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Old Jan 19, 2007, 09:47 PM   #1
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Avoiding Apple's n-come tax




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Old Jan 19, 2007, 10:02 PM   #2
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Interesting analysis. Clearly the whole industry has to do something like this. SOX is just way too restrictive to the way the computer industry does things, otherwise. Not to mention that stopping things like this doesn't really protect the public in any way related to the Enron fiasco.
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Old Jan 19, 2007, 10:32 PM   #3
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SOX is just way too restrictive to the way the computer industry
SOX is way to restrictive, but the thing to fear is the class action lawsuits later alleging that SOX was voilated. Until and unless it is clear, companies have to assume the worst from the trial lawyers.
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Old Jan 19, 2007, 10:45 PM   #4
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It will be hacked, as soon as the updated driver is out. There are work arounds for everything.
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Old Jan 19, 2007, 11:02 PM   #5
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It will be hacked, as soon as the updated driver is out. There are work arounds for everything.
That's not the point, I doubt Apple really cares that people are going to crack their Wireless N enabler that they don't even want to charge for in the first place. The point is that this is a stupid law that should be killed.
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Old Jan 19, 2007, 11:16 PM   #6
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It's all about revenue recognition

It basically boils down to this...

If Apple delivered iMacs and MacBooks with 802.11n hardware but not the software to drive them, then legally they would not be able to recognize the revenue from the sale until after the software was delivered. In other words the sale is not complete until the full features are delivered.

By charging additional fees they are selling the 802.11n as a new capability and therefore seperating it from the previously sold product.

If they gave it away then SOX would claim that Apple's accounts included revenue from products that had not been completely delivered and this would be in breach of the accounting rules.

If these were purely software features (like skins) it would be no big deal, because the original product delivered was complete. It's the fact that hardware was present without the driver that is the complication in this issue, and why, most likely, Apple are charging for the software drivers and therefore protecting themselves from any accounting claims.
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Old Jan 19, 2007, 11:17 PM   #7
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What would be funny is if Apple sold a total of 5 copies of the wireless N enabler. And, then when asked about it they would say "Oh, well... you know."
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Old Jan 20, 2007, 12:01 AM   #8
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Originally Posted by bhibbert View Post
It basically boils down to this...

If Apple delivered iMacs and MacBooks with 802.11n hardware but not the software to drive them, then legally they would not be able to recognize the revenue from the sale until after the software was delivered. In other words the sale is not complete until the full features are delivered.

By charging additional fees they are selling the 802.11n as a new capability and therefore seperating it from the previously sold product.

If they gave it away then SOX would claim that Apple's accounts included revenue from products that had not been completely delivered and this would be in breach of the accounting rules.
Then why not charge $0.01?
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Old Jan 20, 2007, 01:08 AM   #9
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Originally Posted by Blackheart View Post
Then why not charge $0.01?
distribution fees, profit margins.
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Old Jan 20, 2007, 01:54 AM   #10
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0.01

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Then why not charge $0.01?
let's be reasonable....... .50
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Old Jan 20, 2007, 02:42 AM   #11
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I think they could have been much more imaginative (dare I say innovative?!) with this. Like $1 for the updater + 1 free iTunes track of your choice. They can charge 99 cents for an iTunes track, so it would effectively make it a 1 cent charge after the promotional cost of the track.
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Old Jan 20, 2007, 08:33 AM   #12
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Originally Posted by bbarnhart View Post
What would be funny is if Apple sold a total of 5 copies of the wireless N enabler. And, then when asked about it they would say "Oh, well... you know."


What? You don't believe us? Those damn Windows Mobile tools stole our iPhone interface in one day! Erm, what do you mean we stole the iPhone name? Erm... we are firmly committed to the war against terrorism, erm, piracy, erm, Windows. Yes. Gotta run. Fashion shoot, you know.
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Old Jan 20, 2007, 08:36 AM   #13
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Old Jan 20, 2007, 08:50 AM   #14
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If Apple delivered iMacs and MacBooks with 802.11n hardware but not the software to drive them, then legally they would not be able to recognize the revenue from the sale until after the software was delivered. In other words the sale is not complete until the full features are delivered.
Why? They never sold 802.11n, they sold a hardware and software bundle capable of 802.11g. And this is exactly what was advertised, what people paid for, and what was delivered. Sale completed.

By that reasoning, they wouldn't be allowed to distribute new versions of Quicktime either. They enable my hardware to display movies in new formats, something that has not been advertised when I bought the hardware.

Complete BS.
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Old Jan 20, 2007, 08:59 AM   #15
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By that reasoning, they wouldn't be allowed to distribute new versions of Quicktime either. They enable my hardware to display movies in new formats, something that has not been advertised when I bought the hardware.
It is BS, but it isn't Apple's fault. Every major company doing business in the US is adapting their practices as a result of the SOX.... And as another poster above said, they are doing it in a vacuum without knowing what future lawsuits might be raised for "non-compliance."

Apple released function enhancing updates to their products in the past. For instance, the previous AEBS got WPA2 after it initially shipped, as did, I think, Panther. So did Microsoft (e.g. XP/SP2). But the adaptations to this act are just now coming into place, and there is little trial law surrounding it. So accountants and legal counsel are playing it safe. It may be that for a while, Apple, MS, and everyone else will be very hesitant to do what they have done in the past.

It might all boil over. It might not. Hopefully, for the computer industry, where there is a long tradition of releasing free functionally enhancing upgrades to their products, the resolution will be one that favors customers. But we have to wait and see... SOX isn't just concerned about customers. Who had the major fallout from Enron? All those people who lost their jobs? All those people whose retirement accounts were affected by the stock market impact? This is a complicated problem. SOX is not necessarily the best solution. But it is the one that is in place, and we have to wait and see what happens.

In the meantime, so Apple is charging $2 to get 802.11n. Oh my god. I think I'm going to slit my wrists...vertically, naturally.
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Old Jan 20, 2007, 09:11 AM   #16
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Why? They never sold 802.11n, they sold a hardware and software bundle capable of 802.11g. And this is exactly what was advertised, what people paid for, and what was delivered. Sale completed.
Not completely true. The hardware was able to provide 802.11n. It was software that disabled this. Your QT analogy does not apply. The hardware is already capable of displaying the format and revenue was recognized at time of hardware sales.

Probably no one disagrees with your statement of BS, except that SOX is causing this, not Apple. And from the experience I have by daily having to deal with SOX, I understand Apple's interpretation. It's unfortunate, and I don't think SOX was meant this way, but as long as it is not clear, better to take the safe route as company.
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Old Jan 20, 2007, 09:22 AM   #17
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It was software that disabled this.
No. There was, at that time, no software in existence to enable it. There's a world of difference.
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Old Jan 20, 2007, 09:46 AM   #18
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I just spent $5 worth of time reading the article and the posts. Doing the workaround will cost another $5-10 of my time. I rather pay Apple $1.99 and get it over with.

Oh, this post is $0.02.
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Old Jan 20, 2007, 01:27 PM   #19
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No. There was, at that time, no software in existence to enable it. There's a world of difference.
You're correct. We can get very technical, but you're right. Hardware had the capabilities, software didn't exist to enable. But my point was to proof the QT codec example was not a similar scenario.
It would be the same, if a hardware accelerator was build in, not utilized, and the codec would enable the hardware part. But just upgrading software to provide new functionality on the same hardware as already was utilized would not fall in the same category.

Now, technically spoken, I don't think Apple's interpretation is what SOX tried to solve. This is corporate lawyers making sure no one can come back and get them in trouble. I think the lawyers stretched it a bit on this one, but I can see Apple's point that it's better to prevent than to cure at this time.
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Old Jan 20, 2007, 02:17 PM   #20
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What it means.

Hey,..

YOU KNOW WHAT? NUTHIN!!!
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Old Jan 20, 2007, 05:55 PM   #21
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So whwy didtn apple just release it complete instead of waiting for this enabler?

Whos fault is it really? Not mine i went after what they where selling.
Is not my fault they did not want to enable it so why should i have to pay?

Yes its 1.99 but guess what if we dont stand up to this other companys will be like "HEY THEY WHERE FINE WITH SO LETS USE THAT EXCUSE TO GENERATE ANOTHER 6MILLION"

is not our fault is apples fault period.
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Old Jan 20, 2007, 06:28 PM   #22
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It'll be interesting to see whether the enabler becomes available as a free download from a country that doesn't have this law. Apple wouldn't tell their US users to go there, of course, but it might still be a possible workaround.

Edit: As a side note, I see that they're up to their usual tricks again: In one place they say that N offers 5x the performance, and in a different place they say it's 5x faster.

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Old Jan 20, 2007, 08:05 PM   #23
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So whwy didtn apple just release it complete instead of waiting for this enabler?
Those two options are mutually exclusive. If they had the software ready, it would have been released complete.

Quote:
Whos fault is it really? Not mine i went after what they where selling.
Is not my fault they did not want to enable it so why should i have to pay?
You got exactly what they told you they were selling. They had no obligation whatsoever to enable it at all, for free or otherwise. Why is it okay that you have to pay? Because you were never entitled to it to begin with. It certainly would be nice if it was made available for free, but there's no reason customers deserve it for free.
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Old Jan 20, 2007, 08:27 PM   #24
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Then why not charge $0.01?
They probably estimated the cost to process and report the payments. Administrative costs are not free. Look at bills you receive. Many will have a 'processing' fee. I am surprised they actually are charging so little. The fallout would have been the same for $5.
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Old Jan 21, 2007, 10:25 AM   #25
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But my point was to proof the QT codec example was not a similar scenario. It would be the same, if a hardware accelerator was build in, not utilized, and the codec would enable the hardware part. But just upgrading software to provide new functionality on the same hardware as already was utilized would not fall in the same category.
This is exactly what they did. It is the same hardware component that was already being utilized (for 802.11g) that they are now using to do n too.
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