The disposable decade: and the economics of the extended warranty: iMac, phones, camera and homes?

The LCD screen of my 2.5 yo $2000 iMac is coming apart. The average cell phone costs about $400 (hidden in the monthly fee) and lasts 1-2 years. My 1.5 yo Canon (made in Japan!) SD600 digital camera's mode switch is failing. The February 2008 Atlantic (not yet online) describes the construction techniques of $600,000 (made in America) McMansions -- they won't outlast their mortgages. Nothing made in China lasts much beyond the warranty period -- if that.

We live in the decade of the disposable. We no longer own material goods, we lease them for their warranty period.

Except for the McMansions, unless you consider your home insurance policy a warranty.

Ok, so there's one very big exception. Modern cars last a very long time. I wonder when that will change.

So, geezers and young-uns alike, let us wrap our minds around the new reality beginning with these guidelines:

1. Products are only as good as their warranty. So before you buy, you need to know the warranty will be honored.
2. Product lifespans are now about 120% to 300% of the extended warranty, with a median value of 140% (so there's a long tail).

In this world extended an extended warranty is not necessarily a bad deal - unless you're the company on the hook for the bill.

Apple provides AppleCare, which these days seems to be better behaved than a year or two ago (at which time Apple's outsourced repairs had severe quality problems and Apple often struggled to get off the hook for repairs). In this world Apple Care might not a bad idea, but that means you need to factor AppleCare into the cost of the product. When you do that the cost of computers is rising, not falling (though the cost/capability is still falling).

The best deal, however, are credit card buyers insurance programs. American Express, for example, doubles the original warranty up to an additional year (so it's basically an extra year unless you're foolish and buy something with a worthless 3 month warranty).

AMEX used to advertise this feature of their credit cards. They don't any more -- I couldn't find any mention of it on their web site. No mystery there. It must cost them a bundle. I wonder if they still offer it with new cards.

My card has this feature, which is why I buy everything with it. The program might be a secret now, but it still works. I couldn't use it for the iMac (I passed the two year limit), but for the Canon I called the secret number (800-225-3750) and a most excellent service person quickly walked me through the process. Here's how it went:

• I assembled the warranty proof (Canon web site), my invoice (Amazon.com web site) and the entry in my AMEX statement (AMEX web site).
• I should have noted the serial number on the camera as they asked for that, but they didn't really need it.
• I phoned.

If they decide to f/u they might request the camera or the documentation, but the last time I called they didn't. Instead the full original cost of the camera was credited to my account.

The buyers insurance program site did warn of "an extremely high call volume". I wonder how long they'll be able to keep offering this program.

In the new world, it's a great deal for me.

Now, about those McMansions ...

Update: The other question I was asked was "how did you learn of the buyers assurance program"? I assume AmEx uses that information to eliminate clues to the existence of the program.

An old post also reminds me that I bought the SD 600 through the same AmEx buyers insurance program when a Canon SD 450 mode switch failed! So AmEx has paid out on two consecutive Canon compact cameras. I'm thinking I might replace the SD 600 with something that's not from Canon.

Update 2/11/08: It took less than 8 business hours for buyers assurance to credit my AMEX card. So far they don't want the camera, though of course I'll hold on to it. Amazing response really, though it seems a risky business for AMEX to be in. (On the other hand, the buyers assurance and AMEX security programs are why we use the card for every possible transaction, so they so make a fair amount from their slice of our transactions.)