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Apple understands something many retailers have lost. The way you deal with the customer when they’re not happy turns you into a lifetime customer. And if it doesn’t it’s a small price to pay.

Costco, Nordstrom, Marine Layer, etc.

To me this is a winning strategy. Even if it’s 1 in 5 or less.

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It's a winning strategy for high-margin luxury goods, not for everything.

If that one warranty-abusing user convinces 2-3 others to buy the same product and they don't abuse the warranty, the company is still making more money.

It comes down to margin. In a commodity business like Android phones or TVs the margins are razor thin. With a 10% profit margin you’d need to convince 10 other buyers just to break even on one fraudulent replacement. The real difference is Apple has some of the best profit margins in the industry.

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