End User Bill of Rights

END-USER BILL OF RIGHTS

An End-user Bill of Rights adopted by the ASCDI for the benefit of its members and their End-users to make them aware of restrictive hardware and software policies imposed by some original equipment manufacturer (OEM’s).

The Problem

Many End-users find that when they buy a piece of equipment, use it for a couple of years and then try to sell it on the secondary market, their equipment has little to no value because of the practices and policies of certain OEM.  These OEM’s have put together a witch’s brew of roadblocks to the effective re-marketing of used high technology equipment.  These so-called road blocks challenge the concept of a free market.  By thwarting original equipment buyer’s access to the secondary market, the original buyer looses all the remaining value in its equipment while potential secondary market buyers have to pay higher prices because the door to effective competition is closed.  As high tech markets consolidated by merger and acquisition or as individual OEM’s achieve technical dominance the “secondary market” for some equipment is the OEM’s only effective competition and therein lies the rub for the high tech buyer.  That is why some OEM’s are working so very hard to thwart the secondary market.

What We See in the Market

Some of the practices we see in today’s market inhibiting the free movement of equipment include the following:

1) Selling hardware but licensing the software that runs it, even when the software is “special purpose software” and will not run on any other hardware device, causing secondary users to pay high software costs for older hardware when the original user already paid that same licensing fee for the same software to run on the same (owned) hardware.

2) Excessive recertification costs for hardware, even for machines that were under the OEM’s maintenance until they were de-installed and moved to a secondary user.

3) Withholding equipment diagnostics thereby eliminating competition for maintenance contracts.

4) Excessive parts prices; in some cases the sum of the individual parts prices may be four to five times the cost of a new machine, making it difficult for maintenance providers to compete. 

5) Requirements that parts in a machine under an OEM’s maintenance contract must be replaced when machine moves to secondary user, because some of the parts are so called “down level”.

6) The requirement that machines under an OEM’s maintenance agreement be sent “back to the plant” which can then take up to sixty days to re-certify.  

7) The requirement that re-certified machines be sold in a short time period or else the owner (in many cases a third party company) must face additional re-certification charges even if the machine is not used in the interim.  

8)  Having different sets of policies for leasing companies than for end users.  When a leasing company is the owner of equipment some OEM’s prevent lessors from moving equipment from one location to the next without paying hefty re-certification and software licensing charges even when ownership has not changed.     

The Remedy

The ASCDI believes that fair and reasonable steps can be taken to help high technology equipment purchasers get the most out of their equipment purchase while fostering the growth of secondary markets and promoting free and open competition without harm to the OEM’s of the world.  The ASCDI has developed this “End-users’ Bill of Rights” which it feels every End-user should know and understand and then demand adherence from every OEM before the high technology equipment purchase.  It is only when a User Bill of Rights is adopted or adhered to by all OEM’s that technology markets will be once again truly free.  

WHAT EVERY USER SHOULD DEMAND BEFORE BUYING

The ASCDI “User Bill of Rights”

1) Special purpose software furnished by an OEM which is integral to the operation of a machine should be granted an “unlimited license to use for the life of the equipment”. Not to be copied or re-sold but to be used by the owner and each subsequent owner of the machine for the purpose that the machine was originally intended for nominal transfer fees excepted. The ASCDI believes that any situation where a machine is sold but the software may only be licensed for other than a nominal transfer fee is inherently anti-competitive because it restricts the free movement of equipment.  

2) Re-certification cost should be spelled out up front when equipment is purchased and not after the fact. And End-users should be aware that a $50,000 re-certification cost might not look like much now when the new equipment purchase price is $1,000,000 but it might be the entire value four years down the road when the equipment is about to be resold.

3) The conditions under which a new software license is necessary should be spelled out up front and prices disclosed and then made part of the of the purchase contract. End-users should not settle for the illusionary “we have a recertification program for used equipment” without getting all the details and costs in writing.

4) All diagnostic software necessary to maintain a machine in accordance with OEM’s standards should be included with the machine and should be transferable to a new owner when a machine is sold.  This will allow a user to choose a maintenance provider under competitive circumstances. 

5) If a machine is under the OEM’s maintenance it should automatically qualify to be field re-certified without having to be sent “back to the plant” or without having any of its parts replaced because they are so called “down level” parts.  

6) Leasing companies should have the same ownership rights as users allowing them to move equipment they own and software they license that is under OEM maintenance without having to pay re-certification charges.

7) All OEM’s should adopt a “sealing” policy similar to the one that IBM has, which allows for the free and unrestricted movement of equipment that is under continuous OEM’s maintenance.

8) OEM’s should accept for maintenance, upon reasonable prices and terms, any machine that can satisfactorily run OEM diagnostic tests and has not been physically altered and contains manufacturer parts only.

Conclusion

We realize that the education process will be slow and that it will take time for our End-users to make their demands felt with hardware OEM’s. But if we do not begin to educate our End-users on how these policies are costing the user community millions and the industry billions there will be a lot fewer independent computer dealers in the next few years. Moreover these restrictive policies are anti-competitive and are the antithesis of free global markets which many of these major OEM’s say they stand for. Perhaps if the cry of the large corporate users (our End-users) gets loud enough we can begin to restore equilibrium to a now chaotic market.

End User Bill of Rights 09-20-04