802.11n Upgrade Fee Confirmed at $1.99

[tyroja00]

Sarbanes Oxley

I used to be a Big 4 Auditor and I can attest that this issue has nothing to do with Sarbanes Oxley. Sarbanes Oxley deals with the implementation of an oversight board, proper internal controls, etc., none of which dictate a $1.99 charge.

As for accounting fees, Apple is a large client for one of the Big 4 firms. If they need their revenue adjusted, it will be the audit team who will end up doing it. And, it won't cost that much more than the millions that they pay their accounting firm.

First the question is, do they want their revenue adjusted? No, they don't. It would not make the Board of Directors and the Investors happy and it would place doubt in the marketfor their stock.

Second, does this case even warrant a revenue adjustment? Since I am not on the audit team, I can't say why this issue even came up (auditors don't try to find these vague issues and when they do they try to tidy it up). Since the cards were not advertised as "N", I do not know why there is an issue as to when revenue's could be recognized. There may be "cost of goods sold" valuation issues as to the undercosting of the machines (if the cards were built in house) to reflect greater net income. But, the auditors would have tested this unless Apple lied to them. Which I am sure they DO. Everyone tries to hide things from their auditors. If they get caught, they have to change things. If it is difficult to change (noone wants to have their financial statements readjusted). They pass the buck and put a "spin" on it. My guess is they got caught with hiding something in the prior year and this is their fix.

So, overall, I do raise an eyebrow to the fee. But $1.99 won't break me...and I will probably buy there airport express anyway so I won't have to pay.

 

[EricNau]

Yes, I know thats where the info hides.

What exactly do you look for?

You'll want one of these machines...

iMac with Intel Core 2 Duo (except 17-inch, 1.83GHz iMac)
MacBook with Intel Core 2 Duo
MacBook Pro with Intel Core 2 Duo
Mac Pro with AirPort Extreme card option

Pretty much, if you have a Core 2 Duo Processor (with one exception) or a Mac Pro, you qualify.

 

[freeny]

You'll want one of these machines...

Pretty much, if you have a Core 2 Duo Processor (with one exception) or a Mac Pro, you qualify.

Thank you.
So is this a charge that will be applied to new buyers or people with current chipsets that comply?

as you can see im a bit confused as to who exactly will be charged for an upgrade.

 

[jonharris200]

Ok, so I have an Intel Core 2 Duo iMac with 802.11n draft.

If I download the $1.99 software when it comes out, is that enough to bump my speed, or do I need to replace my Netgear wireless router (3 yrs old) with a newer version (new hardware or new software or both) as well?

 

[Spanky Deluxe]

Surely if they're only charging because of accountancy issues because of selling something with an feature that's not activated etc bla bla bla then all Core 2 Duo machines and Mac Pros that are sold as of now must come with the updated software or if not the users shouldn't have to pay the fee, right? Because they're now officially 802.11n supporting machines.

 

[EricNau]

Thank you.
So is this a charge that will be applied to new buyers or people with current chipsets that comply?

as you can see im a bit confused as to who exactly will be charged for an upgrade.

People with compatible systems can pay this fee if they wish to "upgrade" to 802.11n. (I'm assuming current systems are now shipping unlocked).

Ok, so I have an Intel Core 2 Duo iMac with 802.11n draft.

If I download the $1.99 software when it comes out, is that enough to bump my speed, or do I need to replace my Netgear wireless router (3 yrs old) with a newer version (new hardware or new software or both) as well?

You will need a 802.11n wireless router to get increased speeds.

 

[gmanrique]

'We'?

It is not all of 'us'.

So you're saying that this GAAP rule applies to features which are identifiably present and disabled? Any elaboration you can provide would be helpful, as we're having a hard time grasping the exact circumstances under which Apple would feel obligated to charge for software upgrades.

 

[jonharris200]

You will need a 802.11n wireless router to get increased speeds.

Thanks Eric. And when did the first of those come out (Apple and non-Apple)?

 

[Grimace]

The vast majority of folks out there can't even take advantage of N speeds even with an N router!! Geez, we love to whine don't we.

 

[jonharris200]

The vast majority of folks out there can't even take advantage of N speeds even with an N router!!

Why not? Is there something else that's needed? Or are you being sarcastic?

 

[macfan881]

i dont see what the deal is i mean first off apple does not cleary state that there n cards when you buy them so i mean i would rather pay 2 bucks to upgrade for a firmware or rather than 50 bucks for a card to upgrade just be happy apple isnt charching most core 2 duos the full price of a card

 

[jonharris200]

i dont see what the deal is i mean first off apple does not cleary state that there n cards when you buy them so i mean i would rather pay 2 bucks to upgrade for a firmware or rather than 50 bucks for a card to upgrade just be happy apple isnt charching most core 2 duos the full price of a card

Ummm... punctuation?

 

[davester]

Tight arses!

I can't believe all the negative ratings for this thread. Man, $US1.99 - whoop de ***** doo! - and it has now become more than 50% cheaper!! You can all afford to pay the extra to buy a Mac/s yet you complain about a nominal fee for an increase in speed for your existing wireless card/Airport. People like you complain for the sake of complaining. Get a life you losers.

 

[Rocketman]

However, the explanation does not fit well with many of Apple's previous practices. For example, in May Apple updated iWeb to version 1.1 which added a host of commonly-requested features at no charge.

This is a "hardware upgrade" on the theory that the entire device, CPU, firmware, accessories installed, together constitute the device.

They did a trial balloon at $4.99 and then announced $1.99. UPOD.

I still say this is a customer education experience to get them ready for similar experiences with iPhone (ATN) on a regular basis.

Rocketman

 

[SiliconAddict]

*

* Better. Not great. I'm still not happy about it since this should be free. But its better then $5.

 

[caccamolle]

First off.Don't EVER call me a fool.
Secondly if Apple was required to charge $4.99 that would be the way it is now but they changed it.

That says peer pressure.

Ever ? sure about that ? you do sound like a fool to me with this reaction dude.

 

[MacinDoc]

Apple pocketed $1 Billion last quarter alone. If they have to conform to this law, then why don't they charge 1 cent like others have suggested? I agree with others who have said $1.99 won't add much to their bottom line. So why bother? Charge a symbolic 1 cent to conform with the law, and don't piss off your loyal userbase, Apple.

Charging 1 cent would incur a loss (due to the cost of materials, distrubution and sales-related costs). $1.99 would be approximately the break-even cost. If Apple were to sell this upgrade at a loss, it would incur the wrath of its investors, who already are not happy with its under-promised 2Q earnings.

 

[matticus008]

This seems like an invitation to wacky accounting. Imagine if a corporation said: "Yes, our CEO received a house in Malibu, but we SOLD it to him for 1 cent."

It's a clear case of the law creating the problem it is designed to curtail. In order to ensure accurate reporting, Sarbanes-Oxley (and some subsequent, related legislation) stiffened the rules. Now, in order to comply with the law on paper, they have to do a little "creative accounting" to make everything fit. It's just tax code bureaucracy at its finest. Nothing more, nothing less.

Contrary to the 'Big 4' comment above, this is in fact a clear-cut case of Sarbox interference. The question was whether to internalize the adjustment (annoy shareholders, damage stock price which impacts credit ratings and market cap, and eat into profits directly) or to charge a small, break-even fee to customers interested in upgrading their machines to the new standard. As a business, which would you choose? The customers received exactly what was advertised, so you've got no obligation to enable the n-mode at all.

why charge anything for a simple firmware update!? i have tons of gadgets that get firmware updates that dont cost a cent, AND add functionality!

This was an update to a device that didn't exist, officially speaking. It has nothing to do with software, driver, or firmware updates for 99.999% of products Apple has ever sold. So no, you've never been in this situation before.

So you're saying that this GAAP rule applies to features which are identifiably present and disabled? Any elaboration you can provide would be helpful, as we're having a hard time grasping the exact circumstances under which Apple would feel obligated to charge for software upgrades.

It applies when a product contains different (or in this case, extra) components than was disclosed in accounting documents. Even though the computers contain the hardware necessary, Apple didn't ever reported having bought or sold it. Now, in order to release a software update for it, it has to recognize that it sold it in the first place--it can't make it appear magically in its products. Sarbanes-Oxley is designed in large part to stop things appearing for free or 1 cent on the books, and releasing an update to an officially nonexistent product would be a great big red flag.

Correct me if i am wrong but could this be that it is a hardware upgrade not a software update?

In the real world, it's a software update. In the accounting world, it's an additional, material component.

So form here were do we go. Every time firmware is updated we have to pay?

No.

I'm not sure I understand the GAAP implications of this under revenue recongition rules. If this were a service that was advertised and promised as a future deliverable, then I could understand not being able to recognize revenue until the terms for the sale were met. But if this is an unadvertised bonus they decide to throw in after the fact, I dont see how they wouldnt be in compliance with GAAP.

1. You can't promise future-deliverable hardware, and at the time these products were launched, it would have been a huge risk to announce it. What if something had happened to the spec and the hardware suddenly wasn't compatible with a late draft? They've just recently announced certification for draft-n products.
2. "Unadvertised bonuses" don't exist in accounting, only in advertising.

Apple pocketed $1 Billion last quarter alone. If they have to conform to this law, then why don't they charge 1 cent like others have suggested? I agree with others who have said $1.99 won't add much to their bottom line. So why bother? Charge a symbolic 1 cent to conform with the law, and don't piss off your loyal userbase, Apple.

Pissing off the loyal user base would have been to ignore the older products and avoid making any headlines at all. It would have saved them their time and trouble, but ultimately it would be worse for the customer. 1 cent is unworkable for any number of reasons--the processing fee for the transaction is a great deal more than 1 cent, many credit cards won't accept charges less than $1, and 1 cent is an obvious token amount. They can't file new paperwork with a bunch of one-penny transactions and be taken seriously. A series of $1 charges is really the minimum for legitimacy, unless they were selling gumballs.

 

[SiliconAddict]

I'm sure the fee is for accounting purposes, after all, at $1.99 each, their monetary gain is going to be close to zero.

...And all the whiners can just sit down and be quiet. You should be lucky you're getting such an upgrade in the first place, after all, at the time of purchase, you had no idea you were getting this feature.

Some of us would love to pay $1.99 and have our CD MacBooks upgraded to 802.11n.

Yah right. What a load of crap. 1.99 x how many C2MBP's+iMacs+MB with pre-N? So while every other manufacturer is shipping with pre-N wares AND drivers and Intel months away from shipping their first chipset with pre-N us lowly Mac users should bow before Apple and be thankful that they give us N at all. My the Kool Aid is flowing freely this evening.

 

[eenu]

would this 'n' feature be unlocked with a fresh install of Leopard?

 

[KindredMAC]

Not a bad fee if you ask me.

Think about it, Apple is only going to get people paying this fee who think they have to have it who do not even have access to an N network anyways.... Otherwise you get the FREE version of the driver when you buy the N enabled APEXT.

Wow I just went back and read some of the postings.... I can't believe how many people think that as long as they have the N card in their new Intel Macs that they will get N speed out of a G Router..... SIMPLE ALGEBRA PEOPLE!!!!!!!

 

[Rocketman]

Ever ? sure about that ? you do sound like a fool to me with this reaction dude.

Since you are obviously not worth responding to, by him, let me just say Peace is one of the most ACCURATE posters here.

Rocketman

 

[matticus008]

Yah right. What a load of crap. 1.99 x how many C2MBP's+iMacs+MB with pre-N? So while every other manufacturer is shipping with pre-N wares AND drivers and Intel months away from shipping their first chipset with pre-N us lowly Mac users should bow before Apple and be thankful that they give us N at all. My the Kool Aid is flowing freely this evening.

Were you sold a pre-n device? No. You were sold a computer (assuming you bought one) advertised as having 802.11b/g compliance. No mention of pre-n capabilities was made in any official capacity.

Everyone else labeled their products "pre-n" or "draft-n" and delivered software with it to make that operational. Apple had no software ready, so had it sold them as "pre-n" it would be shipping hardware without working drivers--an unsaleable, unfinished product. No one else has shipped a pre-n device incapable of 802.11n performance.

The kool aid might be flowing, but the brain juices definitely aren't around here.

 

[gnasher729]

Why didn't they just enable 802.11n in C2D computers from the get go, and advertise as such? Or would that have detracted from the later release of 802.11n compatible Airports?

Because the 802.11n standard wasn't finished at that time, and nobody knew for sure whether a firmware upgrade would be possible. If Apple had advertised this as 802.11n, and a firmware upgrade had been impossible, that would have been lawsuits costing many millions, plus possibly a hardware upgrade at Apple's expense for everyone who wants it. So advertising as 802.11n would have been bloody stupid.

 

[fustercluck]

I still contend this is bs, but if Apple wanted to stave off some of the displeasure, they could have offered a one-liner in that press release as to why they are charging at all.

I'm not concerned about paying $2, but if this is going to be a recurring thing in the future, I really want to know now. If Apple's M.O. going forward will be nickel and diming users, I'm going to lose interest in Apple products very quickly. If this is a one-time thing, fine, but explain the logic, Apple.