Uh, Is That Your Broken iPhone? Cost of Freebie Replacements Soar at Apple
Apple’s (AAPL) latest quarterly results show that warranty claims this year are still growing faster than sales, a trend that could become a concern if it continues.
In the third quarter, Apple paid $436 million in warranty claims, up 51% from the year ago. By contrast, sales grew just 23%, to $35 billion. Apple has a customer-pleasing, liberal return policy on its gadgets, and it appears that either a growing number of iPhones and such are malfunctioning badly enough to qualify for a replacement.
Apple suffered a slight dip in profit margin in the last quarter, as revenue growth slowed a bit.
So far this fiscal year, Apple has paid $1.3 billion in warranty claims, compare with $790 million in the same period last year. YCharts covered the growing warranty costs in more depth here.
The company recognizes potential warranty claims at the time of its sales. Its products typically carry a one-year limited warranty.
Filed under: Company Analysis