One way of determining reliability.

How many times have you read words like this?

“Oh! gee, they just replaced everything, no questions asked, in my dead Mac. AppleCare rocks – everyone should have it”.

How about “Why the hell did it blow after 15 months and why should I have to pay another 20-30% on top of the price of an already premium priced product? And what about my time and data and productivity lost during the repair period? Shouldn’t Apple be paying me?”

Welcome to AppleCare.

I addressed the extended warranty business back in 2008 explaining why, for most reliable devices like cameras and TVs, the cost of an extended warranty would accomplish but two things. Rob the buyer and enrich the seller.

A warranty is nothing other than an insurance contract, so its pricing reflects three things:

• The likelihood of failure of the warranted item
• The cost of parts, labor and shipping to repair
• The required profit margin

Now it’s hard to put a price on the parts and labor component but if, as a first approximation, we assume that the ratio of that cost to the selling price of the item is constant over a large population (some Macs need a costly new screen, some a screw or two – it averages out) then what is left is the profit margin – assumed constant – and the likelihood of failure, which is an unknown variable.

So if you buy those assumptions, simply looking at the ratio of warranty cost to selling price gives you a metric which indicates the likelihood of failure – the unknown variable.

How do these data stack up for AppleCare which extends the new item’s 12 month warranty by an additional 24 months?

Using the lowest selling price of each item (except for the iPhone where the much more popular 3GS model has been used), the ratio of AppleCare cost:selling price is as follows in rising order:

• Mac Pro – 10%
• iMac – 14%
• Apple TV – 21%
• MacMini – 25%
• MacBook – 25%
• MacBookPro – 29%
• iPhone 3GS – a whopping 35%

These are troubling statistics from which I glean the following:

• The Mac Pro is dead reliable (can you say ‘proper cooling’?)
• Only a fool buys an iPhone with or without warranty
• Now I’m really worried about having bought that MacMini to replace the FriedMac
• The MacBookPro is a real dog
• By Apple’s reliability standards, the iMac is one of the most reliable products they make. This is no consolation.

Another great reason for building your own Hackintosh – check the build list. No single part costs more than $100 with the exception of the exotic $250 Core 2 Quad CPU – how many properly cooled CPUs have you known to fail? All the parts come with a one year warranty and all cost less than one AppleCare insurance policy …. so when they fail in month 13, you throw them out and buy a newer, better replacement. For $100. And you don’t have to ship the whole 50lb megillah back to Mr. Jobs for repair. What’s not to like?

But you have to give it to the merchant huckster in charge. He gets to look the good guy (“AppleCare looks after you, no questions asked” – no need to ask at those margins), charges you up the kazoo and makes huge profits on the insurance business in the process.