Why Applecare is a ripe off.

[Mlebout]

You are totally right, on average it must be a rip off cos Apple will make a profit on it. But it is a bit like insurance. Insurance is also a rip off, cos the insurance company makes a profit. But it does protect you against unknown large expenses. It's a matter of taking a risk or not.

In Europe Apple care is more of a rip off cos by law you have more than 1 year warranty.

Sorry, but I disagree: "Insurance is also a rip off, cos the insurance company makes a profit". What company in business today doesn't make a profit. If you're in business the objective is the bottom line...

Actually, most insurance companies do not make money on premiums versus claims; they make money investing collected premiums. They're margins are actually very small.

Also, if you consider all the fraud and scams perpetrated against the insurance industry, it’s amazing premiums aren’t higher than they are. I’m sure everybody knows someone who had a claim and exaggerated it.

It comes down to the fact that people do not like paying for intangibles. When you buy insurance or Applecare you don’t take it home and open a box an use it, it’s just there if you ever need it.

Sorry for the rant. However, I do agree that there are BAD insurance companies out there that take advantage of people, case in point, State Farm in New Orleans. You just need to do your homework and read your policy.

 

[Kolind]

I haven't read all the posts in here, so sorry if I'm repeating what someone else has already pointed out. If you look at the sources of the blogger mentioned in the OP you will find this piece of information:

There are two caveats to our just-say-no advice: It's worth considering an extended warranty if you're buying a rear-projection microdisplay TV. Repair costs can be high, and these sets have been three times more likely to need repairs than other types of TVs. We also think it may be wise to get an extended warranty (which includes extended tech support) if you're buying an Apple computer, because they come with only 90 days of phone tech support.

(link to full article)

This of course goes for USA, as other people have already mentioned, a lot of countries in the EU (all of Scandinavia at least) has got a 2 year warranty on pretty much anything you buy. (Be aware that this does not hold true for stuff you buy through the Apple online store however).

 

[IJ Reilly]

This assumes that Apple's phone tech support is valuable. Consumer Reports might think so, but then they are notoriously clueless when it comes to Apple products. In reality if you call Apple within the first year with a problem, it is very likely to be covered by the warranty. The only exception is calling tech support with a "how do I?" question.

 

[reflex]

This of course goes for USA, as other people have already mentioned, a lot of countries in the EU (all of Scandinavia at least) has got a 2 year warranty on pretty much anything you buy. (Be aware that this does not hold true for stuff you buy through the Apple online store however).

Why not if you buy from the online store?

 

[aricher]

AppleCare a rip(e) off? Hardly. I would never buy a portable without it. I have a Rev C. B 17" 1.33 G4 that has required repairs 6 times since purchase in December of 2003 - 4 times after the warranty had expired.

Broken SuperDrive - replaced under warranty
Broken SuperDrive - replaced under warranty
Uneven illumination - screen and bezel replaced under AppleCare (post warr)
Bad logic board - replaced under AppleCare (post warr)
Bad logic board - replaced under AppleCare (post warr)
Bad fan - replaced under AppleCare (post warr)

My AppleCare runs out soon and I'm keeping my fingers crossed nothing bad happens through mid-2007 when I plan on buying a new MBP with the fully optimized Adobe suite.

 

[ChrisA]

http://www.techdirt.com/articles/20061120/115301.shtml

I believe this to be very true. Which is said. Personally I feel for me Applecare is not worth it. For Some it may. Especially if you plan on keeping the product for the whole time of Applecare.

Applecare will pay for itself when you sell your computer. A computer that is still under Applecare will get a higher resale price, enough higher to make Apple care a great deal.
So I would say it is a good deal "Especially if you DO NOT plan on keeping the product for the whole time of Applecare. "

 

[IJ Reilly]

Applecare will pay for itself when you sell your computer. A computer that is still under Applecare will get a higher resale price, enough higher to make Apple care a great deal.
So I would say it is a good deal "Especially if you DO NOT plan on keeping the product for the whole time of Applecare. "

This I find extremely doubtful. I'd like to hear from somebody who'd pay full price for a nearly-expired AppleCare plan.

 

[WildCowboy]

Okay...here's an aspect I haven't heard mentioned in any of the gazillion threads on this topic. I have no idea whether it's valid or not, but I'm going to throw it out there.

Does Apple make a profit on repairs? If so, how much? If they do, it could make AppleCare both profitable for them and (on average) you. Say that it costs them 80% of what they charge you to actually make the repair. What if the AppleCare premiums they collect amount to 90% of the total they would have charged those customers for repairs if the program didn't exist? They're not making the full repair profit on those repairs, but the AppleCare program as a standalone entity is profitable in that case...income exceeds expenses. (Take into account any secondary effects such as customers who are partly influenced to buy a Mac because of the existence of AppleCare, and you may get even closer to "full profit.") If that is how things play out, then you as a customer could expect to receive (on average) greater retail repair value than they pay in premiums.

Again, I'm just thinking out loud here, but does that make any sense?

 

[IJ Reilly]

Again, I'm just thinking out loud here, but does that make any sense?

Some, but I think Apple would have little incentive to sell these plans if they cut their repair profit margins in half. I believe they push AppleCare because the plans are very profitable, as are most extended warranty programs. Insurance is statistically stacked against the buyer. This is fundamentally how insurance works.

 

[WildCowboy]

Some, but I think Apple would have little incentive to sell these plans if they cut their repair profit margins in half. I believe they push AppleCare because the plans are very profitable, as are most extended warranty programs. Insurance is statistically stacked against the buyer. This is fundamentally how insurance works.

I agree 100% when you're talking about standalone insurance. But there can be secondary benefits for Apple to offer the program that also indirectly help the company's bottom line...from the impact it has on a person's initial purchasing decision to the goodwill generated for future purchases, there have to be financial benefits outside of the insurance "silo" of profit/loss.

I just wanted to point out that there could be some wiggle room in the costs for both sides there...the profit margin numbers were just for simplicity's sake. While I have no idea how it all pencils out for Apple, I can imagine a scenario in which it would be profitable (on average) to both the company and the consumer for the consumer to purchase AppleCare.

 

[IJ Reilly]

I agree 100% when you're talking about standalone insurance. But there can be secondary benefits for Apple to offer the program that also indirectly help the company's bottom line...from the impact it has on a person's initial purchasing decision to the goodwill generated for future purchases, there have to be financial benefits outside of the insurance "silo" of profit/loss.

I just wanted to point out that there could be some wiggle room in the costs for both sides there...the profit margin numbers were just for simplicity's sake. While I have no idea how it all pencils out for Apple, I can imagine a scenario in which it would be profitable (on average) to both the company and the consumer for the consumer to purchase AppleCare.

I take your point. I'm sure all kinds of calculations go into pricing AppleCare, but I strongly suspect that the number one criterion is profitability, a conclusion we could come to by applying what we already know about insurance in general and extended warranties in particular. Could AppleCare be an exception? Maybe, but I doubt it. When I get a phone call or e-mail from Apple attempting to sell me an AppleCare policy on a almost new product, I get the impression that they're making this pitch to sell me another product, not to do me a favor.

Speaking of pricing, I think the most hilarious AppleCare price is the one they advertise for refurbished iPod shuffles. Last I checked, they were both priced at $59.