One way of determining reliability.<\/i><\/p>\n
How many times have you read words like this?<\/p>\n
“Oh! gee, they just replaced everything, no questions asked, in my dead Mac. AppleCare rocks – everyone should have it”.<\/p>\n
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<\/i>?”<\/p>\n
Welcome to AppleCare.<\/p>\n
I addressed the extended warranty business back in 2008<\/a> 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.<\/p>\n A warranty is nothing other than an insurance contract, so its pricing reflects three things:<\/p>\n 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.<\/p>\n 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.<\/p>\n How do these data stack up for AppleCare which extends the new item’s 12 month warranty by an additional 24 months?<\/p>\n 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:<\/p>\n These are troubling statistics from which I glean the following:<\/p>\n Another great reason for building your own Hackintosh – check the build list<\/a>. No single part costs more than $100 with the exception of the exotic $250 Core 2 Quad CPU – how many properly cooled<\/i> 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<\/i> back to Mr. Jobs for repair. What’s not to like?<\/p>\n But you have to give it to the merchant huckster<\/a> 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.<\/p>\n","protected":false},"excerpt":{"rendered":" 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 … Continue reading AppleCare and warranty math<\/span> \n
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