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You point about other companies "not doing it like Apple's doing it" isn't valid unless you also know how the other companies account for the revenue.

Haha.
My point is valid. You see, my argument doesn't depend on how they do their accounting. it is based on whether or not they charge for their updates. I don't care how they push the numbers, and because it is proven that other companies don't charge for similar or even bigger upgrades. So no matter the accounting, since they do not charge for upgrades similar to this, they're indeed not doing it like Apple. I don't have to have a copy of their accounting manual to check whether they make me pay or not.


If other companies account for their device revenue on a subscription basis like Apple does for the iPhone and AppleTV, then that accounting allows for them to provide free updates.
Haha, yes. It's a choice on Apple parts not to do that with the touch etc. Hence, they're not doing it like the others in the market place.

The quote below is verbatim from Apple's 2007 10-K filing with the Securities and Exchange Commission.


http://phx.corporate-ir.net/phoenix...vPXRlbmsmaXBhZ2U9NTA5NDg5MyZkb2M9MSZudW09MTk=

Very interesting. But it doesn't actually say anything other than what I have been saying: It's a business strategy/practice.
 
Great post phooi.

To reiterate - Sarbanes-Oxley is not an accounting rule. It has no bearing on how Apple must account for sales of ipods or iphones. None at all. The revenue recognition rule covering the sales of both devices (SOP 97-2) has been in place since 1998. If anyone at Apple made reference to Sarbanes-Oxley with regard to how to account for these sales it had to be a pr driven decision. It's akin to saying "we have to charge for upgrades or else we'll be charged with accounting fraud."

Apple could have chosen to provide free upgrades on the ipod touch. Had they done so, they would have been forced to recognize the $400 sales price as revenue over 8 quarters ($50 per quarter). Wall Street would have hated this, since growth in ipod touch sales (at the cost of sales of other ipod versions) would negatively skew revenue results and trends. Thus, Apple decided to charge for the software and take all the revenue up front.

I also find it humorous that people actually are angered by this. If you don't like it, don't buy it. Apple can provide you bug fixes for free - it's not like you are stuck with a product that doesn't work. Do you all bring your four year old cars back to the dealer and demand that they do a free install of GPS and side airbags and the more powerful engine that is found in the newer models?

And who cares what their competitors do? If they provide free upgrades, then they have to follow a different accounting model (one that Apple didn't want to adopt for the touch). Either that, or they don't follow US GAAP (e.g. Sony). But if you like their upgrade policies better, buy their product. BMW includes all maintenance on new cars for 3 years. If I own a Honda, should I complain that I am being screwed because they don't give me free oil changes?

To answer one last question I saw above, Apple could not have separated the software from the hardware in the ipod touch for accounting purposes. Because the upgrades are "unspecified" at the time of purchase, GAAP forces you into subscription accounting for the entire sale if you provide the upgrades for free.
 
Do you all bring your four year old cars back to the dealer and demand that they do a free install of GPS and side airbags and the more powerful engine that is found in the newer models?
If they were giving other owners of four year old cars those upgrades for free, then yeah - I'd want them too. ;)
 
Haha, yes. It's a choice on Apple parts not to do that with the touch etc.
IMO, Apple released the iPod touch with zero intentions of giving it application parity with the iPhone, and their decision to recognize the revenue like prior iPods is consistent with that intention.

Just like how they said "NO NATIVE THIRD-PARTY APPLICATIONS" on the iPhone, after consumers freaked out, Apple realized that it made a bad initial decision and changed its policy.

As I understand it, unless they want to restate their corporate earnings for each quarter since the iPod touch has been selling, they can't start accounting for it in a different way.

If Apple was being greedy, then why not continue to charge for the 5 applications? Why include them for free with the /B models of the touch?
 
If anyone at Apple made reference to Sarbanes-Oxley with regard to how to account for these sales it had to be a pr driven decision.
AFAIK, nobody's ever shown a quote where anyone from Apple has mentioned the term Sarbanes-Oxley in regards to this issue. That term came from the blogosphere and forums.
 
If they were giving other owners of four year old cars those upgrades for free, then yeah - I'd want them too. ;)

No doubt. But they're not.

And I get the fact that people want Apple to give them away for free. And as an accountant I sympathize with the fact that accounting rules have driven a business decision here that (a) is not something Apple likely would have done had the accounting rule not existed and (b) costs consumers money.

But it is what it is. And that's the great thing about consumer choice. If you don't like the policy, buy elsewhere. If this ends up materially affecting Apple sales, then Apple will have made a poor decision. But I doubt that will be the case.
 
As I understand it, unless they want to restate their corporate earnings for each quarter since the iPod touch has been selling, they can't start accounting for it in a different way.

They wouldn't have to restate past earnings unless the accountants believed that they planned to give it away all along (i.e. that there was never an intention to charge for upgrades).

If, on the other hand, consumer complaints and/or a drop in sales led them to make the business decision to provide all future touch upgrades for free, it would only impact the revenue recogntion for sales of ipod touches from that date forward. That still creates the same Wall Street issues that I mentioned before that caused this in the first place.
 
I also find it humorous that people actually are angered by this. If you don't like it, don't buy it.
You do? You realise, that if taken your argument to extremes, all we would have is back padding sheep, right?
When a company screws their customers, it's fair game saying so. It's a ridiculous notion, that if don't like something, you should just keep your mouth shut, because we, the sheep, don't want anyone to say anything bad.

Apple can provide you bug fixes for free - it's not like you are stuck with a product that doesn't work.
Nope, they just cripple a product on purpose, sell it at a premium, lock it down, and want people to buy into a "tad less crippling", in effect making the product dearer than the purchase price. What happened to Disk Mode, btw? Any chance I can buy this "advanced" feature?

Do you all bring your four year old cars back to the dealer and demand that they do a free install of GPS and side airbags and the more powerful engine that is found in the newer models?
Nope. But I make the deal go back if it turns out that the new car I bought couldn't drive anywhere else than suburbia, that I had to pay extra to turn up the volume on the stereo, and that I had to pay extra to be able to put fuel in the damn thing myself.

And who cares what their competitors do?
I do. And anyone that isn't a blind fanboy or sheep should too. That's the only way one can make an informed choice, and thus become an "informed consumer".

If they provide free upgrades, then they have to follow a different accounting model (one that Apple didn't want to adopt for the touch). Either that, or they don't follow US GAAP (e.g. Sony). But if you like their upgrade policies better, buy their product.
Ah, swell. Back to the nonsensical "if you don't like it, shut up and buy something else. We sheep don't like anyone that doesn't clap his hands in awe".

BMW includes all maintenance on new cars for 3 years. If I own a Honda, should I complain that I am being screwed because they don't give me free oil changes?
Nope, but if you bought that Honda at double the price of the BMW, you'd be stupid not to demand that they at least did that for you.


To answer one last question I saw above, Apple could not have separated the software from the hardware in the ipod touch for accounting purposes. Because the upgrades are "unspecified" at the time of purchase, GAAP forces you into subscription accounting for the entire sale if you provide the upgrades for free.
Wow! We're back to "Apple's hand has been forced" :rolleyes:
 
Ah, swell. Back to the nonsensical "if you don't like it, shut up and buy something else. We sheep don't like anyone that doesn't clap his hands in awe".

Wow! We're back to "Apple's hand has been forced" :rolleyes:

Maybe I've missed something here. If Apple stated that the ipod touch had certain features and functionalities, at the time you bought it, that it in fact did not have, then demanding free upgrades to get those features makes perfect sense.

Otherwise, I still don't get the whining. You can either choose to buy a product or choose not to buy it. Why is that nonsensical? Freedom of such choice is the very core of capitalism and a market economy.

If in your mind the product is "crippled" or is lacking in important features then you have two weeks to try it out and return it. What's nonsensical is paying money for a product, understanding its limitations, choosing to keep that product, and then acting as if you have somehow been screwed in the process.

And I don't think for a second Apple's hand has been forced. They had two choices. One would please Wall Street and shareholders. The other would please consumers. They chose the former.
 
IMO, Apple released the iPod touch with zero intentions of giving it application parity with the iPhone, and their decision to recognize the revenue like prior iPods is consistent with that intention.
Ah, great. Just because they have an intention, people are not allowed to disagree with it?
I guess they also have an intention of ripping people completely off if they could get away with it, just like Microsoft used to do (try), but since they intended to do so, everything is fine and dandy. And because they intended it form the get-go and made their choices, all's great. Excellent point.

Just like how they said "NO NATIVE THIRD-PARTY APPLICATIONS" on the iPhone, after consumers freaked out, Apple realized that it made a bad initial decision and changed its policy.
Yes, yes, I get it: They intended[/] it to be that way and made their choices accordingly.

As I understand it, unless they want to restate their corporate earnings for each quarter since the iPod touch has been selling, they can't start accounting for it in a different way.
I don't know. I'm a dane. So I have enough to do with just knowing our own system :(


If Apple was being greedy, then why not continue to charge for the 5 applications? Why include them for free with the /B models of the touch?
Because if they fall too far behind the dance, even the most extreme fanboys will begin to notice that all they have going for them is the sleekness of the UI, and that features-wise, they're lacking. Okay, I'll admit, that the way the Wi-Fi is implemented is great (not all is bad, lol).
 
Maybe I've missed something here. If Apple stated that the ipod touch had certain features and functionalities, at the time you bought it, that it in fact did not have, then demanding free upgrades to get those features makes perfect sense.

As I have shown, specifically with my mentioning of Sound Devices and their upgrades (including hardware upgrade), it's possible to give the consumer these things with out making the customer pay –*and these features, except for MP3-recording, weren't a sales point, nor promised when I bought my recorder. Besides, once again it's "they were forced". You don't think that they thought about this when they decided to cripple the Touch and add features later? It's nto bloody coincidences and mistakes. You're trying to make it look like they didn't know what they were doing, when they began the sales of the Touch. And yet, they chose a completely different business strategy than with the rest of the iPod line. But now, all you guys are saying "Because of accounting, they're forced to it this way". Frankly, I'm rather surprised to learn that other companies have quite a bit more foresight than Apple, if one was to go by your excuses. Hands up anyone who thinks that the accounting department of Apple is incompetent and don't talk to the business strategists!?




Otherwise, I still don't get the whining. You can either choose to buy a product or choose not to buy it. Why is that nonsensical? Freedom of such choice is the very core of capitalism and a market economy.
Yes, but you'll find very find economists that think that the free market is only about buying or not buying. It's way too simplistic way of looking at it. Of course, it would be easier to use such a pseudo argument if it really was that simple. The reality is, that the free market doesn't work if, say, a monopoly-like corporation controls it. It doesn't work either, if there is no free information (i.e it doesn't work if people that are critisizing a given product aren't allowed to speak their mind, and it doesn't work, if too many people are sheep). Yes, they might buy it, but that doesn't mean that the buyers will get the best product. It's the McDonalds-argument in other words, sprinkled with all sorts of fallacies.

If in your mind the product is "crippled" or is lacking in important features then you have two weeks to try it out and return it.
I don't need to pay and return it to know when a product is crippled too much. Disk Mode, for instance. I also don't need to buy and return a product to know I will never want such a product, just like I don't have to buy a lorry to know it will be a bitch to use on a daily basis (for my use, anyway), park in the city and be sucking down fuel like no small car does. It's about making informed choices as an "enlightened" consumer. Something you guys are opponents of – at least that's what you're arguing, even if you don't know it yourselves.


What's nonsensical is paying money for a product, understanding its limitations, choosing to keep that product, and then acting as if you have somehow been screwed in the process.
ah, yes. Apparently you haven't read this thread. Or you're making a conscious strawman.
The reality is, my argument has nothing to do with whether I have bought the product or not. We're not talking "soft" things like user-experience, scrolling speed and whatnots. We're talking business strategies and the excuse of SOX, not to mention crippling features. And anyone with piece of paper can write down a feature list for comparison.

And I don't think for a second Apple's hand has been forced. They had two choices. One would please Wall Street and shareholders. The other would please consumers. They chose the former.
Good. Then don't argue they had been forced, because of the accounting they chose. They chose that accounting method (well, noone actually knowif that's the accounting method they chose), knowing full well what that would mean when upgrading their products. In other words: How they account for the damn thing is irrelevant to the consumer. Since they had a choice, they could have chosen differently. They chose to make the consumer pay, and pay again. And again. They could have chosen not.
 
But it is what it is. And that's the great thing about consumer choice. If you don't like the policy, buy elsewhere. If this ends up materially affecting Apple sales, then Apple will have made a poor decision. But I doubt that will be the case.
There's another option which lets me enjoy the product and hold on to my money at the same time. It's called Jailbreaking, and it will only grow in popularity if Apple keeps making decisions like this that alienate their customers (no matter how justifiable those decisions are) ...
 
You're trying to make it look like they didn't know what they were doing, when they began the sales of the Touch.
It was quite apparent that they didn't know what they were doing at the time of the iPhone and iPod touch launches?

Since those launches, undoubtedly due to the outpouring of consumer sentiment, Apple has changed their position on native third-party applications (for both devices) and application parity for the iPod touch.

So what were their choices in regards to applying it towards the touch?

1. Forget about updating it and avoid the accounting mess
2. Update it and pass along the cost as they're required to.

Since they had a choice, they could have chosen differently. They chose to make the consumer pay, and pay again. And again. They could have chosen not.
Haha, again, in hindsight, it all looks so crystal clear, doesn't it?

You act like the three months after the iPod touch launch never happened.
 
It was quite apparent that they didn't know what they were doing at the time of the iPhone and iPod touch launches?
:eek:


Since those launches, undoubtedly due to the outpouring of consumer sentiment, Apple has changed their position on native third-party applications (for both devices) and application parity for the iPod touch.
Ah! Yes.
It turned out, that the pressure was too much (or at least we'd like to think so. Me included).

However, you're saying now, that the only reasons they added the features was because of pressure, and that they had no intention of upgrading the Touch from the get-go. Frankly, I doubt Apple are that incompetent. Since when have they rolled out a crippled product, if not for a specific purpose (making you buy the PB 12" instead of the iBook, making you buy the MBP if you want this or that, making you buy the MBP if you want a matte screen) and on on. They have a history of crippling products, only to bring out a less-crippled one a little after, or forcing you to buy an entirely different (and much more expensive) product, if you'd like, say, spanning your monitors.
I also find it hard to believe that they from the get-go had no intention of upgrading anything with regards to the touch, and therefore they made the wrong choice when accounted for it. Sheesh! That's what a new company might do by accident, but not someone with the experience of Apple (and their accountants). Give me a break.

So the ramifications of that position change are that they could either not make (i.e. leave the iPod touch without the 5 applications and the ability to run 3rd-party applications) or they could allow it, but charge according to the revenue recognition model that they chose for the touch BEFORE THEY CHANGED THEIR POSITION

What a load of bollocks. Do you have any other indication other than _hope_, that that unlikely scenario is how it went down? Do you have any indication, why they should suddenly choose to account for the Touch differently than all the other iPods?
No? Thought so.




Haha, again, in hindsight, it all looks so crystal clear, doesn't it?
Yes. I am not believing for one second that Apple is as incompetent as you make them out to be, all in order to defend their business strategi.
If they truly are that incompetent, it's about time everyone sold their shares: Way too much luck of the draw, the right hand not knowing what the left is doing, not to mention all the other thousands of people around there.

You act like the three months after the iPod touch launch never happened.

Really? I'm sorry, but I doubt a multi-billion dollar company are simply going with the flow, rather than having a strategy, and a very, very good idea about accounting and how they influence each other.
 
Nonsense. It is certainly not a strawman to test whether your logic and argumentation holds water. One of the classic ways to do that is to see where else that argument will fit, and to what extend that same logic can be applied. To check if it can be used to support (or go against, as it were) absurdities. And your argument, that the only reason you're defending the corporation is that people think the motivation is greed can be used to defend even monopolies bad behaviour. It's called reductio ad absurdium – and let me remind you that r-a-d is not a logical fallacy, it's a method to test whether an argument holds water.

Yet, you apply it in ways that it isn't meant to be applied. I intend to maybe get someone to think outside the box of 'it must be greed, there is no other explanation that is simple.' If people were willing to accept other likely possibilities as just that, possibilities, I wouldn't even be in this thread. :p

Hmm. Abuse of a monopoly-like position doesn't have to "further cement" anything. It just has to be abuse, you know.

Point taken, as there are two ways to abuse a monopoly, price gouging and anti-competitive behavior. Both are illegal.

However, when raising prices causes you to lose sales on a product to competitors, like what sounds to be happening here... it becomes harder to argue they are really in a monopoly position if it is just that easy to move away from their product.

Again. I am certainly not twisting words, and I think it's about time you looked up "strawman argument", as this isn't one either.
You're generalising in the comment I react to, by saying thing's are never that simple. That you have seen stupidity etc in both consumers and corporations, and you thereby imply, that this is also the consumers fault. That there can never be "a screwer" and "a screwee": In other words, there can never be a clear cut attacker and victim.

Still misunderstanding. Situations are never as simple as they appear on the surface. Without showing evidence for the motivation, you cannot prove malice. You cannot claim malice by lack of evidence either.

I may imply that there is an aspect that the consumer is getting worked up about, yes. But I don't imply this is solely the consumer's fault. Hell, in my example of employee stupidity leading to consumer malice, well... it is still clearly the fault of the company that they screwed up. However, the consumer still directed malice at the company for trying to fix the complaints with the v1 device early on the development of the v2 device!

Ah, well. Stretching it a bit, methinks. If you recall, my argument is that this defending Apple and blaming SOX for any and all business practices is bull, and that people have no reason to believe this is anything more or other than business practices – Especially considering their recent past and their competitor's practices.

In that light your argument is at best irrelevant, at worst a (true) strawman argument.

Yet, it does apply. It is a possibility. What we have here is consumer malice due to something that happened in the company. What was it that happened internal to the company that pushed them down this road? Whom was responsible for the multiple steps down this path? I know that with SJ's level of OCD, you can very likely count him in... but is this classic SJ where he makes a decision based on aesthetics rather than consumer wants or what makes business sense? Is this actual greed? Is it something else?

What I am simply suggesting is that the consumer malice currently permeating this thread may be a result of a mistake or simple arrogance that the iPod Touch /must/ be like the other iPods on the part of Apple, rather than pure malice trying to suck you dry of your monies.

You have to remember, that most of what you're arguing for a corporation. You're defending a corporation by all means, just like any of all the rest who claims they're forced by SOX to do these things. Hell, I even read that they "had to" remove the Disk Mode because otherwise they couldn't live up to SOX because of the accounting.

I hope you don't plan to attribute that argument about disk mode to me, it is pretty absurd. Hell, while we are at it, I concede that my earlier claims about SOX were wrong.

But to say I am defending a corporation by all means, I have stated my position that I don't think a large charge for 2.0 in this case is defensible. So please don't get into personal attacks or lumping me in with people like you allude to.

LOL. I really don't care which part of the monopoly-like company screws customers over. It's still the company that screws people people over. You're saying that until each and every department and employee have screwed you over, you cannot claim that a (any) company is screwing their customers over. Great logic.

You misunderstand again. I don't claim that, but one individual can ruin the company's image in the face of the consumer for everyone else. What really sucks is that you get a bunch of great people working together, and you can still royally screw yourself over because Bob decided plan X would be 'okay' when it really wasn't, and didn't bother to clear plan X with anyone else.

It's reality, and it sucks. What is even worse, is that unless there is a scandal that outs a particular person, you will never hear about that guy getting fired as to not completely screw over that employee's hiring prospects elsewhere.

It's true that common sense dictates that. However, you have to look at what is happening. If you write too much off as "stupidity on their behalf", you, yourself will quickly be fit for the monicker "naive".
How can you write this off as "stupidity"? You're telling me that the crippling of the touch and the iphone should be written off as "stupidty". That the tie-ins and lock downs should be written off as "stupidty", that the "pay if you want a less crippled Touch" should be written off as "stupidity" and on and on. No, frankly, that is extremely naive, considering this is not a new, small company, that is coming to market. This is huge corporation, with 18 billions in cash, with some of the best marketing in the world, with enough lawyers and business strategists to think this true. How anyone can even think these things happen because of error (or "stupidity", if you will) is laughable.

The problem here is that the people working on the product, and the people in the consumer space have two different ideas for what the product will look like. Apple is notorious for holding pre-release products close to the chest. We can't assume our expectations for the product will always make it clearly enough to the people working on it.

To assume that 'crippling' was what was done (a conscious choice to remove functionality in order to sell it back to you later)... well, I'd love to see evidence that it was. Otherwise I fall into the category that believes they seriously misjudged a possibly large segment of their target audience with the Touch at first.

And while you can call me naive all you want, having worked on products, I know exactly how frustrating it can be to work while separated from your customer. You have a hard time understanding what they want, their expected usage patterns, etc... you wind up having to make guesses. And sometimes these guesses are flat out wrong. Oh, and forget asking other people on your team for a lot of help if you get suck on user scenarios, they are just as sheltered from the customer for the most part as you are. Including the guy writing the use cases for you.

I didn't miss anything. I chose to go after the premise, the foundation. Building atop invalid premises doesn't suddenly make it valid. It the giant on clay feet.
It's still just blaming SOX for everything crap Apple does. It's still just blindly writing things of as something Apple are forced to because of SOX. It's still defending any and all business practices, no matter how they screw people over, by blaming SOX – even though other companies practices are the proof in the pudding: If it were SOX, the other companies would have to do it too. And it really doesn't matter how much you add to that premise. Your premise is just that. Clay feet.

Screw SOX in this case... SOX doesn't even apply to the up-front vs subscription accounting models argument. Seriously.

I see we interpret "generalities" differently. When defined like you do, then I can see your point in that area. However, I defined it as "equality" (you cannot make a law that only applies to white people. That only applies to black people, only to women, only to men, etc.). You have to make a law, that includes or excludes everyone - you can't go "Only black/white/yellow/pink/cream people may apply" or "This grass is off limits to pink people" and so on. Either the grass is off limits, or it's not.

Yes, but you are attempting to generalize to a higher extent than the problem requires. If accounting practices are involved here, then we must be willing to debate with that in mind. In which case, a lack of knowledge of the ins and outs of corporate accounting do nothing but hurt both of our arguments, especially if be begin to overgeneralize.

Again, a few posts back, I listed a bunch of questions that if we could find the answer for, we could make some sort of educated guess as to what the hell Apple did. It isn't if more knowledge before making a final conclusion hurts at all.

Yes it does suck. What I cannot for the life of me fathom, that even when presented with examples of other companies that do not do it like Apple is doing, you're still blaiming it on accounting. Yet, you somehow utterly fail to recognise – even as you're saying it - that the only ones to blame for this set-up is indeed Apple. How can you argue that it's because of accounting, yet blame SOX, and all the while arguing it's _not_ a choice on Apple's part, that they're not the ones to blame?
When other companies can do even more, without having people pay extra to get a less-crippled product, it's obvious Apple chose this model - not out of "stupidity", but because they chose this business strategy with their eyes open and on purpose.

Stupidity and mistakes can come in all forms, even when you walk into a decision with eyes open and on purpose. It is stupid to believe that consumers won't want lots of upgrades on their Touch, because it is just an iPod. It is malicious to decide that you can use that to your financial benefit.

Again, I am not saying Apple is blameless here. I am saying that the consumer malice may not be as warranted as you claim it is.

Ah, yes. Well, then there's no problem with lock-downs, tie-ins and crippling :rolleyes:

The iPod has been sold as a closed device. It need not be, true, since software tends to change everything... but cavet emptor. Don't buy a product based on what you think you might be able to use it for if the company will be nice, buy it for what you can use it for today.

Nope. We don't. But we do know that other companies are able to provide upgrades, even to hardware, to add many and very large upgrades to functionality without the consumer paying for it. With that knowledge, we can deduct that it's certainly not necessary to charge for these things, especially at the price Apple charges, that it can be done. And because of this, we can deduct, that this is a business strategy. Unless, of course, you're trying to argue that all the rest of the companies out there, are simply too stupid to recognise what SOX is about. In that case, I guess we cannot blame Apple, it's all the rest that is not going by the law, and all of this is because Apple is just following the law …

Not all products are handled equally in the eyes of accounting and business. So unless we find two comparable products, accounted for on the business end in the same way, the comparison may not apply.

That's not putting words into your mouth. The reality is, you're using the accounting model as an excuse. As if the accounting model is something that dictates the business model and strategy to the extent that Apple's hands are tied.

The difference being, that your conclusions, that Apple's hands are tied because of accounting, and we are to blame SOX (and therefore the accounting), that Apple had no choice in this, is contrary to the facts. Just because we both conclude, doesn't mean, that any speculation and conclusion is equally valid. In fact, why is it, that you think that you can blame this on accounting, yet utterly fail to see, that the way these things are accounted for is entiurely Apple's choice – especially given that other companies can do it?

I have posted in this thread your answer. Yes, it was Apple's choice, but the question is which choice was it that got them into this mess now? The choice you claim it is, and the choice I think it could very well be just happen to be different choices that may or may not even be mutually exclusive.

I just didn't like the hysterics of uninformed malice. Granted, I have done a really poor job informing when I am not really better informed. :)

Ah, yes. So because you claim to have seen corporations from within, these choices (business strategy, how they're accounted, and all the crippling) is likely to be just one individual making mistakes. Once again, you utterly fail to recognise that this is not some employee leaking false information, creating a PR-disaster as per your example. This is a busines strategy. YOu cannot write it off as stupidity of one empleyer, when both the crippling (for instance the no Disk Mode), the Tie-Ins, The lock downs, and the "pay-extra" modus is so clear cut. This is by no means a mistake – each and every indicator points in the direction of "strategy". Writing it off as "it could just as well be one employee turning it sour" is so far fetched and out of touch with reality, no matter how much you claim to know corporations from the inside.

Well, now you want to attribute further decisions to the same individual I want to attribute the stupid decision to account for the Touch like other fully closed iPods. ;)

It doesn't work that way.

The problem here is that you take a large grouping of decisions, and claim that because they all happened, it must be strategy. It is a logical fallacy to assume that because one corporation did all these things, that they must be connected.

Hell, I'd love to work for a company as well run as that, at least that way I wouldn't have to be dealing with the infighting trying to fund projects that are key to keeping our customers happy. :)
 
Actually, it would seem Apple initially never intended to have the iPod touch truly be a phone-less iPhone. Apple stated at sometime towards the end of December that the iPod touch's focus would be changed from a touchscreen MP3 player to a mobile platform. Which would validate aristobrat's point.
 
They have a history of crippling products, only to bring out a less-crippled one a little after, or forcing you to buy an entirely different (and much more expensive) product
That's exactly the point. They chose to account for the iPod touch in that same manner that they always had, which assumes that any update would go into the NEXT model. Never before had they updated an iPod like they have the iPod touch, so why would they have thought to account for it differently?

Do you have any indication, why they should suddenly choose to account for the Touch differently than all the other iPods?
What are you talking about? The only two products that they account for differently are the iPhone and AppleTV. The iPod touch is accounted for exactly the same as the iPod shuffle, nano and classic.

Really? I'm sorry, but I doubt a multi-billion dollar company are simply going with the flow, rather than having a strategy, and a very, very good idea about accounting and how they influence each other.
If the go-to-market strategy was "no updates to the iPod touch", then the accounting they chose was consistent.

Their go-to-market strategy for both the iPhone and iPod touch on third party applications was "NO, develop your app in Safari".

That strategy has obviously changed. Are you going to make the point that public outcry had nothing to do with that? Is Apple going with the flow by listening to what its customers want?
 
That's exactly the point. They chose to account for the iPod touch in that same manner that they always had, which assumes that any update would go into the NEXT model. Never before had they updated an iPod like they have the iPod touch, so why would they have thought to account for it differently?

Well, the reason being, they did it for the iphone. You have to be quite naive to think they didn't think and talk about this. That this was just a slip up. Seldomly do I hear anything so horrendously stupid –*that a mulitbillion dollar company don't know what they're doing, and that one might as well toss a coin :rolleyes:


What are you talking about? The only two products that they account for differently are the iPhone and AppleTV. The iPod touch is accounted for exactly the same as the iPod shuffle, nano and classic.

If the go-to-market strategy was "no updates to the iPod touch", then the accounting they chose was consistent.

Their go-to-market strategy for both the iPhone and iPod touch on third party applications was "NO, develop your app in Safari".

Ah, yes. Granted, I misconstrued you. However, how they're accounted for, is pure speculation, based on why they would make people pay for upgrades. You see, you guys are so intend on proving that Apple's hands were forced for reasons of accounting, that it has become ridiculous. And even though you guys think that the accounting-argument will get them off the hook, so to speak, you utterly fail to recognise you can make as many changes you want in the accounting, until you actually have to deliver the quarterly. But no, they're that incompetent, according to you.

Okay, so they're sitting there, iPhone in hand. Then they come up with analysis' (plural?) whether there's a market for such a thing, and how they could market it, sell it, and what sort of business model to choose. They then go "ok. let's produce it", and when the items are actually sold to customers, and after the first quarterly is done, first then do they "discover" that it was a crap idea to account that way, but now that they have, they have to make people pay, and not only that, it has to be 20$ in order to use what is already on the Touch (yes, it was merely an unlock).
That scenario has to be the most unlikely for any company, other than some crap mom and dad-shop who has no clue about accounting (and yet choose to do their own accounting).



That strategy has obviously changed. Are you going to make the point that public outcry had nothing to do with that? Is Apple going with the flow by listening to what its customers want?

I am going to make the argument, that it is very unlikely that Apple had no intention of making paid upgrades to the platform, and that they only did it because of public outcry.

Add: About the "going with the flow" I said earlier, I meant that that it's ridiculous to think that that they have no business strategy beforehand, and let an accounting-mistake (which is what you claim it is) dictate a business strategy, or step in to replace a business strategy.
 
About the "going with the flow" I said earlier, I meant that that it's ridiculous to think that that they have no business strategy beforehand, and let an accounting-mistake (which is what you claim it is) dictate a business strategy, or step in to replace a business strategy.

They had a business strategy, but they changed it when public outcry reached critical mass. But because to change the accounting methods was too troublesome, they now offer paid upgrades. It's a mistake in the sense that Apple could have forseen it, but choose to market the iPod touch as purely an iPod instead of as a mobile wireless platform as they're trying to market it now.
 
Add: About the "going with the flow" I said earlier, I meant that that it's ridiculous to think that that they have no business strategy beforehand, and let an accounting-mistake (which is what you claim it is) dictate a business strategy, or step in to replace a business strategy.
Why do you equate Apple changing their business strategy months after the iPod touch launch with "having no business strategy beforehand"????

You stated Apple's prior iPod (and other device) upgrade strategy: buy a new model iPod.

I believe that was Apple's strategy for the iPod touch launch. Any new feature would go into a subsequent model, just like they had done with every other iPod before it.

If they had thought the iPod touch was in the same league as the iPhone, then I don't think that the would have disabled features in the touch's calendar, making it different from the phones.

The method of accounting that they chose was consistent with that strategy.
 
A few thoughts to add to the discussion.

If Apple would have decided to account for the iPod Touch on a subscription basis, the one bright spot in their latest iPod earnings report (17% growth in iPod revenue) would not have happened. The stock would have been hit a lot harder. Like it or not, Apple's primary responsibility is to their shareholders.

Also, why $20 for the January update? My guess is that Apple considered the market for third-party apps. It Apple is going to give their apps away for a negligible amount, it might set a precedent that would limit the amount of investment that developers can put into their applications. Just a guess, not a justification.

I know someone is going to respond with "but they didn't charge iPhone users." But they did. Apple promised free updates for two years as a feature of the iPhone. It was part of the package that iPhone users purchased.
 
There's another option which lets me enjoy the product and hold on to my money at the same time. It's called Jailbreaking, and it will only grow in popularity if Apple keeps making decisions like this that alienate their customers (no matter how justifiable those decisions are) ...

Whatever the background, this is the reality, and it's something I for one am pushed closer to by all this. Of course, last I checked, you can't JB on a PPC! Everybody is out to screw me, Apple and modders alike. :D
 
Whatever the background, this is the reality, and it's something I for one am pushed closer to by all this. Of course, last I checked, you can't JB on a PPC! Everybody is out to screw me, Apple and modders alike. :D

I don't mean to be flip, but why would Apple care if you jailbreak your iPod Touch? As long as you aren't stealing their applications, they aren't losing anything by you doing that. Feel free to jailbreak! It's your device! (Just don't expect support while it is JB.)
 
Are people that upset with the super-tiny fee that we have to pay compared to iPhone users who pay monthly? You have the internet in your pocket! Come on people... nobody's forcing you to upgrade anyway.
 
Again long post...

Thanks Boda2!

From what I had read up to that point, most people were speculating as to the "whats" and "whys" of SOX and accounting practices without a clear understanding of what was going on. Hopefully people found it educational.

What continues to interest me is the amount of emotion people are demonstrating towards the upgrade (incremental, put your adjective here) fee and the speculation as to why Apple did this. The popularity and longevity of this thread has been amazing...

The truth is we will never know "why" Apple chose this route unless someone from Apple would be kindly enough to share this information with this forum. Anyone? Anyone? ;)

From an accounting/financial perspective, it is clear from their financial filings (please see their 10-K/10-Q) that iPods and iPhones are accounted for in a different manner. And changing accounting methodologies may have potentially significant consequences to their financial results and may directly affect their shareholders (the true owners of the company, not someone who owns an ipod or Apple product and does not own shares in the company). Apple is unlikely to make changes today given the current demand for their products.

From a product and business strategy perspective, Apple has built a great device/platform in the iPhone. In fact, so good that they decided to extend that platform onto the iPod line. But we must remember that they are 2 different product lines TODAY even though at times they seem to be very similar. This does not preclude a future where the iPod and iPhone merges to become a singular mobile computing platform. But today, there are still enormous market opportunities in both the mobile (both pure mobile and smartphone) and media player markets to win as opposed to the UMPC (nascent) and PDA (declining) markets. And it would be a poor strategic move for Apple not to maximize their share in growing markets while minimizing exposure in nascent and declining markets.

Fortunately or unfortunately for the consumers, there will always be a situation where you will be happy or unhappy with Apple's choice of product and feature set implementation. Imagine if Apple never released the iPT. We would all be complaining. Imagine if they created the iPhone without iPod capabilities. Again, we would be complaining. The bottom line is that there will always be customers who are happy with the iPT today and willing to pay the upgrade fees and those who feel they are getting ripped off. Apple can not and should not try to satisfy everyone. Apple has a business to run and to date have succeeded by introducing us products that people are very passionate about, not by listening to what we want but by showing us what we want.

The great thing about the Internet is that everyone can voice their opinion on this subject and that we can have vigorous discourse on the merits of Apple's decision.

What I would challenge all of the people who are unhappy with Apple's decision to charge an upgrade fee is to come up with an alternative solution where the upgrade fee make sense or create a scenario where they can forgo the upgrade fee all together. Apple has given it their best shot with the introduction of Enterprise functionality and the SDK, what can you guys come up with?

I'm sure Apple has marketing people lurking the forums on a regular basis for customer feedback and this would give them a solution they can take to Steve...
 
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