Thursday, November 30, 2006

Stupid decision + Stupid Decision = Smart Decision


About three years ago I bought a cheap eMachine from best buy. I think I paid 400$ for the whole package; computer, mouse, monitor, printer, keyboard. The hard drive died about a year ago and that was a pain to get fixed. Well the new drive was easy, but getting my data from the old drive wasn’t. Now the computer is crapped out again. It runs for about 2 minutes and than locks up. Keyboard won’t even respond. (Number and Caps lock lights don’t come/off).

So buying that computer was my first stupid decision. (Well, it wasn’t my first stupid decision ever. There are plenty of stupid decision I made before that. I think Jim has a collection of original artwork called “Stupid things Garble has done.”)

My next stupid decision was getting the service plan. I never do that.

Insurance is basically a bet. Like betting on “don’t pass” at the craps table it’s a proposition wager. I bet my auto insurance company that something bad would happen to my car. They bet me that nothing bad would happen. No cheating is allowed; accident only. Service plans are the same type of thing. The company bets that nothing will break, you bet that it will. This bet typically sucks because the company has a better idea of what’s going happen then I do. (Aka asymmetrical information) Best Buy and eMachine have detailed warranty reports for many units going back to the launch of the product. They also have the resources to hire actuarial scientists (aka odds makers) to tell them what the average cost of the service plan will be to the company. Then they discount the cost to reflect the present value of the future costs (i.e. they plan to invest the money) and mark it up so that they make a profit. I on the other hand get to stand there in the store and think about if the machine in the box is going to break or not. It’s pretty easy to guess who’s going to win that bet over the long run. (Hint: NOT ME)

But apparently I bought the stupid plan. I’d feel like a real idiot if it hadn’t come in hand this week.

This is also why I haven’t been blogging much.

by the way, none of the links in this post are worth clicking on.

2 Comments:

Blogger Simon Hawk said...

After reading this I can't believe you tried to convince me that getting a store bought computer with service plan was better than building a computer from scratch.

After having Joel explain some of the basics and sitting down with me and selecting the hardware componants im convinced that building your own PC is the way to go. You get to choose top of line parts that each have their own warranties .vs one short warranty that covers the whole computer. Also when you install your operating system you don't get a bunch of manufacturer software bundles that take up space and are a pain in the ass. Like when you by a Dell or Gateway for example they have tons of bullshit in them that aren't necessary.

Another plus is cost, the computer that Joel is helping me build will just crest the 600 dollar mark. It's going to have a 250gb hard drive, 1GIG of ram and approximatly 2-3 ghz processor with a 512mb video card and dvd burner. Also I like the fact you can pick what style of 'case' to build your machine in, go to www.newegg.com and check out the cool shit you can do. It's really not that difficult at all, its mostly alot of reading and making sure your hardware is compatible.

30/11/06 05:37  
Blogger Garble said...

Cool go for it. I just know how little you like to complexity and figured you'd be happier buying one. But if joel's going to help you...

30/11/06 10:36  

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