Why You Still Shouldn’t Care About AppleCare

| Ted Landau's User Friendly View

Back in 2006, I wrote a column titled “Should You Care About AppleCare?” In it, I weighed the pros and cons of purchasing AppleCare when buying a Mac. I strongly recommended against getting Apple’s extended warranty: “AppleCare is almost always a bad choice.”

With the 2011 holiday season upon us, many many many people will be getting Apple products as gifts over the next few weeks. They will all have to decide whether or not to purchase AppleCare for their new devices. As such, it seemed like a good time to reconsider the merits of AppleCare — this time with a focus on iOS devices (iPhone, iPad and iPod touch).

My conclusion remains essentially the same: AppleCare for iOS devices, and especially AppleCare+ for iPhone, are still a bad bet.

AppleCare

It’s not just Apple; extended warranties are a bad bet in general

Check out any issue of Consumer Reports (CR) that mentions the topic of extended warranties. Their advice about these warranties is always the same: Avoid them. As recently as the November 2011 issue, CR reiterated: “Extended warranties for most electronics and household appliances aren’t worth the money.” Why? Because the average cost of a repair is “not much more” than the warranty price — not to mention that, for most electronics, you’re not likely to need a repair during the warranty period.

Consumer Reports does hedge a bit. Despite their general disapproval, they offer two reasons to consider an extended warranty for computer devices.

First, if you want the handholding of additional technical support, an extended warranty can be worth it. With AppleCare, for example, you get one year, rather than 90 days, of “free” telephone support. Especially if you live near an Apple Store (where you can make an appointment with a Genius), I doubt telephone support matters much anymore. But if it does matter to you, get AppleCare. I concede this point.

Second, CR suggests that an extended warranty may be worth buying for mobile devices (such as laptops and smartphones) — if the warranty includes theft and accidental damage coverage. The logic is that devices that leave home with you are far more likely to be stolen or damaged than stay-at-home devices. As you’ll see in a moment, I part ways with CR here.

Extended warranties cover less than you may think

If you put an extended warranty under a magnifying glass, you’ll likely find that it covers less than you thought.

For example, AppleCare for iOS devices “extends your service coverage to two years from the purchase date.” However, you already have the first year covered without buying AppleCare. So the cost of the coverage is really paying for just one year: days 366 to 730 of ownership. Problems before that are covered for free. Problems after that aren’t covered even with AppleCare.

Except for AppleCare+ for iPhone, AppleCare does not cover any damage due to “accidents.” So if you damage your iPad by dropping it or spilling water on it, you’re not covered even with AppleCare. You also aren’t covered for loss or theft under any circumstances.

In years’ past, AppleCare was sometimes recommended just for its battery coverage. AppleCare does cover you for a battery that has “depletion of 50 percent or more from the original specification.” I would argue that, in most cases, this doesn’t mean much. A truly defective battery will almost certainly go bad in the first year. In most other cases, especially with the improved batteries in Apple’s most recent hardware, an original battery should last more than two years.

One more point to consider: An iOS device that is replaced out-of-warranty or that has less than 90 days of coverage left, gets an additional 90 day warranty from the date of replacement. Assuming you don’t buy AppleCare, the replacement warranty makes it very unlikely that you’ll have more than one out-of-warranty repair in the first two years.

Anecdotal evidence is worthless

With the same certainty as the sun rising in the morning, any discussion of AppleCare inevitably leads to people relating their personal anecdotes. I can already anticipate comments such as “My iPad’s [fill in your favorite part] stopped working after it was more than a year old. Because I had AppleCare, Apple replaced the entire iPad at no charge. I saved [fill in the appropriate number] hundred dollars. Count me as someone who is glad they purchased AppleCare.” 

The problem is that such anecdotes are worthless in deciding whether or not AppleCare makes good financial sense. For every anecdote that supports one viewpoint, I can find another that argues against it. In my case, for example, I have never purchased AppleCare on any Apple product. Yet, during more than 25 years of purchases, I only once had to pay for a repair that would have been covered by the extended warranty. Add up all the money I saved by not buying AppleCare, and I clearly made the right decision in hindsight. But this too is an anecdote. It should not be the basis of your upcoming decision regarding AppleCare.

Essentially, as with any insurance, AppleCare is a gamble. You don’t decide whether or not a gamble is worth it based on anecdotes of prior outcomes. Instead, you try to predict the expected value of the purchase. To do this for AppleCare, you need to consider the cost of the warranty, the cost of an otherwise un-covered repair, and the likelihood that you will need such a repair.

If the potential savings are huge, AppleCare could be worth it even if the probability is low that you will save money (that’s the logic behind medical insurance, for example). Otherwise, AppleCare only makes sense if you’re likely to come out ahead financially. I believe the latter more accurately reflects the situation for AppleCare.

Let’s take one example. AppleCare+ for iPhone costs $99. If you get a new iPhone every two years (when your phone contract expires) and purchase AppleCare+ each time, you’ll pay about $500 for AppleCare+ over ten years. The key question is: How likely is it that you will spend more than $500 in out-of-warranty repairs over that time? Remember that, in this case, you have coverage for five of these ten years, even without additional AppleCare. Given the overall excellent reliability ratings of Apple products, and assuming you make at least a minimal effort to care for the devices, I expect the probability to be very low.

The case against AppleCare+

The case against AppleCare+ for iPhone is even worse than just described — if you include the cost for accidental damage replacement. AppleCare+ covers you for “up to two incidents of accidental damage, each subject to a $49 service fee.” This new damage coverage is the “plus” in AppleCare+. While this may seem like a good deal at first, consider the following:

According to what I’ve been told [Update: and as confirmed on an Apple webpage], Apple will replace any damaged out-of-warranty iPhone with a refurbished model for a flat fee of $200. To get a replacement under AppleCare+, it will cost you $148 ($99 for the warranty + $49 service fee). In other words, AppleCare+ will save you only $52 — compared to getting an non-covered replacement phone. In addition, in order to have a chance at this $52 saving, you need to outlay $100 on an extended warranty that you will most likely never need. In the end, you are more likely to lose $100 than save $52. To me, this makes AppleCare+ a sucker’s bet. I’d rather take my chances and pay the $52 if I lose.

One last bit of data to throw in the pot: Apple has a long history of replacing out-of-warranty devices for free — most especially if the device is just recently out-of-warranty and the problem is viewed as a “manufacturing defect.” This has happened to me on several occasions. While there are no guarantees here (and I’ve heard that Apple is now less likely to do this than in the past), it further lowers the probability that AppleCare will pay off in the end.

Bottom Line

“You’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk?” — Harry Callahan

Unless you’re feeling very lucky, my recommendation is to avoid AppleCare. I can’t promise that everyone who follows this advice will save money in the end. But I can promise that the odds are that you will.

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Comments

mlanger

While I agree wholeheartedly about AppleCare being a bad bet for iOS devices, I think anyone who plunks down $1500 or more on a Mac should cough up the extra cash for AppleCare. Why? Because I’ve had a major component failure within the first three years of owning a Mac for EVERY SINGLE MAC I purchased within the past 15 years—and we’re talking a LOT of Macs. Desktops and laptops. I’m talking about logic boards, hard disks, and optical drives. Hell, my old 24” iMac, which I had for four years, had its logic board replaced TWICE, its optical drive replaced once, and its hard drive replaced twice. In every instance, the cost of the repair exceeded the cost of AppleCare. (Do you know how much a logic board costs?) And what most folks don’t realize is that AppleCare includes the cost of having someone come to you—even if you live out in the sticks like I do. I speak from experience.  They don’t make Macs like they used to; for me, it’s worth the extra money up front.

And, for the record, no: I don’t buy extended warranties on anything else. Just my Macs. What does that say about Apple?

vpndev

I routinely buy it for laptops, but that’s all.

I did once for an early PowerMac G5 and was thankful I did as that needed a lot of fixes (video card, CPUs, etc). But not for MacPro - that has been fine. Except for a 23” monitor that died after 2 years (logic board failure).

For iOS devices I bought SquareTrade as it covered accidental damage (which Applecare did not, at the time).

Overall, I’m about break-even or slightly better.

geoduck

Because I?ve had a major component failure within the first three years of owning a Mac for EVERY SINGLE MAC I purchased within the past 15 years

I’d recommend a really good surge protector. I’m not being sarcastic either. I’ve been a computer tech for many years and when I’ve seen that sort of a failure rate, especially one that is so out of synch with most others experience,  there’s likely to be a local cause. Dirty wall current is one of the best ways to kill a computer. Do you live in a dry environment? If so, invest in a good static mat and grounding strap. You can do a lot of damage just by walking across the carpet and jumping a spark to the mouse. I used to live in Minnesota and in the winter there I could jump a spark to the faucet in the shower. Dry air is bad air.

FWIW I’ve had Macs going back decades. I’ve not noticed any drop in quality or reliability. My ‘08 Macbook is actually better than the PowerBook 5300 I had in the ‘90s. Over the years I’ve had to replace the odd component, but nothing catastrophic and nothing that would have made AppleCare worthwhile.

JonGl

And, for the record, no: I don?t buy extended warranties on anything else. Just my Macs. What does that say about Apple?

Nothing, as my experience cancels out yours. wink Of all the macs I’ve owned, only one ever had a problem—a Performa 600CD I bought as a floor model had its CD drive die within a few weeks. Apple sent out somebody who replaced it at my home at no cost to me—and this was looooong before there was AppleCare. That said, I still tend to buy it for our laptops, as I tend to put out a lot for those… But honestly, I’m not sure it’s really worth it. But I’ve never had component problems—logic boards, monitors, etc—go bad on us. In your case, I would be looking elsewhere than Apple—have you checked your power? I wonder if it’s clean…

-Jon

doug

Yes, well, just for balance, I have never bought Apple Care and never had a failure that would have been covered by Apple Care.  And that has been a LOT of Macs, say 45 to 50 (counting iThings) over 15 years.  (I run my office on them too.)  I buy mostly Apple refurbs, for what that is worth.

Ted Landau is right, but don’t rely on anecdotes, including mine.

He might add as well that one should consider the useful life for most Macs—defined as, how long goes by before you want to replace it with something better -  isn’t much more than 3-4 years anyway.  So by the end of 2 years, its starting to get marginal whether you really want it repaired, or want to get something newer instead.

George Wedding

I’ve always hated extended warranties and seldom purchase them either, but I do for Apple devices. For one thing, I run a home-based business, and can’t afford down time. While I’m a very knowledgeable computer, OS and network tech in my own right, I find that Apple’s extended tech support is excellent—and often a Godsend. For Macs, AppleCare adds an additional two years to the standard, one-year warranty for a total of three years. Also, extended telephone tech support comes with the AppleCare warranty and it is excellent. Apple now has a callback service to streamline help. You log-in to the Support site, sign in and list your device (or software) and problem, and a specialist calls you back within seconds. Support is very good, and very cool.

At any given time, we have five home-office Macs, two iPhones and two iPads, and I like having at least one Mac and one iOS device always covered by AppleCare. And when you purchase peripherals on the same invoice as a computer, those peripherals also are covered by the extension.

Apple also is pretty liberal with AppleCare extended warranty coverage.

A couple of years ago, one of the many California power surges occurring at the time fried three Netgear Ethernet switches and every Apple router in the house (a Time Capsule and three Airport Express units being used as wireless speaker systems). I had to buy new Netgear switches, but Apple replaced every Airport under the AppleCare extended warranty—no questions asked—even though a couple of the Airport Express’ were out of warranty). In early 2011, my significant other dropped her brand new iPhone (Christmas gift) and shattered the glass. Apple replaced it, even though accidental damage is not covered. Apple also replaced two older (but malfunctioning) iPhones a couple of times. And back in 1999, after three attempts at trying to repair the video in two-year-old PowerMac G3, Apple designated the faltering desktop to be a “lemon” and called one day with an offer to just replace it with a new Mac Pro G4, since the G3 was no longer shipping. The company even sent a tech out to the house to deliver and set up the replacement (this was the only time a house-call ever happened though).

All this activity might sound like my Apple gear has been unreliable, but I don’t feel this way at all. I think my gear has been heavily used with less down time and worked than the PC equipment used by friends, co-workers and neighbors. I have plenty of other Mac and iOS hardware that never needed a day of service, though the telephone OS support often came in handy.

mrmwebmax

+

I bought AppleCare for my first iPhone 3G, and never needed it. I skipped it for my iPhone 4, and 18+ months in, it still works perfectly.

As for Macs, I’ve bought and used them professionally since the Mac Classic. (Yes, I did Quark and Illustrator on a 9” monochrome screen….) Never had a problem with any Mac until the PowerMac 4400, which weighed about as much as a Sherman tank, was about as elegant (although not quite), and had a lousy hard drive from the start.

As for hard drives…I’m rather hard on them. I still use a dual-drive 933MHz G4 tower at work (alongside a new MBPro), and it’s on hard drives #3 and #4. My 24” iMac blew its internal hard drive this summer; I’m now using a LaCie external as a boot drive via FireWire 800. It’s a 1 TB drive that cost under $200, and at 7200 RPM is much faster than my original internal drive, and far more easily replaced. I think 3-year AppleCare would have cost just about the same, so that’s a tough call, as I would have had the internal drive replaced. (Less speed and storage, but the original iMac elegance.)

Were I to buy a laptop? I think I would consider AppleCare for such a purchase for more than any other, if only because I’ve had the occasional logic board fry. YMMV.

Having said all of that, I think the quality of Apple products now is better than it’s ever been.

Richard

No brainer for me…. I have owned every iPhone and passed them down to others in my family. We have used Apple Care to replace every iPhone at least once and the battery twice in another. It is definitely worth it.

darkone

Of course all of our comments are anecdotal, with that said…

My last 2 Macs have both had repairs that would have cost more than the AppleCare did. Given the proprietary nature of Macs today I recommend AppleCare even more.

My last repair was for a faulty hard drive in my iMac. I am in IT support by profession and normally I would replace a hard drive myself, but iMacs use a proprietary drive from Apple. Fortunately I knew this at the time of purchase, so I hedged my bets and bought the AppleCare.

And yes, I use a top end UPS from APC that both conditions my power and keeps my iMac from powering down ungracefully.

I know of similar instances with friends and family.

Given the premium we pay for Apple products and the higher cost to repair them I think AppleCare is cheap insurance.

I hope I don’t come across as negative on Apple. I love them and recommend them, and I own stock in Apple.

Lynuss

Labour $180 per hour, major components ( the first things to fail)
LED display,Dvd rom, logic board, hard drive cheapest part not shy of $500 id say the first repair will pay for itself.
Perhaps when the lombards and pizmos were around yes no need but the quality of build these days is depreciated.
Applecare is more essential now than ever before.

cb50dc

First, Ted, I generally agree with you and CR, that extended warranties usually aren’t worth it, for most products. And I fully concur that personal anecdotes aren’t sound, objective arguments—though, of course, I’ll cite my own below.

for the record, no: I don?t buy extended warranties on anything else. Just my Macs. What does that say about Apple?

I don’t think that says anything about Apple in particular. Reading just the summaries from googling “apple reliability compared computer manufacturers,” several different sources show Apple landing in the top manufacturers for overall PC reliability (NO JOHN HODGMAN REFERENCES, PLEASE), often trailing only Asus, Lenovo, and maybe a couple of others.

I’ve bought three-year AppleCare for my laptops, but not desktops. Lucky so far: my 2005 iMac continues humming along nicely with 10.4.11. If necessary within the next year or so, I plan to pay to repair it, because I do not want to buy a new one with Lion, at least not until Lion gets some serious veterinary care.

My white plastic iBook (‘03? ‘04?) did need some major fixes, one of which was covered regardless of AC.

A few days ago I dropped off my current late ‘08 MBP for a new optical drive (mine has grown iffy over the last few months), and a logic board (not because of overall functional problems, but specifically and only because the headphone output doesn’t reliably hold a plug—requiring $487.50 parts + $39.00 labor for a piece that by itself can’t cost more than a buck or two, but it’s engineered into the logic board.)

While agreeing that personal experience is not conclusive nor transferable to anyone else’s circumstances, I can say only that it’s helped so far with my Mac laptops.

Lancashire-Witch

In many parts of the world consumer protection legislation removes the need for any extended warranties.

Ted Landau

Applecare is more essential now than ever before.

I have a different view. You almost seem to assume that a covered repair is inevitable. If so, then I would agree with you. However, I have to assume that not every Mac sold will require a repair covered by AppleCare. In fact, if even 20% of all Macs sold required such a repair, I would be alarmed at the shoddy workmanship of Apple products.

So, let’s say there is 15% chance that you will need such a repair. And let’s say a repair costs as much as $700 ($500 plus $200 labor, to go with your example). And let’s say AppleCare on your Mac is $250 (as it is for laptops). That means that you pay $250 for a 15% chance of saving $450 ($700-$250). The other 85% of the time, you are out the $250. That doesn’t sound like such a good deal to me.

Ted Landau

More generally, today’s article was just about iOS devices. Many of the comments here focus on Macs. It is true that I have a similar attitude regarding AppleCare and Macs. But that is not what I was discussing today. Just in case that matters. smile

Ben

Your math is slightly off for the iPhone+.  You are paying for the standard AppleCare, a $69 value (or not depending on your view), so the “+” really costs $30.  And that’s for two $49 replacements.  That means that the real cost of AppleCare+ replacements is $15 (half of the $30 for each accident) + $49, or $64.  Compare that against the $200, your saving $136, not $52.

Couple that with a waterfall method of owning phones (Me->wife->son) and they get a full usage over the two years.

Ben

Ted Landau

Compare that against the $200, your saving $136, not $52.

I don’t see it that way. I still have to pay the full $99 to get the coverage. There is no option to pay just $30 for the accidental damage coverage. If there were, I would agree with you.

Danny

Applecare has replaced batteries and a $1500 motherboard (based on a single bent pin LAN connector that required doing so) on my MacBook Pro.

The value was there for me.

Danny

Lynuss

Ted, perhaps the title for your piece should have read :
‘Why you still shouldn’t care about applecare for IOS Devices’

I would agree with you on IOS device but only due to the fact your covered by insurance (if you choose to pay for it) through your telco for loss /damage.
I dont see any apple product as a ‘consumable’ due to its high price, you don’t buy extended warranty on a hoover that costs $100 ... why? because you can just bin it after the first free year warranty if it breaks ( we get a year on any electronic device in this country) and buy a replacement. However purchasing something that costs $1000.00+ you would like to think its going to last more than a year.
Im sure you have owned more apple product than i, however since purchasing my first mac in 2000 and having desktop and laptop here’s my own list of product

PBG4 12” : Logic board + DC in board
PBG4 15” DVD ROM
MBPro 15 2.0 IC2D LCD screen artifacts
iMac PPC 17” Logic board Power Supply (but that was a recall)
iMac IC2D Logic board VRAM issue
G4 Tower Power supply twice
G5 Tower x2 CPUS / Logic Board / Power supply ( the cost was zero but over three years well over $1000 worth of labour and repairs carried out,( im still using this today 6 years on)
MBPro 15” i7 Hard drive

Can you explain the part about 20% of macs failing, in my case every mac i’ve owned has required a single repair at some point.

After your first years warranty is gone your on your own, of course insurance can help but it was always very sad to tell a person that their 1500.00 purchase a year ago will cost almost the same amount to repair, a veritable ‘writeoff’. Protect your investment, unless you have money to burn.

Bernard Bresslaw

Hey Ted, how often do you replace your machines?

Ted Landau

Can you explain the part about 20% of macs failing, in my case every mac i?ve owned has required a single repair at some point.

I don’t have recent data, but here is a quote from my 2006 article:

“Here’s another look: In a recent Consumer Reports survey, only 17% of Mac laptop owners needed a repair of any type between 2001 and 2005. The percentage was even smaller (11%) for desktop Macs. However, these percentages include the first year (when most problems typically crop up and are covered by the standard warranty). They also appeared to include repairs that went beyond the extended warranty period or would not be covered by AppleCare under any circumstances. Regarding the latter point, Apple’s warranty (as is true for almost all extended warranties) does not cover “damage caused by accident, abuse, misuse…or other external causes.” So if your MacBook falls to the floor, AppleCare won’t pay for any damage. Taking all of this into consideration, a reasonable estimate for the covered repair rate of a MacBook during the AppleCare period might be 10% (I suspect it is even lower, but I am trying to give AppleCare the benefit of the doubt here).”

Ted Landau

Hey Ted, how often do you replace your machines?

I have three Macs in active use: a Mac Pro, and iMac and a MacBook Air. One of these devices gets replaced in a given year (so all three get replaced over three years). Actually, the cycle is a bit slower now, maybe four years.

I also have 2 iPhones, 2 iPads, and a iPod touch plus several iPods ? all in use for one purpose or another. I replace the iPhones every two years. So far, I have gotten a new iPad each year. iPods are more variable.

Just to pick a starting point that I can easily recall: I moved to California in 2004. Not one Mac or iOS device that I have owned in these past seven years have needed a repair that would have been covered by AppleCare.

diverreb

Extended Warranties should never be taken out on anything….  Consider a lifetime of buying products with extended care warranties available.  Washers, Dryers, Cameras, Cars, TV’s, Computers, Audio Devices, Video, Devices, etc….  Put away the money you would have spent on the Extended Warranties in a separate account.  It will more than pay for any repairs you will need during the period the Warranties would have covered.  Exceptions to every rule exist, but I would bet the 95% of the time or better you will come out ahead.

Ted Landau

BTW, here is an Apple webpage that confirms my assertion that an out-of-warranty iPhone replacement is $200 (actually $199 for an iPhone 4S; it’s only $149 for older models). There’s also a $29 ERS fee.

Go to Express Replacement Service > My phone is not under warranty… to find the details.

Spiked

Of course it’s bad, right up to the point of when you need it. If you use electronics a lot, they breakdown its that simple. If you have unlimited wealth, who cares at that point.

Pragmactic

I haven’t seen any mention of the extra “free” telephone support one gets with AppleCare. I just used mine this morning for an Apple Mail issue in Lion.

That plus the value of on-site repairs (a client in Deming NM had an Apple Technician drive four hours from El Paso TX to replace an internal hard drive in an iMac and a client here in Minneapolis with _no_ room for down time kept up and running on a clone until two days later an Apple Technician drove to her office and over her lunch time replaced another failing internal drive so she lost _no_ work time instead of having to haul her machine into an Apple Dealer/store). This saved each of these folks _much_ more than the $169 cost of AppleCare for an iMac. I always advise AppleCare because my collective experience over the last decade with over a hundred clients (Mac users, I have insufficient data for iOS devices) is that AppleCare almost always is a good bet. Ted’s equipment experiences seem to be vastly better than my clients’. My clients remain happy dedicated Mac users thanks in large part to extended warranty service quality and availability.

Spiked

I couldn’t agree more Pragmactic, my findings too.

Winski

Sorry Ted. You’re just a fool.

GE

Bought AC from Apple but I bought the MBP 13” from Best Buy because there is no Apple store within 100 miles of me.  They, that is BB will cover accidental drops and water spills. Though the insurance is somewhat higher than Apples’ I will be covering my new purchases through BB from now on. I must say though that phone coverage is great for AC.

George

check out Best Buys coverage, it covers accidental drops and water spills, though it is more costly and don’t know about phone service.

geoduck

As with all I insurance, AppleCare is a bet. As with most bets, though the individual might win, on occasion, overall the house always comes out ahead.

vpndev

As with all I insurance, AppleCare is a bet. As with most bets, though the individual might win, on occasion, overall the house always comes out ahead.

Quite true. But I still pay my car insurance when it comes due.

dhp

Here’s the way I do AppleCare: I have never bought it at the time I purchased a Mac. I wait until near the end of the first year, then decide if I think the additional coverage is a wise bet. With my G5 iMac, after one year I had already replaced most of the internals at least once, so I got AppleCare for the first time and it definitely paid off with further repairs. (The optical drive in that iMac failed again after the extended AppleCare ran out.) In the fall of 2010 I bought a new iMac and had to replace the optical drive within six months. I don’t know whether I’m killing these drives or they are just flimsy, but I decided this fall to go ahead and pay for another two years AppleCare. I don’t know if it will pay off this time, but for now I’m enjoying the peace of mind.

TreehuggerDoug

Experience has taught me to at least consider the extended two years of AppleCare for my Macs. Like at least one other poster, over the years, I’ve had a good amount of expensive failures/repairs (IIRC, Centris 660AV motherboard, iMac G4 motherboard, PowerBook G4 motherboard, G4 or G5 tower power supply) in which AppleCare saved me plenty of money; in at least some cases, the repairs were after the initial one year and were covered by the extra-cost extended AppleCare.

I tend to save money by buying Apple refurbs and, at least for laptops, applying the savings toward AppleCare (purchased at reduced cost from a source other than Apple itself). When I bid on used Macs on eBay, I tend to look for systems still under AppleCare, the longer the better. On the selling side, I think it would be easier selling a Mac still under AppleCare over one without.

Mark Fleming

It’s a simple case of probabilities. The insurance company calculates the probability that it is going to make money. So if it’s a good risk for the insurance company to make money, that means, on average, it’s a bad risk for individuals. Yes there are going to be people who gain, but there are going to be many more of us who lose. It is exactly the same a betting on a horse. The bookmaker gives you the odds to attract you to part with your cash. On the off-chance that your horse comes in, he pays you but overall, he walks away with a lot more money that you do.

mhikl

Anecdotal this may be but I had AppleCare for both my Pismo and MacBook and for my iPod Color. Saved a bundle on repairs. Hard drives and physical keyboard components were the problems. However, there are caveats.

The Pismo?s DVD player went on the fritz at the end and under warranty was replaced by a refurb. Now that is tacky and it never worked right. The same happened with all the refurb replacements on my iPod Color. That little horror was an expensive experience that could make one an Apple hater. I got 6 months of total useful life out of a $600 experience. It is now a trusty paperweight, a reminder to think twice before purchasing AC.

The 4 year old MacBook I now use has had countless keyboard/trackpad changes and at its final one I was told it would continue to be under warranty as it is a hardware defect. (Not that I believe this will be honoured.) But if true, this suggests I didn?t need AC for this problem. MB hard drive repairs were my own fault. I closed to sleep but didn?t shut down for many trips to work and home. Once I realised this didn?t lock the hd, my hard last drive has had no problems.

I have never had any AC nor any need for repair for any Mac desktop nor any iOS device I have owned and I doubt I would get it for the MBA I plan to get this spring. These pups have no moveable parts outside the kb/pad and are now so finely made and inspected I doubt they will ever die. And I know how to cycle and look after batteries. I am still using the same batteries that came with the MB and Pismo.

My AT1 is cooking away fine, and after it survived its first year, I didn?t bother with AC. I keep it raised sitting on screw pop tops for ventilation and nothing sits on it. I only turn it on when we want to use it for movies or music or on cool days to keep the room warm.

I agree. AC is a waste of money and frustration, especially when tacky refurbs come into the count. Would never get another one.

Ross Edwards

The insurance company calculates the probability that it is going to make money. So if it?s a good risk for the insurance company to make money, that means, on average, it?s a bad risk for individuals.

We have a winner.

In fact, we don’t even have to calculate the risk for ourselves.  Apple has already done the actuarial math.  If they didn’t come out ahead on the deal, they wouldn’t be offering it.  The key difference here is that, unlike the win-win value-for-value that comes from the free and voluntary exchange of products for money, a warranty is more akin to a proposition wager, and in any wager by definition there is a winner and a loser. 

Casinos pay out jackpots all the time, but they have the long odds edge.  So it is with Apple and anyone else offering an extended warranty.  In fact, the entire insurance industry is based on this, and the main reason people have insurance at all is because catastropic loss, while improbable, leads to a ruinous outcome—it’s the inverse of an extended warranty, if you think about it.  Applecare is a gamble and the odds favor the house.  If you’re going to spin the roulette wheel, at least do it in Vegas where the booze is free and the girls are pretty.

vpndev

n fact, we don?t even have to calculate the risk for ourselves.? Apple has already done the actuarial math.? If they didn?t come out ahead on the deal, they wouldn?t be offering it.? The key difference here is that, unlike the win-win value-for-value that comes from the free and voluntary exchange of products for money, a warranty is more akin to a proposition wager, and in any wager by definition there is a winner and a loser.?

Casinos pay out jackpots all the time, but they have the long odds edge.? So it is with Apple and anyone else offering an extended warranty.? In fact, the entire insurance industry is based on this, and the main reason people have insurance at all is because catastropic loss, while improbable, leads to a ruinous outcome?it?s the inverse of an extended warranty, if you think about it.? Applecare is a gamble and the odds favor the house.? If you?re going to spin the roulette wheel, at least do it in Vegas where the booze is free and the girls are pretty.

Actually, we don’t know this. This may indeed be true but we do not know.

I think it is reasonable to assume that Apple sees AppleCare as “profitable” in the overall scheme of things. But that does not require that AppleCare itself turn a profit. Maybe it does, maybe not - we don’t know. Perhaps Apple gets more benefit from running at a slight loss but having happy, loyal customers who will buy again and encourage their friends to buy Apple products.

lynuss

Applecare had the best margins from a reseller point of view as its easy to store/stock/ship and really should be viewed as value added.
Consider the fact apple support your product upto 5-7 years after its been discontinued id like to think applecare offsets the costs for all those parts and storage of parts.To all those that have bought applecare and never needed to use it either for onsite support,telephone support or hardware replacement, lucky you and thankyou !

Lynuss

Just for a giggle and im sure ted will chuckle at this
Ted :

Unless your feeling very lucky, my recommendation is to avoid Applecare

Couldnt agree more!

Ted Landau

But that does not require that AppleCare itself turn a profit. Maybe it does, maybe not - we don?t know. Perhaps Apple gets more benefit from running at a slight loss but having happy, loyal customers who will buy again and encourage their friends to buy Apple products.

It’s hard for me to imagine Apple taking this approach. This is not how Apple works. It’s really not how any corporation works. Extended warranties are not loss-leaders. It’s well known that they are more the reverse. They are cash cows.

zewazir

For individuals, who rarely own more than a few items at a time :Mac desktop, Mac portable, iOS device) the decision is, well, individual. For some the purchase of AppleCare brings piece of mind - which does have a certain value. For me, I’d rather save the cash. Statistics are on my side that I will save more in the long run paying for post 1-year repairs out of pocket.

But for institutions which purchase in the tens if not hundreds, it’s a TOTAL waste - an argument I won with my administrators only last year.  Used to be we’d buy AppleCare (Volume discounted “parts-only”- but still kinda pricy in my book) for all portables and for all special order desktops. But the ONLY time we’d NEED AppleCare for any given unit is when a unit died AFTER the first year of use, and before the end of the third.  With the cost of AppleCare, we could buy another unit for every 11 - 12 units covered with AppleCare. I argued (and finally won by tracking warranty vs non-warranty repairs) that it is far less expensive for us to buy a few spare units than use AppleCare. Afterall, the year 2-3 failure rate was far lower than 1 in 12, which is what it would have to be to make AppleCare cost effective.

zewazir

I think it is reasonable to assume that Apple sees AppleCare as ?profitable? in the overall scheme of things. But that does not require that AppleCare itself turn a profit. Maybe it does, maybe not - we don?t know.

Actually, we DO know.  It’s a simple matter of numbers. First, we need to consider that AppleCare ONLY pays between the end of the first year, and the end of the third year.  All first year repairs are covered under the standard warranty. And, since AppleCare is simply an extended warranty, not an insurance against accidental damage, the types of repairs covered is limited to the same type under the standard warranty.

Now, let’s look at the numbers.  Take a new 15” MacBook Pro for $2199.  Applecare for this model costs $349. Now, the most costly repair would be a logic board failure, which, if we were to assume their repair prices are at-cost, would be a $429 part plus $75 for the repair tech to put it in, for a total of $504 that Apple would pay for the repair. So, they take a $155 loss on each AppleCare repair of a logic board for the 15” MBP.  But what THAT means is for every person who never uses their AppleCare, their purchase of AppleCare covers TWO AppleCare repairs. (Actually, more like 3-4)  An Apple product would have to have a failure rate GREATER than 3 failures in 4 units before their AppleCare would run at a loss.

Even the worst lemons that result in Apple issuing an extended warranty program, the failure rates were closer to 1 in 20 or less.  Failure rates during the 2nd and third years in my district are currently running a bit less than 1 in 120.

AppleCare Believer

For someone who prides themselves of writing books about apple, it seems like Ted does not know FACTS about apple ways regarding AppleCare. And if you do look at Consumer Report and apple, it stated you don’t buy extended warranties unless it’s AppleCare. Apple does not give refurbished phones, will not replace your phone out of warranty for free, and the cost of parts on a computer ( including chargers) will exceed the AppleCare cost. AppleCare+ is a great service that apple offers, and for those who have cracked their screen in the past or had water damage on the bottoms of the phone, know AppleCare+ is well worth it.

I’m quite disappointed in the article, not because of his opinion, but of his false statements. Please inform yourself better next time…

Ted Landau

For someone who prides themselves of writing books about apple, it seems like Ted does not know FACTS about apple ways regarding AppleCare. And if you do look at Consumer Report and apple, it stated you don?t buy extended warranties unless it?s AppleCare. Apple does not give refurbished phones, will not replace your phone out of warranty for free, and the cost of parts on a computer ( including chargers) will exceed the AppleCare cost. AppleCare+ is a great service that apple offers, and for those who have cracked their screen in the past or had water damage on the bottoms of the phone, know AppleCare+ is well worth it.

I would agree with everything you said ??except for the fact that everything you said is wrong.

1. While CR occasionally qualifies their general recommendation against extended warranties ? making a partial exception for mobile devices (as I noted in the article above), they rarely single out AppleCare. I am aware of one article in 2006 where they said: “It may be wise to get an extended warranty if you’re buying an Apple computer, because they come with only 90 days of phone tech support.” I also noted this second partial exception in the article above. As such, I believe what I wrote more than adequately addressed your point. In any case, my arguments against AppleCare, as covered in the rest of the article, had to do with costs, not telephone support.

2. Apple does use refurbished phones in replacements. You may get a new phone replacement but it is not guaranteed. I know this because I have gotten replacements in which I have been specifically told I was getting a refurbished model. Apple even states this policy on their website (http://support.apple.com/kb/index?page=servicefaq&geo=United_States&product=iphone): “During service, Apple may exchange your iPhone with an iPhone that is new or equivalent to new in performance and reliability.”

3. Apple will occasionally replace your phone (and other products) out of warranty for free. Again, it has happened to me (more than once) and has happened to many others (as reported in numerous forum postings). This is an unstated policy which means Apple could revoke it at any time. But it does happen; there is no doubt about this. It all depends on your specific circumstances and the particular person at the Apple Store who is helping you.

4. As to the last part of your comment, citing the overall value of AppleCare+: It is certainly true that AppleCare+ can save you money if and when you damage your iPhone. The problem is that many many many people will never damage their iPhone and never need a replacement. Those people save no money. Plus, as I explained, the savings is minimal anyway. The question isn’t: Was AppleCare+ worth it for those who needed it, but is it worth the gamble when you don’t know if you will need it or not. In my examples, I showed why I thought it was not worth it. You have not presented anything that would lead me to a different conclusion.

Next time, when you feel the need to accuse people of making false statements, try looking in the mirror.

Laurie Fleming

I confess ignorance of US consumer law - does it vary from state to state? or is there an overarching warranty requirement for faulty goods?

I *do* have (or did - it’s probably expired now) Apple Care on my MBA, because it came as part of the purchase price. But I don’t need it. Under the NZ Consumer Guarantees Act, anything sold (with exceptions, but retail computer sales aren’t part of them) must have a reasonable life-span. Any computer or peripheral should last for a minimum of five years - way past what any extended warranty would cover.

The law is purposefully non-specific about this; one would be drawing a long bow to ask for a full replacement cost after five years if a disk drive crashed. As an example, I split the cost 20/80 with my local hardware shop to get the engine replaced on my lawn mower after three years.

So the deal is not with the manufacturer, but with the retailer. If a pair of shoes falls apart, I don’t take them back to the cobbler: I go to the shoe store.

On day 366, without Apple Care, can a retailer tell you to get lost if something goes wrong?

puggsly

I know of no guarantee that Apple will replace a dropped, cracked, crushed, soaked or otherwise damaged iPhone for anything less than the unsubsidized purchase price of an iPhone, or $600-800. That is for the entire 2 year period, during which time you are liable for $65+ contract as well. Now set aside the 2 years of phone support, free head set replacement, cable and charger replacement, and battery guarantee. You are paying $4/month to protect a $1500 financial commitment.

Did you notice the iPhone is covered in glass? Just saying!

If you can point me to a definitive statement that Apple will replace an iPhone for it’s first 2 years for $200. I might change my mind. But without that, $99 sounds cheap!

Ted Landau

If you can point me to a definitive statement that Apple will replace an iPhone for it?s first 2 years for $200. I might change my mind. But without that, $99 sounds cheap!

I’m repeating myself but it seems that is necessary. So here goes:

Once again, I point you to the Apple webpage that clearly states the $200 price for all but the most “catastrophic” damage.

And it isn’t $99 cost, if you need your iPhone replaced due to one of the accidents you described. It’s $148.

As to your other calculations, bear in mind that repairs not due to accidents are covered for the first year anyway. So basing your numbers on two years of coverage for AppleCare is not entirely accurate. As to including the monthly phone contract fee in the money you save via AppleCare, I simply don’t agree with your premise.

All of that aside, if after everything I’ve written, you still feel that you are getting a great deal with AppleCare, far be me from me to try to dissuade you. Get it and be happy.

AreYouKiddingMe?

Darkone wrote:

“My last repair was for a faulty hard drive in my iMac. I am in IT support by profession and normally I would replace a hard drive myself, but iMacs use a proprietary drive from Apple. Fortunately I knew this at the time of purchase, so I hedged my bets and bought the AppleCare.”

I apologize in advance for pointing out the utter stupidity of the above statement. Apple does NOT use proprietary drives in their computers! You will find a standard 3.5” SATA HD in iMacs and Mac Pro towers and 2.5” SATA HD in Mac Mini’s and MBP’s. MBA’s use SS HD’s and the older Airs used 1.8”  or SS drives.

AppleCare is a great deal IF you need/want it. Not everyone wants to deal with repairs or support themselves. AppleCare+ was probably created to help the stupid people in the world get a new phone after they dropped their iPhone in a toilet or down a flight of stairs.

Laurie Fleming

Alternatively, you could have said something like, “I think you’ll find you’re mistaken - Apple uses bog-standard hard drives in its machines.” But I guess “pointing out the utter stupidity of the above statement” is another way of saying the same thing.

Not at all pleasant though, eh?

geoduck

Apple does NOT use proprietary drives in their computers! You will find a standard 3.5? SATA HD in iMacs and Mac Pro towers and 2.5? SATA HD in Mac Mini?s and MBP?s. MBA?s use SS HD?s and the older Airs used 1.8?? or SS drives.

It’s my understanding that Apple does use proprietary drives in its 2011 iMacs.
http://blog.macsales.com/10146-apple-further-restricts-upgrade-options-on-new-imacs

vpndev

The drives in latest iMacs are certainly not the usual ones you find at Newegg/Frys/Amazon etc. I don’t know if they’re proprietary but they’re certainly non-typical.

Apple appears to have some amount of “custom” in the drives in other systems. The drives always have Apple labels and I’ve heard that they have custom firmware.

That said, I have standard, non-Apple drives in my MacPro and 2011 MBP and they work fine.

AlleyC

I think Ted is correct in saying statistically, AppleCare for the purpose of hardware repair isn’t worth it.

HOWEVER: I’ll never be without for many products, because the real value is phone support.

After wasting hours and hours hunting about on the web for solutions I end up calling Apple. Their response time is exceptional. And for all but iCloud support, I’d say 90% of the time you’ll get the right answer in a couple of minutes. (Occasionally they’ll pass you on to a senior tech)

In general I’d say their staff is stronger on System and hardware than the mobile stuff: but it’s all more reliable than some of the well meaning but frequently wrong stuff found in user boards (especially Apples)

IMHO: If your time is worth anything to you - AppleCare is actually a bargain.

Peter F

I find the remark that “anecdotal evidence is worthless” amusing.  Is the evidence Ted has much better?  I think not.  Ted provides no scientifically gathered data and I am left to depend on his analysis of industry-gathered statistics, which might very well be unreliable, inaccurate and/or invalid.  I am quite skeptical of statements that provide neither the data to support the statement or the organization that gathered the data.

I can say that I have maintained a number of Mac systems for businesses in which I have worked, and although Applecare has not payed off in hardware repairs, the help Applecare provided numerous times for nagging technical problems for which a business would have to purchase technical help has more than paid off for the businesses.

Peter

AppleCare for iOS devices is not cost effective because there are no moving parts in an iOS device.  Less likely you will have a failure.  However, for Macs, especially non-servicable iMacs, it is a great value.  I don’t have the lint-free tools to remove the front glass and LCD to do my own repairs, so AppleCare was a great value.  During the last 6 months of AppleCare on my 2008 iMac, the 320GB drive suddenly failed with read/write errors.  Apple no longer stocked 320GB drives since current Macs ship with 500GB drives minimum.  Apple gladly replaced my 320GB drive with a 500GB drive, free of charge, of course.  They also did the repair in 24 hours.  How could I complain about that type of service?  I have owned Macs since 1989 and that was the second time I bought AppleCare, and the first time I used it.  The first Mac I bought AppleCare was for an iMac (iSight), again because those were also not easy to open.  The best feature is that you don’t need to buy it at the time of purchase like other warranties.  You can buy it at any time during the initial 1 year warranty.  That is another great selling point.  I find it a great value for Macs.

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