20 September 2010

Intel and the price for quality

This item from Engadget caught my interest. As the article notes, differential charging for varying levels of quality is an idea that has been around for some time. Varian and Shapiro, in their book "Information Rules" cite a similar example around IBM printers.

What is different and interesting to me about this case is that Intel is stepping around the value chain in trying to directly monetize quality. In other words, in the case of the IBM printer, it was the integrator (IBM) who had the direct relationship with the customer that was doing the quality differentiation. Here, Intel does not have the direct customer relationship (Dell, HP, etc. hold that honor), yet they are trying to directly monetize the quality. By directly selling to consumers, they are bypassing the relationship that Dell and HP have built.

Intel has been trying to build brand awareness among consumers with their "Intel Inside" campaign for some time. This is a significant step further in that direction. I wonder what liability Intel would assume for customer support should this upgrade cause a system to fail?

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