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The Applecare Hustle

basicappleguy.com

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81–90 of 107 posts

Re: The Applecare Hustle

#81

Post by sokoloff »

benjaminwootton wrote: post #73
roenxi wrote: post #58

Earlier quoted context omitted.

I'm staunchly anti-insurance in most cases, as once someone is making a profit it can't be a positive-expected-value deal. But that angle seems to have been covered already so just to be different - insurers also have the strongest incentives in the market to make sure risks don't play out. There is nobody with more at stake in the event of a bad flood or other disaster. The incentive structures around insurance (in…

I pay £30 a month to insure an £X00k bill if my house develops a catastrophic problem. That’s +ve EV regardless of the numbers because the risk avoidance has “value”.

It’s +EU (expected utility), but probably not +E$ (expected money). Traditionally, EV is talked about as E$, not EU.

When you bring in peace of mind and avoiding risk of ruin, those are utility concerns (which make purchase of -EV insurance sensible in many cases).

Re: The Applecare Hustle

#82

Post by dfawcus »

Chernobog wrote: post #53

AppleCare is such a non-issue here in Norway. We have five years of "reklamasjon" (think of it as kind of a mandatory warranty). I wonder how electronics would have been built if this was a global thing.

Essentially the same applies in the UK and Ireland, when the EU warranty thing was brought in (2 years cover), nothing changed as the existing legislation in both states gave longer protection.

5 years in Scotland, 6 in England; I can't recall what Ireland has but believe it is in the same region 5-6.

However one has to know it exists, and argue the point with the supplier, and they will often try to push back.

Added: This is for the goods being of merchantable quality, not for accidental damage.

Re: The Applecare Hustle

#83

Post by roenxi »

matwood wrote: post #78
roenxi wrote: post #58

Earlier quoted context omitted.

I'm staunchly anti-insurance in most cases, as once someone is making a profit it can't be a positive-expected-value deal. But that angle seems to have been covered already so just to be different - insurers also have the strongest incentives in the market to make sure risks don't play out. There is nobody with more at stake in the event of a bad flood or other disaster. The incentive structures around insurance (in…

> I'm staunchly anti-insurance in most cases, as once someone is making a profit it can't be a positive-expected-value deal. Are you also against loans? Insurance is just a way offload risk onto someone else for a fee. An insurance companies profits are not risk free, but they hope a large diverse pool of insured will keep them from being wiped out in a large event. Most of us don't have a choice on whether to carry…

Very much in favour of loans. I am normally willing to lend at about 5-8% depending on estimated creditworthiness, although nobody has offered me that in the last decade.

Re: The Applecare Hustle

#84

Post by matwood »

mehwoot wrote: post #5

In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…

> A company wouldn't offer it if they didn't expect to make money

> So maybe it is actually a win-win

In the case of AC, I think it is a win-win.

Apple could make money and it still be a good deal for the customer. AC on a phone for example. If the user comes in with a broken screen they can pay $100 and get a replacement phone (or $30 for only a screen). The replacement phone didn't cost Apple anywhere near retail (they are probably refurbs), and it cost the user $100+AC cost.

It also keeps users in the Apple ecosystem, and in part leads to their very high customer satisfaction scores. As someone who has used AC a number of times in the past, it's very nice to walk into any Apple store with a broken phone and walk out 15 minutes later with a new phone.

Re: The Applecare Hustle

#85

Post by cascom »

mehwoot wrote: post #5

In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…

To simplify when purchasing insurance typically the first question is:

1) would this be a loss I could afford to bear, if not most people insure and stop there (Home insurance, health insurance, Auto (liability), etc.)

2. If it’s a risk they can afford to self insure than the question becomes “does my view on expected losses differ from that of the insurer?” (E.g. I’ll definitely break an iPhone screen in the next two years so AppleCare pays for itself)

Side note: I think the real genius of AppleCare is that it’s priced extremely attractively and creates a great customer experience, but due to the sticker price of repairs, the math shifts to, replace vs repair when out of warranty…

Re: The Applecare Hustle

#86

Post by sokoloff »

mehwoot wrote: post #5

In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…

> The government also forces me to buy third party insurance to drive my car, which seems fair enough since I can't afford to pay damages for someone permanently crippled from negligent driving.

I agree with your post overall, but this piece always struck me as incomplete at best. My state’s mandated minimums for 3rd party bodily injury are $20K per person, $40K per occurrence (and $5K of property damage liability).

In the scheme of things, those minimums seem like “technically, but not practically” being insured against the risk.

Re: The Applecare Hustle

#87

Post by kleinsch »

fnordsensei wrote: post #18
mehwoot wrote: post #5

In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…

During my decade or so as a consultant, I did a project with one of the oldest insurance companies in my country of residence (they've been around for well over 200 years). They made sure I was aware of their history, in order to understand their business. They started out insuring farms against calamities. If a farm burned down, it was a proper disaster: for the farmer, for everyone who worked there, and for the sur…

I think you're misconstruing the parent's point, and actually saying the same thing they are. They're not saying that insurance is an evil scam empire. They're saying it's a simple calculation: if you can't afford to replace it, buy insurance. If you can, don't.

In your example, the farmers can't afford to replace their farms, so they buy insurance.

The fact that the insurance company in your example is a non-profit is incidental. The farmers have two risks when paying insurance: paying too much and the insurance company not paying out in a disaster. If the insurance company has perfect information, premium == risk probability and everyone wins. Since they don't, they probably have to slightly overcharge - which is OK for the farmers bc they can't afford to replace their farms. If they undercharge, that's also a big risk for the farmers, since insurance in a geographic area faces massive correlation risk. If an earthquake burns down all the farms and the insurance company goes under, the farmers just lost their farms AND all the premiums they've been paying.

Re: The Applecare Hustle

#88

Post by cascom »

sokoloff wrote: post #86
mehwoot wrote: post #5

In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…

> The government also forces me to buy third party insurance to drive my car, which seems fair enough since I can't afford to pay damages for someone permanently crippled from negligent driving. I agree with your post overall, but this piece always struck me as incomplete at best. My state’s mandated minimums for 3rd party bodily injury are $20K per person, $40K per occurrence (and $5K of property damage liability).…

Agree with you.

Separately I have several hundred thousand dollars of auto liability coverage but no collusion/coverage on the actual car, and am often surprised to learn others don’t do the same (with middle aged used cars)

Re: The Applecare Hustle

#89

Post by simonh »

exporectomy wrote: post #62
Chernobog wrote: post #53

AppleCare is such a non-issue here in Norway. We have five years of "reklamasjon" (think of it as kind of a mandatory warranty). I wonder how electronics would have been built if this was a global thing.

Surely that doesn't cover accidental damage like AppleCare does? Apple already provides normal warranties too.

Not accidental damage, but it can cover things like battery failures, screen lamination issues, glitchy circuitry, etc.

Re: The Applecare Hustle

#90

Post by simonh »

oefrha wrote: post #39
ssivark wrote: post #4

1. Is this much repair indicative of abnormal use, or are Apple products not really robustly designed? 2. Why are repairs so damn expensive? Several hundred dollars each to repair a scratched screen or replace a torn earcup fabric!?!?!?!?

> replace a torn earcup fabric I'm generally happy with Apple products, but Beats products specifically have very poor build quality, and from talking to genius bar employees when mine were broken, "repairing" broken headband/earcup/etc. = giving you a new one. I don't touch anything Beats now.

Most Beats products are designed by Ammunition, not Apple, as they were before the acquisition.
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