Dell offers refund to unhappy Chinese customers

When a group of Chinese customers complained in June that their new Dell laptops did not ship with the right processor, they vented their displeasure publicly and began plans to bring a lawsuit against the company.

The Dell customers thought they were buying laptops with Intel Core Duo T2300 processors, but ended up with machines based on the Core Duo T2300E processor instead. After discovering they had received systems with a less capable chip, a group of users threatened to bring legal action against Dell, accusing the company of false advertising.

The T2300 and T2300E processors are identical in many respects, but there are important differences. Both chips are produced using a 65-nanometer process, have 2MB of cache, run at a clock speed of 1.66GHz, use a 667MHz front-side bus, and consume up to 31 watts of power. But the T2300E doesn't support Intel's Virtualization Technology, which allows users to run multiple operating systems and applications in independent partitions.

The T2300E also costs less, priced at $209 compared to $241 for the T2300, Intel said on its Web site. Both prices are for 1,000-unit quantities, a standard method of pricing processors.

In early July, Dell apologized to the users and offered a full rebate for unsatisfied customers who returned their laptops, blaming the processor mixup on a failure to update its marketing materials. At the same time, Dell said Virtualization Technology was generally intended for workstation and server users, not laptop users.

The T2300E offers better value for users who do not need the Virtualization Technology, said Francis Kam, director of China customer sales support at Dell, in a recent post on the company's Direct2Dell blog. "Many customers have accepted our apology, some have accepted our refund offer. We are still working it out with others," Kam wrote.

While many users may not take advantage of Virtualization Technology on their PCs, the technology can be useful. Virtualization Technology allows home users to create independent partitions for different users and functions, helping to protect the computer against viruses and malware, Intel said on its Web site.

Despite Dell's efforts to placate customers, the first lawsuit over the processor mix-up was filed against the company in Shanghai on July 26. Last week, a court in Xiamen, China, agreed to hear a class-action suit brought against the company.

The processor debacle and lawsuits are not the only marketing headaches that Dell has faced in China. Most recently, a glitch on Dell's Chinese Web site inadvertently reduced the price of a PowerEdge SC430 server model from around 9,000 renminbi ($1,123) to 977 renminbi. Despite Dell's error, the company will not honor the lower price, said Sharon Zhang, a spokeswoman for Dell China.

In the past, Dell honored the lower price when pricing mistakes were made on its U.S. Web site, but the company hasn't handled similar errors in that way for a "few years," Zhang said.

"We think the scale of the pricing error would have been recognizable to many customers," Zhang said, calling the lower price a typographical error. To make amends for the mistake and any inconvenience caused to customers, Dell is offering the SC430 to customers at a 25-percent discount for up to five systems, she said.