Fixing your drowned or broken iPhone
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What do you do if your iPhone has suffered a fate not covered by its Apple warranty? All may not be lost!
A couple of solutions for people in the Boston, Massachusetts area are to bring it to either "iPhone Curt" or Boston iPhone Repair (see web links below). iPhone Curt provides an array of services catering to iPhone users. Boston iPhone Repair successfully resurrected a friend's iPhone that had suffered through ten minutes of his washing machine's 'wash' cycle - with no loss of data!
If you live elsewhere, you can mail in your iPhone to at least one of these services or you could look for a similar service in your area. If water is a component of your iPhone's (or iPod's) problem, you might also consider ifixit's "Thirsty Bag" (see link below). The Thirsty Bag is a liquid absorption bag designed to dry all the water out of your phone after it gets wet.
If the phone has well and truly been dunked, though, don't hold out too much hope. Your best bet is to retrieve a dropped iPhone as quickly as possible from its underwater resting spot, dry it off as best you can using a towel, then consider further measures, such as repeated sessions over the next day or so with a hair-dryer (set to low heat - you don't want to bake the device).
Check the internet for additional remedies ... or consider moving to the Boston area!
Apple has built into its iOS devices indicators that can tell you (and Apple's support staff) if the device has come into contact with water. These indicators are described and illustrated in the link below.
Disclaimer: I have not had direct experience with the above services or tools, so please understand that results are not guaranteed.