$6 billion iPhone damage bill somewhat suspicious

Americans have spent nearly $6 billion on damaged iPhones according to a new guesstimate. It’s an eyecatching figure but both the methodology and the presentation are open to question.

The figure comes from SquareTrade, a company that offers third-party warranties for electrical goods and, to its credit, does a good job of producing interesting stats to gather media attention. (Witness our recent coverage of its look at varying handset accident rates from state to state.)

Often its figures are inherently questionable because they are based on its own user base, namely people concerned enough about device loss or damage to pay for cover. That’s going to mean a disproportionately high number of self-proclaimed clumsy folk.

This time round the figures come from a survey of iPhone users as a whole, so should be more reliable. The sample size is 2,000 which is enough to be confident in general responses to closed questions (such as “have you ever broken a phone?”)

The main findings are that 30 percent of iPhone users damaged their handsets in the past year, around 10 times the proportion who lost an iPhone or had it stolen. Among under-35s, the damage rate is listed as 50 percent.

While it’s certainly believable that many people have had an accident with their phone (“dropped from my hand” is listed as the most common), that isn’t the same thing as the proportion of people who’ve caused damage that required repair. If SquareTrade is counting people who’ve suffered a ding, chip or scratch as if they definitely shelled out on a repair, the headline figure is very open to question.

The company estimates total damage costs of $5.9 billion in the iPhone’s history, taking into account spending on replacements and repairs, plus lost deductibles by those who claimed on insurance policies.

That works out at around $70 per iPhone that’s ever been sold in the US, which sounds very high. Yes, repairing a damaged handset can easily cost that or more, but we know the majority of owners don’t damage their handsets, and likely many of those who do don’t have to spend anything as a result.

There’s also a major flaw in the comparisons SquareTrade uses to try to highlight the scale of the apparent $5.9 billion cost. It notes the figure is double annual spending on toilet paper and 29 times annual spending on contraceptives. Leaving aside the curious choice of comparison subject (something to do with “damage limitation”?), the $5.9 billion is a figure covering a five year period.

That flaw continues with the note that the 5-year iPhone damage cost figure just about exceeds the expected combined spending by the Obama and Romney campaigns this year. There isn’t really any sensible reason to compare something that’s calculated over five years to a single election.

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