Options?

• pay $250 for a replacement unit (by mail or in an Apple store)
• pay $150-200 for some company to put in a replacement screen (which voids the Apple warranty)
• continue using it, although the glass is cracked, the beauty is gone, and my eyes tear up every time I look at it
• (no, the $5 DYI option is not an option)

I’ll pay $250 for the replacement unit. Although I know I’ll probably drop this one too, sooner or later (please, God, later!). So I investigated the possibility of buying some kind of insurance against accidental damage.

Apple sells an extended warranty, but no insurance against accidental damage. Of course, the regular $3.99-5 AT&T phone insurance is not available for the iPhone.

An AT&T store manager recommended Safeware, and other sources suggested checking with home/renter’s insurance companies. Geico doesn’t offer it, but apparently State Farm does. I called two State Farm agents and they both told me State Farm stopped writing this policy for the iPhone because they were losing money. A Safeware customer rep. told me Apple hasn’t released components for the iPhone, so no one can repair it – that’s why insurance is not available. I did find one company who offers iPhone extended warranty (just like Apple Care) and Accidental Damage Protection (ADP): SquareTrade. You can buy ADP only within the first 30 days of getting a brand new iphone. The rep. told me they’re also considering dropping iPhone coverage, because it doesn’t make financial sense.

I hate Apple.

But I love my iPhone.

So, does having a good/revolutionary product mean you can abuse your market? Dictate your own terms, set high prices, refuse insurance, make it difficult for other companies to insure your product, charge a fortune for a replacement unit when you know it will, sooner or later, break?!

What are the factors that make it possible for Apple to “abuse” customers and still keep them coming back?

• a good product. After having the iPhone for a few months, I can’t imagine living without it. It’s useful! It’s beautiful. I’m emotionally attached to it, to the pleasant experience of using it, and to the unique feeling of “cool!” (powerful branding, there). I know it’s silly, but I can’t help it. It’s gotten me at a level deeper than reason.
• targeting a high-end market. People who buy the iphone (most of them, anyway) can afford the $250 replacement cost. They won’t be happy about it, but it won’t break the bank.

Apple’s marketing strategy works – but is it good PR? Apple has the potential to define a new type of organization-public relationship: the (happily) abusive one! Can this type of relationship last, in the long run? Does it provide enough of a trust cushion to carry Apple through a major crisis, should one happen?

What do you think?

Is Apple’s marketing strategy somewhat abusive? What makes it work? What does it mean for PR and the long-term relationship with publics? How do you feel about your iPhone? How do you protect your iPhone? If it broke, would you pay $250 to replace it? If it broke again, would you pay $250 again?