Warranties on the consumer level are typically a bad idea.
Say you want to buy a new TV.
For the past few weeks you’ve been educating yourself on all things television. You’ve consulted CNet. You’ve read Consumer’s Digest. You’ve asked your nerdiest of nerd friends for their expert opinions. You know what you want, and you’re confident that it’s the best on the market.
You go to Best Buy, pick it out, and get to the register.
“Would you like to purchase a service plan? We’ll have you 100% covered for the next 5 years no matter what happens!”
This line taps into one of our most fundamental human biases, Loss Aversion—we are more greatly affected by the fear of loss than we are the joy of gain. As a result, we inflate the likelihood of something terrible happening to our possessions, even if it’s statistically rare. Basically, while we are excited to have this new TV, we are even more compelled to hold onto the security blanket that is The Warranty.
Economists will tell you that it’s not worth the investment. Companies like Best Buy pull in millions of dollars in revenue from warranties each year. How many products do you think they actually needed to replace?
So, consumers, you need not open your pockets for these sorts of things.
Business owners, on the other hand…you don’t actually want to welcome that level of risk, no matter how minuscule it may be.
Servers are point-blank the most important piece of technology for any business. Outages mean the loss of billable time, of valuable data, of the workhorse that powers the entire organization; you will bleed money for every minute that passes while your server is down.
The survival of your entire business is worth the cost of a server warranty.
News recently broke that HP will start charging for service packs and firmware updates if you don’t have an active warranty on your server.
Yes, this is unprecedented in the land of servers (firewalls and the like have had this sort of policy for quite some time), but to us it’s largely a non-issue—you need to have your server protected at all times. Period.
Of course, there are situations where organizations simply cannot afford a warranty for their server. If that’s the case, you certainly won’t see IT teams recommending HP servers to these folks.
It will be interesting to see if other vendors like Dell will follow the precedent that HP is setting.
No matter how the tide shifts, we will always recommend 3-year warranties, extensions, anything to maintain a relationship with the vendor and guarantee support for your infrastructure.
So tell that Best Buy employee that he can keep his warranty, but don’t pass up protection that could save your company from a world of heartache.