The only other company to come close is Sandisk, who once sent me an upgraded version of my mp3 player when my head phone jack broke
[0]
Cue a pneumatic drill and a circular saw. Modern drives are surprisingly hard to drill, btw, what with being so dense.
After the second replacement failed too after a couple of weeks, I just went and bought a disc from the local shop down the road. It's probably still going, twelve years latter. We never bought Dell again.
This is pretty standard. Even at the corporate/enterprise level -- where the disk may contain sensitive data -- you have to send the drive back. You can pay extra (at the time of purchase) to have the option to not have to send your broken drive back.
I fully understand why they require the defective drive be returned, however. Their replacement policy would quickly be abused if they didn't require the customer to return the drive.
We than spent the next hour diagnosing the fact that it was, in fact, a broken harddrive. Although I told them this from the start, I can understand them wanting to verify this, but the we had found what seemed to be enough evidence that it was a broken HDD within the first 10 minutes, then just ran around in circles (I assume looking for a scripted error code that never showed up for some reason).
Once we were done, they agreed to send me a replacement drive, and I asked if it would be possible to upgrade the drive and pay for the difference. They then spent about half an hour looking up what HDD options were available. Once I decided which one I wanted, I was informed that I would be paying for the full price of the drive (but they could still send it instead of the free, non upgraded, one I was entitled to by warranty). I declined and asked for the free one.
Once that was done, as we were finalizing the shipping details, I was informed that I would need to send back my broken drive, which I was not willing to do. Eventually I agreed to just pay for a new drive (in retrospect, I should have hung up and bought the drive from another source). They sent me a drive and told me I would be receiving a bill.
The bill never came. Two weeks later, I called them again and spent another two hours trying to pay; before being told that I cannot pay because I have not been billed yet because I had not yet failed to return my broken drive in time. About a month after that, I get a voicemail from them about my failure to return my drive.
I try to call back, but due to ( I presume) time zone differences I never managed to reach them during office hours, so I just got to voice mail where I had to leave a message asking them to call me back. Despite this, I still had to wait through about half an hour of holding to get a line to the voicemail. After going through this dance a few times, I just asked them to email me the bill, after which point I payed them the $70 for the hard drive.