So possibly spending $200 instead of $69 is better in what scenario?
In the scenario where 9/10 times you won't ever have to spend a dime.
As an INDIVIDUAL consumer, I'm not concerned with screwing Apple out of their potential profit but rather, trying to minimize my expense. Applecare is insurance. So using your logic, we shouldn't get automobile insurance either because the insurance industry is set to make a profit by processing less claims than the income from premiums?
Remember, AppleCare only covers product defects. If you drop your phone on concrete and it shatters, the $69 you spent on AppleCare is worth nothing. The odds that a phone will suffer an expensive malfunction within months 13-24 of its life are minimal. That's exactly why Apple sells the AppleCare.
The chances that you as an individual customer will need to get a part repaired that isn't your fault is small. Even if it does happen, you can afford to cover it. Imagine for a moment that you consistently bought one iPhone every 2 years, and that you purchased AppleCare on every single phone. After 10 phones you would have spent $690 on Applecare. However, statistically you would only have needed ONE phone replaced. That means you spent $690 to protect yourself from $200 of losses. That simply makes no sense at all.
The purpose of insurance is to help you recover from losses that aren't easy to replace. A house is too expensive for 99% of us to replace if it were to burn down. A car accident can cause thousands of dollars in liability which 99% couldn't afford to pay on our own. It makes sense to pay an insurance company a small fee (usually about 5-10%) to pool our collective risk in that situation.
It makes no sense to pay a 50% fee to pool risk for an item you can replace without financial trouble. That's why we don't take out insurance on our clothes, shoes, or books.
I personally find the peace of mind from Applecare worth the expense.
If that's your preference, then by all means, buy it. Just don't try to assert that it's a net benefit to you financially, because it just isn't. We all treat ourselves to personal comforts, and maybe the peace of mind AppleCare offers you is one of yours. Just don't think it's a financially wise move, because, again, it isn't.
The prior poster's argument is about the relative cost, so your auto insurance analogy is off ... think about how many people would buy insurance if (a) wasn't required and (b) cost $17,500 for a $50,000 car over 2 years.
I think the prior poster would agree that if the iPhone warranty was inline with auto costs (assume $2,500 over 2 years for the same $50,000 car or 5%), he'd probably be more than willing to pay for that coverage.
I don't think those kinds of margins are possible with a warranty though. I think the very cheapest Apple could sell AppleCare on the iPhone for (and not lose money) would be about $35. That's still 17.5%, which is a lot to pay for an item that isn't very expensive to begin with.
