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Netflix blames shipping delay on hardware

Tue., Aug. 26, 2008

LOS GATOS, Calif. – Netflix Inc. is blaming a faulty piece of computer hardware for a breakdown that delayed millions of shipments to the online DVD rental service’s customers earlier this month.

“We’ve taken steps to fortify our shipping system with the acquisition of additional equipment and worked with our vendors to verify we’re in good shape elsewhere,” Mike Osier, Netflix’s technology chief, wrote on the company’s Web site.

The explanation, posted late last week, marked the first time Netflix identified the cause of an outage that prevented the Los Gatos-based company’s 55 shipping centers from processing rental requests from Aug. 12-14.

The worst outage in Netflix’s 9-year history affected about one-third of the service’s 8.4 million subscribers.

Netflix is giving the affected customers a 15 percent credit on their next monthly bill to compensate for the inconvenience. The credits will lower Netflix third-quarter revenue by about $6 million, estimated Wedbush Morgan Securities analyst Michael Pachter.

Netflix shares fell 71 cents Monday to $29.94.


 

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