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Friday, October 12, 2012

The Sum of the Parts = Zero

A little over a year ago the Wolf household acquired a new refrigerator.  It was a fairly large and fancy one from the local Sears store.

It replaced one which was failing.  The previous one was purchased from a chain store that had subsequently went out of business.

At the time of purchase we received the usual pitch about the extended warranty.

Now normally I am not a fan of these for several reasons:

1) They are expensive.

2) Why doesn't the company stand behind its product?

3) They are often a hassle to utilize.

However, this was an expensive purchase and so I thought - why not - something always breaks after the one year warranty expires.

I signed on for several years.

Sure enough almost to the day one year after the manufacturer's one warranty expired the icemaker stopped making ice.

We awoke to a small pool of water on the floor an no ice.

So we contacted the Sears repair service and scheduled a call.

Sadly this took about ten days of lead time - it would have been a serious problem had we had some sort of catastrophic failure of the freezer.

In the mean time an unordered UPS package arrived addressed to me.  I hadn't ordered anything so I opened up the box.

Inside was an I suppose brand new icemaker.


Finally the day of the repair arrived and the serviceman showed up.

After thrashing around for some time he decried that the "board" had gone bad and that there was a "slow fan" inside the device.

He quickly disassembled the freezer portion and swapped in the fan which he apparently had on his truck.

He then scheduled a second call in about ten more days to have the board swapped because it was not something he had on his truck.

He closed up the fridge and as he was about to leave I asked "do you want to take the icemaker with you?"

"No," he replied.

"I don't want it and I don't want to have to send it back," I said.

"Oh, don't worry about, we don't need it, maybe you'll need it later."

And he left me standing there with the now unneeded brand new icemaker.

Over the course of the next ten days two more boxes show up.

A "board"

and some sort of panel for holding fans.

The next guy shows up, asks for the board, pulls out the fridge, swaps in the new board and declares the fridge fixed - all in about five minutes.

"What about the old board and this other stuff?" I ask.

"Oh, we don't want it..." he replies.

And leaves us with all this "stuff."


This stuff can't be worth the cost of driving it back to the repair depot - perhaps a few dollars.

Yet the icemaker and board are significant critical parts of the fridge.  The only other major element (besides the fans) being the compressor.

So what does this say about the actual cost of the fridge.

Its probably very, very low - I'd say sevearl hundred dollars based on the "throw away" value of these items.

My guess is that when they built the fridge they also built a fixed amount of "replacement" devices like the icemaker and board.

Early in the life of these devices they just swap them willy-nilly as needed because they are freely available.  The "bad" parts are actually flawed and can never be fixed (or would be too expensive to fix) so they don't want them back.

As the device ages the good replacement parts pool will become more shrink and once they run out you'll have to buy a new fridge rather than get it fixed cause it won't be possible to swap parts until it works.

This also says the cost of labor, shipping, and the items (boards, etc.) are far outweighed by the device itself.

The repairman is merely a part swapper who substitutes one valueless part for another.

My guess is the real business model is this:

Build a product - if its faulty you don't worry so long as the average burn in time to first failure is a few days more than a year.

You then build devices.  As you discover additional design flaws you build up a supply of better spare parts.

You sell the devices to unwitting consumers.  If they buy warranties they get the better parts under warranty and their device works longer.

The poor shlubs without warranties (or only the "factory" warranty) get crappy "first run" parts and are burned.

The parts in the device are basically worth nothing - so what's the device worth if its component parts are worthless?


Now I will end up storing these things should the need to use them arise again.  So that will cost me time and money.

So actually the parts are worth less than nothing - they have negative value.

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