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Tiny Computers' collapse strands customers

PC World

By Tom Mainelli, PCWorld.com

(IDG) -- Edwin Champion has a Tiny problem: Despite a three-year extended warranty, he can't get Tiny Computers to service a faulty PC he bought from a Tiny retail store in Tacoma, Washington, in May 2001.

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When the British company pulled out of the United States last August, it also withdrew plans to honor its on-site service agreements. In the meantime, another U.K.-based company has purchased Tiny, but its executives say U.S. customer service isn't part of the deal.

The situation leaves Champion, now a resident of Silver Spring, Maryland, fuming. "I feel frustrated and betrayed," he says. "I recommended Tiny computers to family and friends, and now I feel like a fool."

Frustration Abounds

Champion is far from the only frustrated customer. In Washington state, where Tiny opened several stores before leaving the United States, 85 Tiny customers have asked the attorney general for help.

Unfortunately, there's not much state officials can do.

"There really isn't much to tell them," says Dave Huey, assistant attorney general for Washington's consumer protection division. "We're telling people that we haven't been able to locate any people or assets in this country. Most legal actions require at least one of these two," he says.

Huey says his office has tried to contact Tiny's registered agent in the United States, a legal necessity for foreign companies doing business here. However, that company -- a law firm -- has yet to reply, and is probably no longer working for Tiny, he says. So, it appears, nobody is accountable here.

"They have disappeared from the face of the U.S., and we haven't figured out who to talk to over there," Huey says.

No Help From Time

Time Group is purchasing Tiny and its assets in the United Kingdom, and it plans to honor the warranties of Tiny customers there. However, it has no plans to honor the warranties of U.S. customers, according to a company executive.

"The operation in the U.S. went into administration [bankruptcy] a couple of months before the U.K. operation," says Colin Middlemiss, Time communications director. Tiny USA was a separate division and was not part of the purchase, he says.

"We have no business operation or experience with the U.S. market; it's something that we could not take on," he says.

Time will continue to maintain the U.S. Tiny Web site, where customers can find some information, including an e-mail address for customer service.

"We are sympathetic to U.S. customers; we hope this will provide some help," Middlemiss adds.

Tiny's Fall

After establishing the company as a PC player in the United Kingdom, Tiny executives set their sights on U.S. customers. Tiny first launched a Web site for online sales, and opened its first retail store in Seattle in 1998. By June 2000 the company had 36 stores in California, Washington, and Oregon, and was planning to have 250 by 2002. Its goal: to displace Gateway as the most consumer-friendly place to buy a PC.

"We saw a gap in the U.S. marketplace for consumers looking for an easy way to buy a PC," says Cate Curran, Tiny's vice president in charge of U.S. operations, in a June 2000 PC World article discussing the company's plans. PC World went on to review several Tiny systems.

However, the company's elaborate plans to invade the United States were short-lived. When the tech industry slumped in 2001, Tiny was apparently caught off guard. Time's Middlemiss says the company failed to react to the change.

"Tiny failed to see that the market had slowed down, and it continued to grow and expand without diversifying into other areas or cutting overheads," he says.

To survive the slump, Time executives restructured the company and cut overhead. The result: Time isn't doing the same volume as Tiny, but its margins are higher, and it can survive -- and even buy its rival. The Tiny name will also survive, Middlemiss says. Time plans to market both the Time and Tiny brands.

Dishonest Vendor?

The Tiny name may live on, but that's little solace to Champion, who is experiencing numerous problems with his PC and bundled peripherals. The network card isn't installed correctly, the game pad and microphone do not work, the scanner is error-prone, the drivers for the digital camera were incorrect, the graphics card is faulty, and lately the computer has taken to freezing for no reason, he says.

He wonders aloud why he paid an extra $300 for an extended warranty.

"I was promised on-site repairs of my system if there were any problems," he says. Now, not only is he unable to get on-site service, but he can't even seem to elicit a helpful e-mail response, he says. Most say "reboot your computer," he says.

Champion says he has contemplated opening his PC to try to fix some of the problems on his own. But he says he's afraid if he opens the case, he'll nullify the warranty -- letting Tiny off the hook.

"Yes, even though Tiny has not kept its side, I'm still holding on to mine," he says. "In the end, the honest guy is working on a broken computer waiting for the dishonest guy to keep his promise."

Assistant Attorney General Huey says most of the complaints involve extended warranties. People often cannot believe a supposedly legitimate company -- to which they paid money for future services -- could just disappear.

"The first question they ask is 'Can they do that?' And it's always after it's been done," he says. His response: "We have laws against it -- but that doesn't stop people from doing it."

Still, he recommends frustrated Tiny users report their stories to their state attorney's office. At the very least, it's a good place to start the process, he says.

"You just have to understand we're not magicians -- we'll do what we can," he says.


 
 
 
 


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