UPDATE 8 August 2006 5:50 pm ET
Round Rock (TX) - Dell Computer corporate communications specialist Liem Nguyen told TG Daily this afternoon that a problem with the installation of the cooling assembly in the company's top-of-the-line enthusiast desktop system, the XPS 700, has been pegged as the culprit responsible for shipment delays, a series of which has plagued the product since its announcement late last May. Dell now expects a resolution of the problem to be implemented immediately, and customers with pending orders to receive their machines in the four- to eight-week timeframe.
Last July, this Dell XPS 700 looked ready to play 'Ghost Recon' ... albeit with the case open.
"Given competitive constraints, we can't provide a lot of product details," Nguyen told TG Daily, "but I can tell you that, as we ramped production, we discovered an issue that could, in very rare circumstances, affect system operation. It's related to the installation of the cooling assembly. Now, this issue is contributing to the current extended lead times, because even though it has a very rare chance of occurring, we are delaying shipments until we complete testing of the resolution, and every system meets our reliability standards."
Nguyen's statement effectively exonerates Intel - which had been suspected of causing supply problems with not only Core 2 Duo and Core 2 Extreme processors, but earlier Pentium D 9xx series as well - as well as Nvidia, whose nForce 590 chipset has been reported to have behavior problems with Intel's Conroe series processors, reportedly due to driver issues. Similar issues are believed to have delayed shipments of nForce 590-based motherboards for Intel processors through OEM and customer channels; Dell designs its own motherboards. Last week, a spokesperson for Nvidia told TG Daily they know of no serious engineering issues regarding the XPS 700 and Nvidia equipment which would have contributed to these delays.
If it's anything Dell doesn't need right now, it's more systems catching fire. As Nguyen described it to us this afternoon, Dell began officially shipping XPS 700 systems on 20 July, two weeks after the company unveiled the upgraded version of its system specifications, to include Core 2 Duo and Extreme processors. At least one customer did indeed receive his system on 27 July, and posted pictures of it to his blog. But along with those photographs is also a story of having ordered an XPS 700 on 2 June, and having originally been quoted a three-week lead time, meaning he would have been promised a ship date of around 23 June.
Nguyen repeated to us several times - after we asked him several times, in several ways - that the cooling assembly problem was discovered since 20 July. "Let me be very clear," he said at one point. "We discovered this issue very recently after we began shipping. I'm not going to go into details about the specific timelines. I can tell you that we started shipping in late July, we posted [that news] on our Web site, and as of July 20, we posted on our blog that we're ramping production."
Ramping, just as on a public freeway, is an accelerating process that starts slow and builds up. Nguyen told us the anomaly was discovered during this ramping period, since the 20th of last month. However, news of the identity of this anomaly was made public only today - nearly three weeks later. Regarding this interval, Nguyen said, "I think you're implying that there was a long period of time, and there definitely was not.
"Sometimes when things crop up," Nguyen explained, "you want to be very sure you understand the situation before you communicate anything. And that takes time, right? We actually are able to respond much quicker than anyone in the industry, because we have direct relationships with our suppliers and partners, and our factories are all built to not make anything until customers order it. We can react very quickly, and it still takes some time for us to assess the situation and respond accordingly. We actually discovered that issue, and we jumped on it, right away, and we're now working to implement the fix, and we'll begin fulfilling the orders as quickly as possible."
Seventeen weeks ... where has the time gone?
Customers with existing orders are being told it may take four to eight weeks to ship their systems, perhaps sooner, according to Nguyen. New orders, in the meantime, are being delayed until mid-October. However, just today, posters to Dell's Community Forum are reporting their revised shipment estimates - albeit coming from Dell's Web site, not from customer care personnel - are also being bumped out to mid-October, over eight weeks away.
Between the earliest known shipment dates customers were quoted - the fourth week of June - and the latest dates customers are now reporting - the third week of October - is a 17-week period. To the best of his knowledge, Nguyen told TG Daily, there were no technical issues whatsoever that would trigger shipment delays to XPS 700 between the time the original Pentium D-based systems were announced in late May, to the time the cooling assembly anomaly was discovered in late July.
"Irrespective of the fact that we're on extended lead times right now," remarked Nguyen, "even several weeks ago, we were going back to customers and saying, 'Look, we're really sorry about this, and we really want to thank you for your patience, and [to do so] we want to offer you the option of going ahead and receiving your XPS 700 with the current configuration and getting a gift card for your trouble (for the US)...or we could offer you the option to upgrade to the Core 2 processor when it becomes available.'"
Many customers who were quoted ship dates in mid-August accepted Dell's upgrade offer, and were told soon afterwards that their units would ship in September, according to reports from the Community Forum. Since then, many have seen their ship dates extended again to October. "We don't want to ship a product that may cause a customer a bad experience," said Nguyen. "That's not our business model. We have such high quality and reliability standards, probably the best in the industry, that we're not willing to compromise on that. So as soon as our engineers recognize that, even in the very rarest of circumstances, this could cause some instability in the system operation, we decided we're going to delay the shipment of the product to the customer until we get that resolved. Because that's what they expect, whether it's an XPS system or any system, any product from Dell."
Customers posting to the Dell Community Forum report having been given varying explanations from the company's support personnel, leading them to speculate that problems with the nForce 590 chipset may have been to blame, or more recently, that a special edition of Creative Labs' X-Fi sound card manufactured for Dell - which some customers characterize as not really an X-Fi card at all - may have contributed. Today, Nguyen told us there will be no changes to the XPS 700 systems that customers were most recently quoted, other than the fix to the cooling assembly. Customers will see the 590 chipset and the special edition X-Fi card, and Nguyen repeatedly denied that they contributed to any shipment delays.
That said, Nguyen did admit that Dell's partners will be involved in the customer feedback assessment process. "We're going to continue to work with our partners and suppliers to make improvements throughout the process," he said, "and introduce enhancements based on customer usage and feedback, so that the next-generation products have an even better customer experience than the previous generation." Later, he reiterated that Dell's engineering, marketing, and sales teams will work "with each other and our suppliers to constantly make improvements throughout the development process."
We asked Liem Nguyen what Dell would learn from this debacle that it could implement for its next generation of enthusiast systems. He responded first by saying he wouldn't characterize this situation as a debacle, but as part of everyday business. "I think as a company that ships millions of systems per year - we shipped 10 million systems last quarter - it's not unusual for Dell engineers to occasionally discover issues and pro-actively resolve them," he said. "Let's set the context appropriately. We ship millions of systems per quarter. So it isn't unusual for us to proactively discover issues and resolve them quickly. It's based on our commitment to deliver the highest quality and reliability to customers.
"It is part of our $100 million investment to improve the customer experience," Nguyen concluded, "that we're going to make improvements and enhancements through all of our processes, wherever we touch the customer."