David R. Henderson  

Yay is for Apple

Keynes and Central Planning... Open Borders and The Walkin...

After my devastating fire in 2007 in which I lost my computer, I switched from PCs to a Mac. I didn't fall in love with the Mac instantly, as my Mac friends predicted I would. It took about 6 months. About a year later, my wife switched also. We are now an all-Mac family.

Why do I mention timing? Because we bought a 3-year warranty on my wife's Mac when we bought it in 2008. Last week, my wife's LCD went haywire and she immediately called Monterey Bay Computer Works, because that's where we had bought it and we had been pleased with their service. We also knew that they would have a record of the warranty.

There was one little problem: the warranty had expired just 8 days earlier. Computer Works suggested that my wife call Apple and see if they would cut her some slack. It took being on hold for 10 minutes, but then she was transferred to the right person. Bottom line: they decided to bear the cost. I have in front of me an invoice from Computer Works for about $450 in parts and $99.00 in labor of which we paid--zero. Yay, Apple.

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CATEGORIES: Business Economics

COMMENTS (16 to date)
Chris Koresko writes:

Perhaps the economic lesson here is that part of the price premium Apple charges can go to better customer support than a commodity PC seller can provide.

Back around 1990, when PCs were expensive, you could get very good service from some of those vendors, too. When one of our lab's Dell machines had its monitor fail (within a few weeks), it took maybe three minutes on the phone to convince them to replace it. We had the new monitor the next day, with a pre-paid return box for the old one, no cost to us.

Today, PCs are a cheap commodity product: that $450 repair bill would buy you a pretty full-featured setup in the PC world. I don't know of any PC maker that charges ~50% above the usual price in exchange for exceptional customer support. I sometimes wonder if there's a niche for that.

John Hall writes:

Yeah I was just gonna say, $550 would get you an amazing new LCD these days.

Maxwell writes:

I had a similar experience with apple - the warranty on my ipod expired just a few days before I broke it. The guy at the genius bar (another phenomenal service) replaced it anyways. Most interesting part was that he did not even need to ask a manager!

Phil writes:

Yay Apple for engineering a product that would fail 3.02 years after the 3 year warranty kicked in. With regards to planned obsolesence, they nailed it!

darjen writes:

My 8 year old Asus laptop is still going strong without any major problems. I did have to get someone to re-solder the power jack though, that cost me $50. Maybe Apple is better on warranties and customer service because their stuff has more major failures.

Pandaemoni writes:

Apple lost me when they tried to assert that jailbreaking their phones violated the Digital Millennium Copyright Act. (See http://www.wired.com/threatlevel/2010/07/feds-ok-iphone-jailbreaking/)

Apple can tell me that I voided the warranty, that's fine...Apple *wants* to be able to sue me for damages if I I try running unapproved apps. Jobs's personal campaign against Flash video also just strikes me as weird. Granted that Flash is a resource hog and clunky...but it's also pretty much standard and so a lot of content is geared to it.

I get the whole "benevolent dictator" routine that Jobs is into. He prevents people from doing thins he dislikes, and that in turn protects them from having bad experiences (and thereby protects the brand). It also "protects" people from various good experiences...though people are far more likely to remember the time their computer melted down or Flash made it slow to a crawl than they are to remember when "that program ran without a problem" or a video played as intended. It's essentially a point in favor of the benevolent dictatorship business model that you remember feeling frustrated...but you never remember that time you weren't frustrated.

It would be nice to have some of the built in programs that they do have though.

Arnold Ziffel writes:

About one year ago, one of our precious dogs chewed completely through the monitor cable on my Apple 30" monitor. Aaaahhhh!!!

I made an appointment at my nearest Apple Store, fully expecting to have to pay for the replacement cable and installation, and much to my shock, the Apple employee said, "I think we can take care of this." I told him this wasn't a warranty issue - it was a dog issue, he shrugged, had me sign the order allowing him to ship the monitor for repair. Three days later, I picked up the monitor and there was no charge!

Now, that's customer care.

yoshi writes:


Apples doesn't support flash on mobile devices for a simple reason. It simply doesn't work on that platform. Why would a company support a proprietary standard that provides such an awful user experience on mobile devices?

And jailbreaking of phones (Apple's or others) IS a violation of DMCA. Which is an incredible stupid set of laws. Work to get it repealed. Don't bitch about it when a company takes advantage of it (and Apple is hardly alone here).

And really - I don't understand some peoples personal obsession with hating on Jobs.

Michael Stack writes:

Jailbreaking a phone is not considered a violation of the DMCA (at least, not anymore):


And I've had really good luck with Apple products. I had an iPhone with a bad 'sleep' button, and the headphone jack was filled with garbage from being in my pocket for a year. No questions asked, they gave me a brand new replacement (8 days before the warranty ended). You do pay for that service level however; Apple products are incredibly expensive.

Michael Stack writes:

Oh, and regarding Flash on Apple mobile products: I have long suspected that the real reason Apple doesn't support Flash is because Flash is essentially a Virtual Machine - once you allow Flash on a device, the user is free to run just about any type of application within that virtual machine. Note that JVMs (Java Virtual Machine) and emulators are also not permitted.

Addicted writes:

Michael that's an easily disproven assertion.

1) flash on any phone (including android phones when google and adobe pulled out all stops to support flash on android) arrived 2 1/2 years after the iPhone. It's only now about 4 years after the iPhone that flash is usable on those phones but still kills battery life.
2) for the entire 1st year of the iPhone there was no app store. The only way to develop apps was through the web using html5. Many developers (including me) whined about this on the Internet. Html5 is a more capable runtime than flash. For example, nearly all of google's software (google docs, gmail, google reader, etc) is delivered through html5. If apple wanted to avoid alternate runtimes the iPhone wouldn't have the best html5 support.
3) adobe flash is terrible on non windows platforms. Their Mac player was universally despised even before the iPhone, and they did not even have a Linux player. Even now, the Linux and Mac players are not even half as good as the Mac. It would make no sense to support a platform which is historically hostile to you, and furthermore, will be o bel dyed soon by a better platform (html5).

Garrett writes:

Apple originally charged you out the wazoo to be able to provide you with that service. Dollar for dollar, PCs are a better value.

Pandaemoni writes:

@ Yoshi:

As noted, in the article I linked to and by Michael Stark, jailbreaking has been ruled not to violate the DCMA.

I don't hate Jobs, I just avoid Apple products because (A) PCs work very well for me, (B) Apple is supposed to be a cooler company than their stance on the DCMA suggests they really are, and that separation creates cognitive dissonance for me, and (C) Jobs, for branding reasons, prefers tight control over his products and I suspect his products would be even better if he stopped that. I am voting those issues with my wallet, but I have recommended Macs to others (particularly those who could not handle the complexities of PCs and wouldn't be inconvenienced by certain design decisions made by Apple that would drive me nuts).

In fact, my girlfriend has a Macbook Air because I recommended it to her. She really likes it (although she has had issues with customer service...she refers to them as "the euphemistically named Apple 'geniuses'"). It always comes down to what is best for the individual and their particular circumstances.

I don't understand abject Apple hatred *or* the rampant Apple fanboy Kool-Aid drinking. These are just machines, and they all generally work well.

John Voorheis writes:

Spec for spec, there's only a few products that are actually being sold for a big premium vis-a-vis competitors. The iPhone is pretty much the same price as any other high end smartphone, and if you compare the MacBook Pro to other high-end laptops (Alienware, etc.) they're reasonably competitive. Its at the lower end (the regular MacBook) that you have some "overcharging".

Kahuna writes:

@ Pandaemoni

"It always comes down to what is best for the individual and their particular circumstances."

I could not have said it better and I applaud you for having written that.

As a Mac user, I am partial to Microsoft's Bing for search and I have several Hotmail accounts, along with mucho Microsoft software.

Most important of all: if Microsoft and Apple didn't _both_ exist, there would be no reason for either company to keep improving its products.

You "vote with your wallet" for personal philosophical reasons and I can respect that, too.

Walt French writes:

@DavidH, your experience with Apple service (as comments, my personal experience and JD Powers surveys all suggest) is far from unique. It also coincides with a period where Apple has had +100% growth rates in earnings, driven both by sales and margins. They seem to be doing something — maybe, many things — right.

I interpret this as saying that Apple offers very favorably differentiated products in what others see as commodity markets. But the exceptionalism seems to challenge economic orthodoxy. Is this all about “investing” $549 into PR that's perceived to have a higher NPV? Is it counter to rational behavior? Given that it's impossible to reap any economic benefit in a competitive market, is this an example of positive externalities to oligopoly?

I'd be delighted to read well your favored economic theories can take on this topic.

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