Dell’s India Pricing Mantra – If They Can’t Afford It, Charge Them More

30 05 2007

I’m looking to get a new laptop ASAP as my current Acer Aspire 9412 has decided to make my life miserable by shutting the LCD down completely, and also petrifying a hinge to the extent that it’s broken off a chunk of plastic from my cover. So anyways, since I had been warned just over 3 months back by Acer that the hinges might be a problem, I took out some extra protection and extended the warranty to 3 years. All good, or so I thought. It turns out that Acer has an International Traveller’s Warranty, not an International Warranty. What that means is that you’re entitled to 3 years of service in the country you bought the laptop, and also for UPTO 90 days in any country you visit and have a problem. Now, the problem is that I wasn’t informed of the 90 days clause until today, and my 90 days just expired 10 days back. So the good news is that I have the warranty to cover the breakages, the bad news is that I have to go back to Malaysia to get it fixed.

So, I need a new laptop otherwise I have to wait until my next trip to Malaysia, which is out of the question since I haven’t a clue when that is. Having this Acer warranty experience firmly in mind, I decided not to fool around with companies like Acer, HP/Compaq, Toshiba, and focused on Dell, IBM and Apple. I’d called all three and checked that when they say “International Warranty” they mean “International Warranty”. Now, the Apple would have been my first choice, except that it costs an arm and a leg. Same with IBM. So I decided on Dell. Now, always looking for the best deal, I talked to my dad in Malaysia this morning and he said that Dell had some really good deals on the market. So, I logged onto the Dell Malaysia site and started configuring a nice Inspiron 6400 with all the bells and whistles, and most importantly a 3-year complete warranty for about RM4,900, or about Rs.58,000. A bit steep, but the bulk of the cost is in the warranty, so its worth it.

When I configured the exact same spec on Dell India, the configuration cost came to Rs.86,000 or so, a premium of almost Rs.28,000 or 48% on the Malaysian price. Here’s the spec in detail for you to try out for yourselves:

Intel(R) Core(TM)2 Duo Processor T7200 2GHz, 4MB Cache, 667 MHz FSB
Genuine Windows Vista(TM) Home Basic 32 bit (English)
3 Years CompleteCover (Asia Pacific Regional Coverage Only)
Artic Silver with Alpine White accents on a black base
15.4″ Wide Screen XGA TFT Display with Truelife(TM): 1280×800
2GB (2 X 1024MB) 667MHz Dual Channel DDR2 SDRAM
256MB NVIDIA(R) GeForce(R) Go 7300 TurboCache
120GB SATA Hard Drive
Internal 8X DVD+/-RW Combination Drive with dual layer write capabilities
McAfee(R) Security Center(TM) 8.0 – 15 Months OEM (English)
Dell(TM) Wireless 355 Bluetooth Module
Intel(R) PRO/Wireless 3945 Dual Band 802.11a/g 54Mbps Wireless Mini Card
65W AC Adapter
9-cell 85Whr Lithium Ion Primary Battery
Dell(TM) Large Backpack
A/V Cable Kit

Now I did some homework and found that if I had this machine bought in Malaysia and then shipped to me by Fedex or DHL, the duty component is only Rs.10,000. And the freight is around Rs.5,000. So for an extra Rs.15k, I can get the shipment here in an extra 3 days, and still save Rs.12K. I can even save that if I get someone to carry it with them when they come, which is my preferred choice.

Feeling extremely belligerent and eager to make someone at Dell’s life miserable, who wouldn’t feel like that after finding out about this kind of bare-faced robbery, I called Dell’s Customer Service number in Bangalore to find out if they could explain why this kind of disparity exists. So, when I asked this chap why the cost of the exact same spec in India was Rs.28k more than in Malaysia, he gives me a mini-lecture on a new-fangled pricing theory invented by Dell.

It goes like this. Apparently, the difference in price is due to the difference in purchasing power in Malaysia and India. So, I asked him, “Ummm… Is India’s more or less?”, to which the response is, “India’s is less, sir” “Yet you charge them more in India?”, I ask. He retorts, “Yes sir, that’s right.” I didn’t proceed any further as I could tell this chap was getting very testy with my questioning.

So, according to Dell, if the people in a country have a lower purchasing power, you make the products more expensive in that country. Shouldn’t things be more affordable in a country that has lower purchasing power to appeal to a wider audience??? Apparently, in the Dell’s world, in the IT industry actually, the answer is no. By this theory, a loaf of bread in India should be more expensive than in Malaysia, which it isn’t. Apparently, since everyone in the IT game benefits from this, no one bothers to reduce prices to attract a wider market. And I find that this pattern repeats itself in many markets, including automobiles, electronics, household appliances, etc. I still remember a funny story of a time when my cousin and his wife visited my folks in Malaysia. He went nuts and bought 4 or 5 electric rice cookers cause they were dirt cheap in Malaysia compared to India, something like RM40 or Rs.450 in Malaysia compared to over Rs.1,500 in India. Imagine! Rice cookers!

The real irony here is that Dell laptops sold in India are actually assembled in and shipped from Malaysia. So, Dell’s product cost is the same for both India and Malaysia, but there’s a huge difference in the retail price. I can accept a difference if there’s a difference in your production cost, but how can you justify jacking the price up if the costs are essentially the same? Ok, they may tack on 10% for import duty, 5% for freight and handling and all that for India, but how does that explain the remaining 33%? Isn’t there already a profit margin built into the system in the Malaysian price? Is the Dell brand worth so much that it justifies a 33% price premium? I don’t think any brand is worth that much, when there so much competition in the market.

No wonder Dell is trying to enhance its presence in India so aggressively. They’re milking the Indian population bone-dry and laughing all the way to the bank. It’s criminal that the Indian public is so misinformed that they’re willing to pay so much for products that are essentially over-valued. FYI, all memory manufacturers offer a lifetime warranty on RAM. In India, the retailers only give you a 2-5 year warranty. Ask your retailer next time, he’ll say its cause there’s no proper distributor in India for RAM, which is total bullshit. It’s cause they want you to buy more RAM.

So, back to my predicament. I’m getting the machine ordered in Malaysia and brought along the next time someone flies over here from there. I think I can wait a few weeks to save over Rs.25K. I’ve already converted my Acer into a quasi-desktop so I can still work at the office. The only thing is that I have to learn to live without a laptop at home for a while. Might be an interesting exercise in self-control. I might have to stock up on books to read. A lot of books.

For those of you interested in buying a Dell or any computing equipment in India, but not willing to pay Indian prices, let me know. I might be able to help you to save some money by getting the kitting done in places like Malaysia. After all, a good entrepreneur is always on the lookout for new venture opportunities. By the way, I’m extremely serious about this offer. ‘Course its limited to people I know, or people referred by people I know, or people who are really really desperate, and can show proof of desperation… whatever that is… šŸ™‚

Note – 27/6/2007: I’ve got a few requests upon people reading this post to do this import of laptops as a business. I’ve got no issues with helping people by advising them how to save some dough, but I’d rather not get into the whole legal ramifications of doing this as a volume business.

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17 responses

5 06 2007
Rahul

Hi…read your blog. really like dit coz iam also in agreement with questionable policies of certain MNC companies.
Anyway i’am also flying down to Malaysia this week and i wanted to explore some business options with you if possible. ref: ” For those of you interested in buying a Dell or any computing equipment in India, but not willing to pay Indian prices, let me know. I might be able to help you to save some money by getting the kitting done in places like Malaysia.” šŸ™‚

BTW i own a import & export company in india…so iam intrested in your views as they concur with mine.

Regards,

Rahul
send2rahul@hotmail.com

5 06 2007
Ashwin

Hi Rahul,
The simple fact of the matter is that you can pick up pretty much any IT product in Malaysia for at least 10%-20% less than in India. The added advantage is that things like RAM and stuff have lifetime warranties in Malaysia compared to India. All anyone has to do to take advantage of this is to just go to Malaysia and pick up the stuff and fly back. Indian customs lets you carry up to 2 laptops max back into the country [one as carry-on, one as checked in luggage], plus I don’t believe there’s a problem with assorted computing items. At least I never had a problem with this. The downside is that you need to fly to Malaysia to take advantage of this.

I wasn’t really serious about this as a business. To do this in a structured manner you’d have to have volume, which might violate Intel, Dell’s and pretty much every other IT companies service agreements, not to mention that you need to pay duty. One or two items is one thing. 10 to 50 is quite another. But I’m happy to help anyone who wants to get a better deal in Malaysia, since I do know the ins and outs of where and what to buy. So just give me a buzz, and I’m glad to help. As a business, I’ll pass for now

18 06 2007
Rahul

Hi Ashwin,

I’am in Malaysia right now. Thought we can talk. Pls give me a buzz on mob#016-9966761 whenver you are free.

Regds,
Rahul

26 06 2007
Arcee

Hi Ashwin
Useful and informative ! Checked out with Dell Malaysia – they can ship systems only within Malaysia; How then do u arrange the logistics of having it shipped to India – the customs duties and other formalities ?
Thanks
Arcee

27 06 2007
Ashwin

Arcee,
I had the system delivered to my dad’s office in Malaysia, and then asked a friend to bring it over with him. I also checked with DHL and Fedex on having it couriered over from there. Even then the total cost of shipment including customs and freight was only Rs.15,000, Rs. 5,000 for the freight and about Rs.10k for the duty. And its still Rs.13K cheaper than the India price, which is still shipped from Malaysia. So Dell is making the normal margin they do in Malaysia, plus an additional Rs.13K profit to ship it to India. And they use Fedex/DHL for shipment.

23 07 2007
Laptop for around 40k - TechEnclave

[…] is horrendously overpriced in India. You can read about how Dell over-charges its Indian customers here. __________________ Before you cross the street, take my hand. Life is what happens to you While […]

23 07 2007
ij

hi man,
kinda agree with you,but the reason why people overprice stuff when the buying population is less is to recover their investment..im not sure how it goes but think of it like this if you have invested say 10crores in some kinda project and need to make a profit wont you price it according to the market conditions..where there is a chance of selling say 10000 of your products u keep ur margins less because you know that the sheer volume ur gonna be selling is gonna make you a neat profit..now if u have to recover ur investment by selling say a 5000 pieces dont you think the company is obviously gonna keep a lot more as margin..look all im trying to say is that dell charges more in india because they dont sell as many as they do in malaysia and im guessing the duty and taxes are not as high as they are in india..and regarding ur statement about the cost of bread,being cheaper in india than malaysia well thats for a reason my friend bread is consumed in larger numbers here in india because it is essentially not that costly an item and there are bakeries which produce them a every corner so competition drives the price down….the cost of a laptop is equivalent to nearly 6months pay of a middle class family

but anyway u can expect the prices of dell’s products to go down once their factory comes up in tamilnadu and they dont have to pay import duty anymore(which is quite high)

and oh by the wya before u flame me as a dell employee let me tell u im no such person all i like to do is think how the companies think…

23 07 2007
Ashwin

ij, i’d agree with what you said except for the fact that the laptops that are sold in India are manufactured and shipped from Malaysia. So where’s the extra investment to justify the steep price? If they had a 100 crore facility in India, then yes you could justify the cost that way.

You could argue that the percentage of people who can afford laptops in India is less than 5% of the total population compared to maybe 40% in Malaysia. But, when the total population of Malaysia is only 27 million compared to 1.3 billion, you actually have a larger target audience in India compared to Malaysia. And the factory is in Malaysia not in India. So back to my first point, how do you justify the added cost? Fine, the overhead of running a support organization in India may be there and the duty and stuff. The duty and freight works out to about 15% of the cost, plus the cost of the rest is maybe another 5%. But you have to remember that all this is a premium on the Malaysian price which already has a margin built into that. So the extra 10-15% they get by selling to India is pure profit on top of everything else. And considering that the Indian market is not as affluent compared to Malaysia doesn’t it make sense to make the products appeal to a wider audience???

I guess its a highly subjective issue. No flaming here. I appreciate your views on this. It’s just that when the origin of the product is the same and yet the purchase is radically different, you can’t help but feel they’re being too greedy and losing out on the opportunity to grab a larger marketshare, which would also benefit consumers.

25 07 2007
ij

http://www.techtree.com/India/News/MAIT_63_Lakh_PCs_Sold_Last_Fiscal/551-82327-615.html

way less than 5% of the population man that includes both desktops and laptops and im sure desktops far outnumber laptop sales…and if u think dells pricing is outrageous try other brands like sony,hp,compaq.. none of them are any better..

11 08 2007
Arpit Jacob

I agree with ij other brands charge ridiculously more than Dell. Plus I just check for inspiron 5210 with all the latest bling the price difference is 15,000 šŸ˜¦

14 09 2007
nahush

great. even i faced the same kind of response when i called up dell. i am looking for an inspiron 1520. it costs about 3000RM . in India the same config is about 20k costlier. i have no contacts in malaysia.
how should i proceed?

9 10 2007
Gaurav

Hey Ashwin,
I am really interested in shipping a laptop from Malaysia down here but the pain being that I do not have ne acquaintance in Malaysia who can carry that laptop for me. Would you be able to make a leeway for one laptop. šŸ™‚
Please lemme know as my current Toshiba is running in flames and I dont have much option but to go for a cheaper lappy and yet not compromise on the performance…..

<>

29 11 2007
Rohit

I am in the same predicament. Laptop fell, LCD broke, hard drive conked. So am looking for a new laptop
(BTW – HP’s service centre wanted 27K to change the LCD. A reputable dealer offered to change it for 12.7K with genuine Compaq LCD)
the config i was looking for costs 30K in the US after some deals, 44K in India, and 36K in malaysia (essentially the same laptop as above, without extra warranty and Intel 5270 chipset)
Trying to get it from the US

29 11 2007
Ashwin

if you’re going to get a laptop for india get one with a warranty that covers india… I bought my dell with a 3 year complete cover warranty… when i was in KL last week, my audio died… i called dell.. gave them the machine serial number… the next morning.. the guy came and replaced my motherboard and speakers at no charge… checked my drivers (turned out the driver was corrupted) and made sure the system was working… no charge no fuss… and the best part is i can get the same service in India…

5 06 2008
BASIL M KALLUNGAL

Hi…
My cousin is coming form USA next month. He is ready to bring me a DELL laptop (Inspiron series) from there. Can I get all the features of limited warranty (USA) offering by DELL here in INDIA? I mean One year free servicing and replacement.

If not, what should I need to do to get the same?
Please advice me what will be better,
a) Buy a laptop form USA
b) Buy a laptop form INDIA

What about 3 year international warrenty. If i bought Laptop from US with 3 year international warrenty how much money can i save.???
Please advice me … thanks in advance for your reply.

23 11 2009
Nathan

Am planning to buy a laptop in US. it says one year warranty. am planning to take this laptop to India where i will be using it. Is the warranty valid in India?

13 05 2012
Vinay

Lovely brother…

Very informative and kind of liked it…
dam.. I neve knew this, even though i am in this industry from almost 5 years… “FYI, all memory manufacturers offer a lifetime warranty on RAM.”

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