Chiming in
The analogies are interesting here...especially since UK and US medicine are vastly different, and are seen through different cultural lenses. Personally, I like the knee/insurance one. But it's very difficult to get a second opinion on an eReader...thus the scepticism.
As far as the reader goes, there's a business term called "goodwill" that Sony should really think about here. It's probably worth more than the $250 they'll save to fix the reader, especially when they are facing the 800-lb Amazon Gorilla for market share.
Combine that with the fact that the bad "press" they get here on one of the premier eBook sites, and if this thread turns, say 2-4 customers to Amazon, they've lost. Of course, nobody has repair/return statistics for the eReader, but you can see my point. It's probably better for Sony to turn this into good PR and write off the cost of the return.
If the product is so bad that returns are being abused, they probably should consider making a better product anyway.
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