From The New York Times - March 24, 2008:
March 19, 2008, 12:02 am
HD DVD Owners, Some Stores Want to Make Amends
By Eric Taub
When a line of consumer electronics is curtailed, it’s often the retailer that gets the blame for pushing that “piece of junk” in the first place.
Now that the HD DVD format has gone belly up, stranding consumers with a defunct technology, Best Buy wants to make sure that that doesn’t happen to them. To assuage the feelings of the 200,000 customers who purchased HD DVD hardware or drives from a Best Buy store, the company will announce Wednesday that it is giving each buyer a $50 gift card to spend on whatever they want.
Best Buy’s move follows a similar, but less public, step from Circuit City. Earlier this month, Circuit City began to quietly take back HD DVD players, even if used, granting store credit for the full purchase price. The only caveats: returns must be made within 90 days of purchase. And you have to ask for it or learn about the action on the store’s Web site.
The Best Buy cards, which will not expire, will be sent automatically to most customers who purchased HD DVD hardware by February 23, when Toshiba announced that it was abandoning the format. Best Buy’s list includes those who belong to their rewards program, bought extended warranties, or purchased the machine on its Web site. Others need to show proof of purchase to get their cards.
If you don’t want to keep your HD DVD machine to use as a standard DVD player, the company will even buy it back via its Web site, www.bestbuytradein.com
. In that case, customers can double-dip, getting a second gift card for the sale. (No trade-in prices have yet been established, said a company spokesman).
The HD DVD players typically sold for around $400, though they were heavily discounted before Christmas and then again in January.
“We’re very committed to moving from a transactional to a relationship space with our customers,” said Brian J. Dunn, Best Buy’s president and chief operating officer. “We don’t want to leave customers hanging.”
Promoting the fact that it is shelling out potentially $10 million could be a great public relations tactic. HD DVD buyers are likely to feel less ripped off; and customers, armed with an additional $50 (not to mention the planned federal cash incentive planned for May), may very likely purchase something a bit more expensive than they would otherwise–and do so at Best Buy rather than at a competitor’s.
Best Buy is certainly not the first electronics retailer to try this strategy. Last summer, Apple shocked early adopters when it slashed the price of the 8GB iPhone from $599 to $399 barely two months after launch. To atone, the company gave purchasers a $100 Apple Store credit.
Did Best Buy look at Apple’s strategy when formulating its move? “I would be disingenuous if I did not tell you we constantly survey what the industry is doing,” Mr. Dunn said.