards and fax modems, rare in the early 1990s, are standard equipment today. And machines that once included a handful of software titles now come with 20 or more pre-installed. All of these new devices and programs raise dozens of potential new questions for home PC users, experts said.
Hardware companies say more and more of the calls they get are related to software, a trend that has intensified since software companies instituted their own fees.
If service managers see any relief in sight, it is through new technologies. AST, Apple and others have already erected sites on the Internet where consumers can find answers to common questions and submit queries via e-mail. Many companies are also hoping that improvements in diagnostic software will make it possible to fix common computer problems automatically.
And this is where the carrots and sticks come into play. AST, in order to wean customers from toll-free numbers, is thinking about offering free software, or longer warranties, to those willing to swear off toll-free lines. And for those who refuse, “we’ll probably make it somewhat punitive” through the use of fees, Doyle said.
Still, several computer executives admit that the best way to reduce the number of technical support calls has nothing to do with fees or Internet sites. Instead, it involves listening more closely to customers, writing manuals that are comprehensible and building PCs that are easier to use.
“Our customers aren’t stupid,” Rozhin of Hewlett-Packard said. “People can figure out how to use their blenders, their can openers, their VCRs and their TVs. We need to make [computers] more like an appliance.”
