Warranty Week Updates on Apple

We’re a bit behind with some summaries of some interesting reports from Warranty Week.

The site looked at Apple’s warranty claim costs, which have stabilised over the last couple of years, after a five year period of growth. The company keeps reserves to deal with warranty claims and Apple got to second place, behind General Motors (at $8.5 billion). However, at $3.83 billion, the company has now dropped behind Ford, which is in second place with a $5.0 billion reserve. However, Apple is the largest warranty provider of all. HP Inc and HP Enterprise are also high on the list.

Apple’s claim rate is around 2.3% in its last financial year and over the last 15 years, it has averaged 1.6%. Over the last 15 years, the site has found that across all major US public listed companies (where data is available), the average claim rate has declined from 1.5% to less than 1%, although it has slightly risen over the last three years. The blog attributes the drop in cost to the reduction in the number of companies and the failure of companies that had high warranty claims.

WW Apple Fig 1Apple’s Quarterly Claims Paid. Image:Warranty Week

Extended warranties can be an important revenue opportunity and Warranty Week estimates that Apple sold around $5.65 billion of contracts for AppleCare, down around $1.6 billion since 2015 which makes it the largest service contract company globally and about 3% of Apple’s revenue.

Warranty Week also showed an interesting chart of Apple’s revenue sources.

The website also looked at the overall results for the computer industry, although the number of companies has declined a lot and many do not release data. The companies tracked include Apple and both HPs, Seagate, Western Digital, NetApp, Brocade and Quantum Corp. Warranty claim costs had dropped from nearly 4% in 2003 to around 2.5% recently. Data storage makers have seen their costs drop from around 2.5% to around 1.0%.