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Prominent Accountants Blast Apple's $1.99 802.11n Upgrade Reasoning

How do you feel about Apple's decision to charge $1.99 for 802.11n

  • It's Fine

    Votes: 89 36.8%

  • Don't like it

    Votes: 104 43.0%

  • It'd be okay if they gave an adequate explanation

    Votes: 49 20.2%
  • Total voters
    242
MacRumors

MacRumors

macrumors bot
Original poster
Apr 12, 2001
63,513
30,788


Some sites have been picking up on a recent Wall Street Journal article (paid subscription required) that quoted prominent accountants disregarding Apple's stated reasons for charging $1.99 for enabling 802.11n capability on Core 2 Duo based Macs and the Mac Pro.

A statement from Apple had previously blamed the charge on "generally accepted accounting principles", or GAAP. However, the Journal's interviewees do not agree.

"GAAP doesn't require you to charge squat," says Lynn Turner, managing director of research at Glass Lewis & Co. and a former chief accountant of the Securities and Exchange Commission. "You charge whatever you want. GAAP doesn't even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn't charge for it."

[...]

Still, Apple's language surprised officials who oversee accounting rules. "Accounting doesn't require any charge for anything," says Edward Trott, a member of the Financial Accounting Standards Board, which writes the accounting rules. "No, GAAP doesn't tell you to do anything. You need to work out your transaction with your customer, and GAAP will tell you how to reflect your transaction with that customer."
Click to expand...

The reaction from the Mac community appears to be mixed since the formal announcement from Apple. While many were happy to see the final price drop more than half from its previously rumored $4.99 pricetag, many others were frustrated at having to pay anything for hardware capability already in their systems.
 
Article Link
https://www.macrumors.com/2007/01/25/prominent-accountants-blast-apples-1-99-802-11n-upgrade-reasoning/
0

0tim0

macrumors newbie
Oct 19, 2005
18
0
Who cares?

$1.99. Who cares? If you think that is so expensive, live without "n". You'll be just fine.

--t
 
longofest

longofest

Editor emeritus
Jul 10, 2003
2,924
1,682
Falls Church, VA
Note, its not the fact that Apple is charging that the accountants are blasting, but Apple's stated reasoning.

Us in the mac community seem to have two different beefs...

a) we don't like the fact that they are doing it at all
b) we don't like the reason they gave for it

(or none of the above)
 
combatcolin

combatcolin

macrumors 68020
Oct 24, 2004
2,283
0
Northants, UK
Seems there disagreement over whether apple need to do this, so Apple are playing safe and charging.

Of course, you would think the obvious solution would be for Apple to talk to the regulatory body and simply ask them.

If the defense lawyers are confused then so must be the prosecution council.
 
Gasu E.

Gasu E.

macrumors 603
Mar 20, 2004
5,033
3,150
Not far from Boston, MA.
I didn't read the detailed criticisms, just the clipped quotes. But these indicate Apple is being criticized for the wrong reasons. Apple didn't say "GAAP requires us to charge something." Apple said, in effect, "if we don't charge something, GAAP may require us to consider the original product to be a partial shipment, which may require us to restate earnings." Even if Apple is right (and it is certainly a matter of opinion if they are), there is no "requirement that they charge something." Apple in any case has the option to restate earnings.
 
hob

hob

macrumors 68010
Oct 4, 2003
2,004
0
London, UK
I really really really want some news agency to use the word dubious to describe Apple in this :p

It does sound strange. Why charge $1.99? Why charge at all? $1.99 is such a token amount...

That's like £1. I sneeze £1. And I'm a student!
 
hob

hob

macrumors 68010
Oct 4, 2003
2,004
0
London, UK
Oh, and one further point. This only affects people that bought the very very latest Mac's, and the latest Airport base station, right? I don't understand the big deal - because surely it only affects a handful of people.

That being said, it is a little... dubious...
 
Gasu E.

Gasu E.

macrumors 603
Mar 20, 2004
5,033
3,150
Not far from Boston, MA.
hob said:
I really really really want some news agency to use the word dubious to describe Apple in this :p

It does sound strange. Why charge $1.99? Why charge at all? $1.99 is such a token amount...

That's like £1. I sneeze £1. And I'm a student!
Click to expand...

Obviously because Apple thinks there is some principle involved. $1.99 just about covers their handling costs. It's preposterous to think that Apple is lying to cover up some profit-generating scheme, because there ain't no profit in this.
 
Copland

Copland

macrumors regular
May 26, 2006
114
0
Rochester, NY
synth3tik said:
If I pau the $1.99 will depend on if I get the Airport, at which point 2 bucks is no big deal
Click to expand...
Well, if you get the airport, you don't have to pay for the upgrade. (Edit: Woops, beat to it)

I'm of the opinion that it's fine. I'm currently quite in the red, but I could probably find $2 on the ground if I had/wanted to.
 
C

cherrypop

macrumors member
Sep 27, 2006
31
0
This draft n upgrade story is doing a great job of taking the focus off of the options story. Calculated?
 
V

vitrector

macrumors member
Jan 18, 2002
70
0
no big deal

I really don't understand how this even is an issue. People buy a computer with certain capabilities, and presumably are happy with it. Then they get the opportunity to upgrade the software of the wireless chip for $1.99, less than most espresso drinks, and they get upset. This is just so blown out of proportion. I would have gladly paid the $4.99.
People are writing about this because AAPL is so popular right now, and there are all the knuckle-heads that think Apple, Inc. is abusing them by 2 bucks.
I think it is great to get n without having to buy another linksys or Apple base station right away.
 
T

Twenty1

macrumors member
Feb 23, 2006
35
0
Gaap...

Having sat through more accounting classes than I care to remember, the accountants are technically right about GAAP. Like any good Accountants, they are really nitpicking what Apple is doing (which is why I really hate accounting.)

If you remember the line from Pirates of the Carribean, GAAP is "more like guidelines."

Yes, GAAP doesn't require you do to many things - it's not a law per say. However, businesses constantly use the guidelines to recognize revenue in a way that is positive for them. You hear about it all the time if you follow any financial news.
 
0098386

0098386

Suspended
Jan 18, 2005
21,574
2,908
I'd rather it be free, but seeing I won't be getting an N wireless router I couldn't care less :)
 
P

Panu

macrumors regular
Mar 31, 2005
102
0
Virginia suburbs of DC
Why does anyone care?

$1.99 won't even buy a cup of coffee these days, so what's the big deal?

If someone says, "It's the principle of the thing," then I'd say, "You need to learn how to choose your fights."
 
pale9

pale9

macrumors regular
Oct 10, 2005
176
0
cary, north carolina, before that boca raton, fla,
pissed off at the stupid reasoning, not the $1.99

i would not have a problem at all if apple would have simply said they will charge $x.xx for the update. not that i want to pay, but they are running a business and they can charge whatever they want (even though almost nobody charges for firmware updates).

*however*, i hate being sold for a fool, and that is exactly what apple did by coming up with a totally bogus and stupid reason why 'they had to' charge for the update... yes, accounting rules made us do it! no, it is SOX!!!! wait, homeland security forced us to!
 
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