(Product) Red Responds To Dell Pricing Controversy

Responding to a Dell pricing controversy that boiled over last week, a spokesperson for (Product) Red, an initiative whereby company color some of their products red and donate a portion of the profits to an AIDS fighting charity, left a comment on our blog to try dispel some of the confusion they felt had arisen over the issue. At stake was a computer Dell sells for $1,299 that you can get in the (Product) Red version for $1,599, with $80 of it going to the Global Fund. What about the other $220, asked gizmo blog Engadget? Well, we could tell them that it’s because you’re getting Windows Vista Ultimate and Microsoft Office and Student 2007 instead of Windows XP and Microsoft Works, but we’ll let the comment from Bich Ngoc Cao of (Product) Red do the talking…

We’ve been following all of the discussion that our recent partnership announcement has created. While most of it has been very positive, it seems there is a lot of confusion around the pricing of the (PRODUCT) RED offering. Above and beyond the entry level XPS ONE, the (PRODUCT) RED version offers Windows Vista Ultimate and Microsoft Home Office and Student, a $300 value of upgrades when purchasing through DELL.

We’re aware that not everyone will need or want these upgrades. (RED) is not about buying something for charity – it is about doing good while you are buying something you need. For those consumers who are in the market for a DELL XPS ONE with WINDOWS VISTA ULTIMATE, the (PRODUCT) RED option gives them the opportunity to get all of these features AND trigger an $80 contribution to the Global Fund to help fight AIDS in Africa, at no additional cost. For those consumers who are not in the market for this type of full-featured experience, they have the option to purchase another DELL PC that meets their needs.

(RED) is just one tool for people to do good – it doesn’t replace the need or desire for charity donations, volunteering or getting involved in other ways. It is simply a choice when you’re out shopping for something you need.

Most of the discussion demonstrates an enthusiasm for these partnerships and a desire to have more (PRODUCT) RED PCs available at a broader price range. We are also very excited about the potential of the DELL & MICROSOFT partnerships – which are just starting with these products. These new partnerships will help increase overall awareness of the AIDS epidemic in Africa and increase contributions to buy lifesaving ARV treatment for those who cannot afford it.

If you have any questions, feel free to contact (RED) at info@joinred.com.

Thank you,
bn
(RED)

It seems the internets are better at getting angry than doing math. Would donating $300 directly to the Global Fund do more good? Absolutely, but not everyone shopping for a Dell is going to do that, while they might, however, check off a different box at checkout and opt for the (Product) Red computer. Last time we checked, $57 million donated to fighting AIDS, tuberculosis and malaria was a good thing.

PREVIOUSLY: Is Dell’s Pricey (Project) Red PC A Ripoff?

Comments

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  1. darkclawsofchaos says:

    so what is the problem then, they are just over charging for additional software, but they didn’t really do any false advertising, misledading, yes, lying, maybe not so

  2. @darkclawsofchaos: They aren’t allowing people with less to spend to contribute.

  3. ShadowFalls says:

    They make it sound like getting Windows Vista is worth paying more for… Ofcourse money spent on fighting AIDS more often mostly ends up in the hands of pharmaceutical companies.

    Only three ways to kill AIDS, a cure, a vaccine, or keeping those who have it in quarantine.

    Who needs awareness? They know what AIDS is, they just choose to not care and continue to spread it.

  4. ShortBus says:

    (Red)tarded

    (With props to tshirthell.com, though it seems they pulled down their long rant about this moronic organization)

  5. cheviot says:

    The problem is simple. The whole idea of Project Red is for people to elect to contribute money to the cause without having to spend more (I.E. The seller takes the hit.)

    In this case, not only is Dell passing the cost of the donation on to the consumer, they’re using it as an excuse to bundle in other software on which they make a profit.

    Remember, While $300 is close to the retail price difference between XP and Works bundle and Ultimate & Home and Student bundle, the wholesale cost is much lower.

    Dell seems to be using the Product Red situation to make an increased profit, something that’s just downright despicable if true.

  6. Buran says:

    Wh@cheviot: Exactly. Why do they charge more when Apple doesn’t, and charges the same price for the red ipods it sells and donates the money itself?

  7. SilverHammer says:

    @Buran

    Came here to say that. Shame on Dell and everyone involved. The spirit of the campaign is to take a hit, as Cheviot says, and make that donation themselves. Instead, they force the consumer to “upgrade” if they want to donate and buy the pc, and profit off of it.

  8. Caption:

    “Hey, look – we’re cool too! Bono hangs out with us _and_ Steve Jobs!”

    On topic, Apple charged $30.00 more the for iPod Nano (Red). Of course, you got the cachet that came with a nice, exclusive color, and Apple gave all of that money to the effort.

  9. coren says:

    @thnkwhatyouthnk: What, people with less money can’t just donate directly to Red?

  10. manok says:

    charities are about making money. Non profit my ass.

  11. Joafu says:

    There’s AIDS in Africa!?! Alert Bill Gates. He already knows? So does the rest of the world? Oh.

    Red has been going on for a while, has anyone heard any reports of the number of people treated or any other report of the program in work? There’s a difference between getting pumped to do something and actually putting the ‘nose to the grindstone’ and just doing it.

  12. Mr. Gunn says:

    I still want to know what’s happening to the extra $(220) dollars. As long as none of it goes to their (marketing) department, I’m (cool) with it.

  13. balthisar says:

    So… I don’t see the problem. Unless I were looking to say, “companies are bad.” This is win-win.

  14. craiggers says:

    @CaliforniaCajun: Apple didn’t charge extra. I own the 8gb red nano…it cost $199 just like the other 8gb nanos being sold at the time.

  15. Falconfire says:

    @balthisar: the problem is that they are charging the retail for the software… when they get it for MUCH much cheaper. The software exists just so they can make a bigger profit, unlike say Apple who sells the iPod nano for the same price and donates what would have been their profit instead.

  16. SOhp101 says:

    Congrats everyone, for finally realizing that product RED is a shill to take your money. If you’ve ever looked at their actual donation percentage to charity, it’s pretty sad, but the person in charge did admit that they are not a non-profit.

  17. randalotto says:

    Here’s an idea:

    Buy the base model, and then donate some money on your own.

    So far as I can tell, it isn’t about getting the company to donate. Nearly every RED product I’ve seen has been priced higher. The consumer is typically the one actually donating, just indirectly and inefficiently.

  18. mycroft2000 says:

    I started laughing at the part about “needing” Windows Vista.

  19. EmperorOfCanada says:

    Whats the big deal? For an average joe uneducated consumer (by that I mean uneducated on the product they are purchasing, not uneducated in general) they get to purchase themselves a new toy, maybe make a little difference in the world and feel better about themselves.

    So the company made a profit, big deal, thats the point of running a business.

  20. Michael Belisle says:

    @Falconfire: They’re not charging retail.

    When they offer it as an option, Dell charges $299 to upgrade to Office Home and Student ($149) and Vista Ultimate ($150). Try playing with the XPS 420: [configure.us.dell.com] .

    Granted there’s a missing dollar, which causes a child in Africa to cry every time someone buys an XPS (Red).

  21. Michael Belisle says:

    @belisle: I mean they are charging retail, but retail is their standard charge…

  22. Falconfire says:

    @belisle: 299 is the RETAIL price for that software, its NOT the WHOLESALE price for it, its what the suggested price from Microsoft is.

    Vista U + Home and Student if you where to get the WHOLESALE price from Microsoft is roughly 40 dollars. As a school we can get the two for less than 100 a license

    So Dell is making 179 dollars pure profit without counting hardware, where Dell makes a huge profit based on their manufacturing model of getting the cheapest parts possible wholesale. This is in part why no two models from Dell could have the same hard drives, optical drives, or in the past even motherboard manufacturer.

  23. varco says:

    Here is the deal–they have one product, which they sell for $1599, which includes an $80 donation to charity. They also sell a product for $1299 which has different features, but it doesn’t include any donation to charity. It is exactly the same as Apple carrying a $199 ipod nano with a donation to charity, but a $149 ipod nano (with different features) with no donation to charity.

    Some part of the outcry has to be because Dell and Microsoft are involved. If you are relying on a major electronics purchase to give to charity and you don’t believe companies should charge (retail, not what you “think” they should charge) for software, then you are both a scoundrel and an idiot.

  24. Falconfire says:

    @belisle: The issue with this is the fact the concept of (red) is they are supposed to be donating the profit to the program. The way they set up the package, they are going to be making more profit from someone buying (red) and having to get the upgraded software vs someone who just bought the normal hardware.

    Compare this to other retailers like the aformentions Apple, whos (red) offerings cost exactly the same as their normal model, and you can see where people are pissed at what Dell is trying to pull.

  25. Falconfire says:

    @varco: But its not the same, because Apple charges the EXACT same price for their offerings, and eat the profits like they are supposed to based on the concept of (red)

  26. varco says:

    @Falconfire: None of the companies donates all of their profit on the product to charity. None. Apple never donated all of the profit. If you go to their website, they say that they donate part of the profit.

  27. varco says:

    @Falconfire: Apple uses product red to sell a premium product (at no additional markup outside of the cost of the product). So does Dell.

  28. cde says:

    @varco:
    @Falconfire:
    @CaliforniaCajun:

    [store.apple.com]

    The 149 dollar ipod nano is the 4gb model. The 199 dollar ipod nano (red) is a 8gb model. There are five different colored !(red) ipod nano 8gbs for the same price as the (red) one. So stfukthxplz.

  29. cde says:

    Oh, and the shuffles are all 80 dollars, red or not.

  30. varco says:

    The 149 dollar ipod nano is the 4gb model. The 199 dollar ipod nano (red) is a 8gb model. There are five different colored !(red) ipod nano 8gbs for the same price as the (red) one.

    That’s right. You pay more, you get more, and you give some to charity. Sounds almost like the Dell program.

    So stfukthxplz.

    Thank you, CDE, for supporting free speech and freedom from grammar.

  31. cde says:

    @varco: //That’s right. You pay more, you get more, and you give some to charity. Sounds almost like the Dell program//
    Yet the one model shuffle is the same for (red) and !(red)

    //Thank you, CDE, for supporting free speech and freedom from grammar.//
    No, thank you for keeping the internet free of humor. Now gtfo my internets…

  32. varco says:

    The whole red thing is pretty stupid. If you want to buy consumer electronics, buy consumer electronics. If you want to give to a charity, give to a charity. Don’t try to confuse this marketing by Dell and by Apple (or your desire for more gadgets) as any sort of philanthropy.

    @cde: Seriously, little dude, try to keep it civil.

  33. @varco: Maybe you should try to re-read his original post. You obviously either don’t know what !(red) means, or you chose to ignore the !. You’re the one who is in error.

    so I’m with him. stfukthxplzbai.

  34. mike says:

    I’m always weary of programs like product(RED). It doesn’t really seem the companies really donate anything; they increase the price of a product and then make a donation out of the increase.

    Also, it keeps people from claiming the “donation” in their taxes, and allows the corporations to basically claim the contribution and get a tax break.

    This is why I don’t buy the “pink” labeled anything for breast cancer.

    By the by, has anyone else noticed that companies are starting to take advantage of people who feel guilty about something, simply to make more money? Examples include being “green”, product(RED), breast cancer.

  35. Falconfire says:

    @varco: Your obviously completely oblivious to what Dells doing, which I guess is why Dell is able to get away with using software to mark something up as opposed to hardware.

    Apple doesnt mark up its (red) iPod, its the same if you bought it (red) or normally. Same hardware, differet color and the percentage of their profits goes to the (red) fund.

    Dell DOES mark up their computer for (red) they add a extremely cheap software package on their end, for the retail price on the consumer end, which depending on who you talk to could be anywhere from a 100 to 250 dollar markup from what it would in reality cost Dell, netting them a decent profit even AFTER they donate to the charity.

    Yes your getting a little bit more, but the whole point of the program is for Dell to sell the computer sans software package, and eat the profits they would normally make of it by donating to the fund. Instead they are making MORE profit than they normally would, since the general public would never purchase Vista Ultimate since they dont really need what it offers over the stock Vista install on the machine.

    Now the Student and Teacher edition IS a decent package for Office, and I would say anyone who could get it, should since most people have little use for anything beyond Excel and Word these days and if they did would already have the package they need at home. But the kicker with that one is when you normally buy Student and Teacher, your getting THREE licenses to use the software on THREE different machines. So your really paying for 2 extra licenses of the software that you probably have little use for, and cant give to other people.

  36. rbb says:

    Sorry, I’ll make my own donations to the groups I choose and get the tax deduction at the same time.

    And, I will certainly NEVER give to any program endorsed by bono. He’s great at telling governments and people how to spend their money. But when it comes to U2, he moves the operation from Ireland to Holland to avoid taxes… In other words, he’s great at spending other peoples’ money.

  37. zero_o says:

    Also if all of these companies donate the marketing dollars (for just the product Red campaign) towards the global fund instead of marketing then I believe that they would end up doing more good. see wikipedia “Product Red”

  38. ExtraCelestial says:

    @coren:
    I think you’re missing the point of Product (Red). Sure you can donate. Anyone can donate, but it’s generally something you do in the privacy of your own home. Product (Red) is not only getting the donations, but they’re also raising awareness and bringing the effort mainstream. Product (Red) products have the opportunity to become Livestrong bracelet-esque where having a red iPod or red Chuck Taylors is the “cool” thing to do. You can show your support for the cause while going about your normal activities and get people involved that normally wouldn’t contribute because it’s virtually effortless.

    @sohmc:
    That’s why everyone’s so angry about Dell. Other Product(Red) partners DONT charge anything extra. You simply get the same product in a different color and the company absorbs the hit for the donation.

    @varco:
    Amazing. Are your ancestors ostriches?? Even after numerous patient explanations you still bury your head in the sand and refuse to read.

  39. TCameron says:

    (Red) is the commodification of AIDS. Plain and simple.

  40. @cde: I stand corrected. Kudos to Apple for NOT marking up their (red) iPod and still managing to give away money.

    I guess Del”s craptacularly low margins make it necessary to mark up their (red) items far beyond what they actually give to charity.

  41. Doc Benway says:

    @thnkwhatyouthnk: Here is an idea send them a check for $25 and set your screen background red.

    @ShadowFalls: And what facist wing of consumerist readers did you come from?

    The crucial thing you all seem to be missing “IF YOU DON’T LIKE THE PRODUCT DON’T BUY IT”.

  42. riverstyxxx says:

    1. Please tell me that’s not Bono. I’ll shit a brick if it is.

    2. Doesn’t “Red” care that the euros found a 95% success cure for HIV last year, or is this just about PR?

    3. Dell sucks.

    4. If I want to do something good for charity, I’ll make a direct donation, tyvm.

    5. Not trying to sound mean, but I honestly Don’t care about AIDS in Africa. I care about AIDS in america, and poverty in america, and fighting crime in america, and the problem with meth in america. The biggest problem Africa has is the fact that the country is piss poor. And those nigerians with their internet cafes aren’t making things any easier.

    6. Price fixing “Charities” have always been a scam to companies like Wal-Mart and Mcdonalds.

  43. shadow735 says:

    $300 in added value for Vista, thats a load of crap, Vista is one of the worst OS ever, I returned a dell computer because it had vista and I have a week of talking three hours a day to tech support(which was great tech support) that prompted that, then I spend $400 bucks more to get the XPS 710 that had XP now I have no problems at all.
    All in all Dell got about 3k from me for my computer and monitor. I love my computer but they need to provide XP for those people that want a stable OS.

  44. shadow735 says:

    VISTA SUCKS, its not worth $300 bucks wait two years and maybe it will be stable.

  45. riverstyxxx says:

    @shadow735:

    Or no OS and I’ll install Ubuntu for free :)

  46. LVP says:

    Although he does put his time into causes I have never heard of Bono giving any of his own money. Therefore I will not give him mine.

  47. fearuncertaintydoubt says:

    Simpson’s reference applies:
    “Krusty, what are your plans for the royalties?”
    “We got to pay for promotion,shipping, distribution. You know, those limos out back aren’t free. Whatever’s left, we throw down the well. “

    Red is a scam because when you do the math, companies spend more money on marketing for the program than is actually generated. The point is that there isn’t much philanthropy going on. Just a bunch of corporate marketing sleazeballs suckering you to chip in so they don’t have to.

  48. guspaz says:

    Don’t like it? Don’t buy it. Donate the money to charity yourselves. Dell’s not forcing anybody to buy the product. Other than the colour, there’s nothing in the PC that you can’t get in another model.

    Why are people so upset about this? They’re getting all worked up about nothing. Maybe their time would be better spent volunteering for charity rather than complaining about the price of Dell laptops.

  49. Xkeeper says:

    Something I thought was amusing: both “$(111)” and red coloring are used to denote losses on statements.

    Which is basically what (red) is.

  50. varco says:

    This is a Dell and Microsoft (red) product. If you look at the press conference pictures, Bill Gates is all up in there. They bundle the software (Office + Premium Vista @ MSRP $300) and the computer (MSRP $1299) because you can’t really sell (red) software. So there it is.

    Now, no one else sells (red) products at less than MSRP. Not Apple, not Armani, not Converse, not Hallmark, not anyone. You may question the value of the product itself, but it is not ripping off anyone to sell a product at MSRP. It sounds like some of you want the fashion statement that says that you gave to charity (gotta let everyone know) while purchasing a major consumer electronics purchase, while also getting a discount.

    If you want to make a real difference, go buy a $400 dell and give $1200 to charity. Or just volunteer your time somewhere.

  51. Trai_Dep says:

    As cited, other companies actually go thru the trouble (and expense) of creating a NEW (red) product that’s colored red. Then eats the cost and sells it at a normal price, with no MSP pricing shenanigans. Case in point – as (almost) always – Apple.

    As a manufacturer whose sales dwarf those of Apple, it’s sad that Dell can’t even meet this.

    I guess that’s why Apple customers are more more satisfied than Dell ones.

  52. varco says:

    @trai_dep: Dell released a computer with a red case (on the back). Apple released an ipod with a red case.

    I guess Apple’s customers think they’re extra special.

  53. phrygian says:

    @fearuncertaintydoubt: That’s exactly what I was going to say. I’ve read past articles outlining the cost/profit/donation for Red items and it’s not philanthropy. Less than 10% of the jacked up prices (e.g.: Gap Red t-shirts) are actually donated. Yes, it’s worthwhile to donate money but I think that retailers are doing a crappy thing by exploiting the feeling of “easy philanthropy”.

  54. n/a says:

    I wouldnt donate to any charity or cause because for the simple fact that never 100% of my money ever donated goes to that cause, some pig always has to have their share of the profit in some way or margin or method.

  55. grebby says:

    @D3Anon: Administering a charity costs money. If you are genuinely concerned about how charities use their donations, try a site like Charity Navigator that rates how efficiently charities operate.