Extended Warranties Morph to Protection Contracts

consumer reports adWarranty Week created an article that highlighted that it is ten years since the influential Consumer Reports magazine in the US placed adverts that told consumers that they should not buy service contracts. Although there was a big reaction at the time, Warranty Week says that consumers have forgotten the advice and that the world of warranty has changed, especially after the release of the iPhone. Apple and the service providers have offered more and more protection to consumers. The contracts have become more and more valuable with the overall value of the service contract reaching $42.2 billion, up from $29 billion in 2006. Taking vehicle contracts out brings the value down to just over $21 billion, with the big growth coming from mobile phone contracts.

Analyst Comment

In writing this story, I’m reminded of a long term friend I had that was working for a CE company. After years in monitors and TVs, he ended up in the warranty area, somewhat to his disgust, but he was a loyal company man and sorted out its marketing and sales of protection plans. I remember him saying to me, “Bob, it’s really become a new pleasure to be involved in displays and actually contribute profit to the firm!”. (BR)