802.11n Upgrade Fee Confirmed at $1.99

[Rocketman]

No theory can make a software update a hardware upgrade. They are different things - hardware is made of silicon and metal - software is made of binary information. Some hardware has embedded software to provide a communications API. That's called firmware - it's a type of software.

It's good that words have real meaning, so we can communicate effectively.

This seems to be an accounting issue. Accounting is an art more than a science, which makes it odd they criminalize the smallest of errors. It has to do with how they DECIDED to treat FIRMWARE when they initiated the accounting process on Macintosh computers. Aparently Apple CHOSE to treat firmware as a part of the hardware.

I really think it is that simple.

The complicating factor is the computers shipped with "draft-N" hardware, and the firmware AND the software was not yet fully baked, and I am sure Apple wants the cards to be as compliant with future-N as possible whenever they do deploy the final pieces to the puzzle so they waited for deployment for more testing.

However as I have now said a couple of times, this is only one layer of the issue. Yes they are doing it because of accounting. Bush went into Iraq over regime change and WMD too. It seems Apple is also testing the waters for consumers to become accustomed to post delivery feature upgrades for a fee. It appears iPhone (ATN) is going to have hardware features on deployment that are NOT activated. Later on, it appears Apple will offer consumers the capability to activate features for a fee. Perhaps for more than $1.99

Rocketman

 

[ClimbingTheLog]

I paid for an N card the proof of which is that I have a ****ing N card in my computer, you idiot. The fact that it was disabled by Apple is another issue entirely.

This is a really important point. The same card that Apple is shipping was being shipped by other vendors when Apple started using it. The other vendors included the draft-n firmware whereas Apple included the firmware that prevented recognition of draft-n capabilities. So in a very real sense, fustercluck is right, it was crippled ("disabled").

This seems to be an accounting issue. Accounting is an art more than a science, which makes it odd they criminalize the smallest of errors. It has to do with how they DECIDED to treat FIRMWARE when they initiated the accounting process on Macintosh computers. Aparently Apple CHOSE to treat firmware as a part of the hardware.

I really think it is that simple.

If the law says you can treat cattle as horses when you're doing accounting, by just deciding to do so, then that really is an insane art. Which I propose has no place in a numeric tracking system. At least there if you start to believe your own fabrications you'll find your breeding program isn't as successful with your short fat spotted horses.

 

[MikeTheC]

The funniest thing about this whole situation: the same people bitching about spending $2 for n-capabilities would be bitching that they would have to shell out $70 or so for a whole new Airport card (or worse, that their iMac was now "obsolete"), and that they should have used n-capable chipsets in the first place.

This practice isn't all the uncommon.

That isn't my read on this issue.

"Back in the day" they put slots in everything (from the last of the OldWorldROM black PowerBook G3s to the clamshell iBooks to the B&W G3 towers, and everything forward of that) for Airport cards, but the cards themselves were not included. In other words, it was a fully legitimate "future expandability", not some minor feature bump.

Apple's already placed cards in their computers which are nominally capable of 802.11n. They're already there. And they're even making people aware the cards are there and contain this intrinsic capability. But now they're charging extra to further utilize a hardware component you already purchased. And the important distinction here is that *you own the card*. It isn't Apple property anymore. You're also not using it with an Apple service (for that matter, Apple doesn't provide a WiFi service.)

It would be exactly the same thing as if I bought a broom but had to pay the manufacturer extra if I wanted to sweep orange dirt in addition to black and brown dirt, given that the broom was already capable of doing so.

Or more to the point: Apple's asking us to pay them to remove a restriction they placed on their own product who's only intent was a revenue generator.

I don't know if this is illegal, but I would regard it as being undesirable.

And yes, if Apple pursues this kind of behavior in the future, it is going to cost them customers. After all, of all the customers in the world, none can be more aware than Apple customers that there are alternatives to the technology products they're using.

 

[phillipjfry]

The explanation for the fee is reminiscent of an explanation previously given to iLounge. However, the explanation does not fit well with many of Apple's previous practices. For example, in May Apple updated [url="https://www.macrumors.com/pages/2006/05/20060515170303.shtml"]iWeb to version 1.1 which added a host of commonly-requested features at no charge.

It is because you are paying for software that enables you to access more HARDWARE features, not software. It's just an accounting kinda thing and is nothing I would bat an eye at in terms of "being robbed".

edit: i didn't read anything above this post so if someone already argued against/for this claim sorry in advance

 

[Gasu E.]

Translation: "We must make more money off of loyal customers."

The overhead of collecting $1.99 will exceed the revenue. But you would have answered the same if the charge had been $.01, right?

 

[ClimbingTheLog]

It is because you are paying for software that enables you to access more HARDWARE features, not software. It's just an accounting kinda thing and is nothing I would bat an eye at in terms of "being robbed".

It's ironic how Apple claims to be all about the user experience when it comes to its hardware and software, but when it comes to charging for it, it's all about <stuffy voice>You see, there are considerations on Sarbanes-Oxley about how one reflects revenue for partially delivered products in various corners and when revenue is recognized for said quasi components of said products</stuffy voice>

The might be good at hiding the implementation for their customers when it comes to applications, but they really suck at it when it comes to corporations. The VP of Platform Experience should be hearing about this.

 

[Gasu E.]

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.

They DID. It is an accounting requirement. You can't legally recognize revenue until you ship the complete product. The product Apple claimed to be shipping to you (and thus legally the "complete" product) was only 'b/g'. If they now said "this was really a half-done 'n'", then they are saying (legally) they improperly recognize hundreds of millions of dollars previously. Result: major income restatement, stock goes through floor, investors rebel, Steve maybe forced to resign. Major restatements are very, very bad for stock prices.

If they had originally said "we are selling you a half-done 'n' product", then they could not report the corresponding revenue as current; theiir earnings would have been crap, so stock tumbles, etc. Plus they would have been promising a "future"; if they stumble, they would be terribly vulnerable to a class-action suit.

They COULD have waited and bundled it with another charged-for product. But then you would have had to wait, and you would have had to buy the other product to get this feature.

 

[tyroja00]

Apple is a US company that reports to the SEC on its worldwide earnings - ergo no free pass for customers outside of the US. Sorry, but you must have realised by now from all of the worldwide grousing that all foreign subsidiary companies of US concerns and, indeed, all non-US entities that are listed in the US have to comply with SOx. In fact, any company anywhere with 300+ US shareholders is similarly affected.




You could try reading this thread. It is not as if there are hundreds of pages to wade through. Yet.

A lot of wailing and gnashing of teeth over $1.99 to unlock a functionality which has absolutely no value whatsoever unless you spend even more money on an N-capable router. With the spec being draft at present, who knows whether interoperability is even an option. It may very well be the case that N-speeds are only achieved with Apple's own router, in which case the firmware upgrade fee is moot.
I am certainly going to wait until Tom's Hardware/other guinea pigs report back on their findings before rushing out to spend any money on the upgrade.

For those who still harbour a moral objection to paying out anything for the unlock, it will be on torrent sites/rapidshare within seconds of being released. Apple will not care in this instance. Apple seems to feel obliged by their accountants to recognise this as a product sale rather than an software upgrade, but the price clearly demonstrates that Apple does not regard it as a revenue stream and is merely complying with the letter of the law.

What I mean is what section of SOX does this relate to? I do not recall a section of SOX dealing with recognition of deferred revenues that can subsequently require a nominal charge to customers. One member stated EITF 00-12 and SOP 97-2, which does deal with revenue recognition, but those are not SOX.

 

[Gasu E.]

It's ironic how Apple claims to be all about the user experience when it comes to its hardware and software, but when it comes to charging for it, it's all about <stuffy voice>You see, there are considerations on Sarbanes-Oxley about how one reflects revenue for partially delivered products in various corners and when revenue is recognized for said quasi components of said products</stuffy voice>

The might be good at hiding the implementation for their customers when it comes to applications, but they really suck at it when it comes to corporations. The VP of Platform Experience should be hearing about this.

Right... if they are really about "user experience", they should chuck accounting, 'cause it's way too boring.

 

[fustercluck]

They DID. It is an accounting requirement. You can't legally recognize revenue until you ship the complete product. The product Apple claimed to be shipping to you (and thus legally the "complete" product) was only 'b/g'. If they now said "this was really a half-done 'n'", then they are saying (legally) they improperly recognize hundreds of millions of dollars previously. Result: major income restatement, stock goes through floor, investors rebel, Steve maybe forced to resign. Major restatements are very, very bad for stock prices.

If they had originally said "we are selling you a half-done 'n' product", then they could not report the corresponding revenue as current; theiir earnings would have been crap, so stock tumbles, etc. Plus they would have been promising a "future"; if they stumble, they would be terribly vulnerable to a class-action suit.

They COULD have waited and bundled it with another charged-for product. But then you would have had to wait, and you would have had to buy the other product to get this feature.

I don't know how I missed that, but wow, I really screwed up. Subject closed for me.

(Unless this kind of thing is going to be a regular practice.)

 

[Gasu E.]

What I mean is what section of SOX does this relate to? I do not recall a section of SOX dealing with recognition of deferred revenues that can subsequently require a nominal charge to customers.

That's just plain old GAAP. You can't recognize revenue on something you haven't shipped. I learned that back on the second day of my business school accounting class, many years before SOX.

 

[Gasu E.]

I don't know how I missed that when I skimmed the statement the first time, but wow, I really screwed up. Rant over.

Yeah, I thought you sounded too thoughtful and rationale to come up with those conclusions! It was easy to miss the facts in all the noise.

 

[tyroja00]

That's just plain old GAAP. You can't recognize revenue on something you haven't shipped. I learned that back on the second day of my business school accounting class, many years before SOX.

That's right. That's why I don't know why people are quoting SOX.

 

[dejo]

Just an FYI:

Apple explains 'nominal fee' to activate 802.11n

“The nominal distribution fee for the 802.11n software is required in order for Apple to comply with generally accepted accounting principles for revenue recognition, which generally require that we charge for significant feature enhancements, such as 802.11n, when added to previously purchased products,” said Teresa Brewer, Apple’s Mac hardware public relations manager.

 

[vitaboy]

For the last time: I paid for n hardware. I was promised g functionality and currently have g firmware/software, but somewhere in the final cost of my machine, there is payment for a physical N card.

For the last time, in terms of accounting, you did not pay for n hardware. You may not like it, but Apple sold the machine to you as having 802.11b/g hardware, and you handed Apple your credit card based on those specs. It doesn't matter if it was later discovered that the underlying hardware was n-capable.

An analogy that hasn't been used is the electronic engine controllers in cars today. The performance or horsepower you get out of that engine is determined in large part by the electronic computer that monitors the timing and fuel injection in the engine. Many cars today have firmware that limits the horsepower of that engine.

So when you buy a car from Ford or Lexus, you pay for a car that is advertised at a certain horsepower, whether it's 120 hp or 300 hp. Never mind that fact that there is an aftermarket business in ETC firmware that allows you to boost horsepower by replacing the factory software with a custom one designed to operate the engine that a higher capacity.

By your logic, the car company ripped you off because you bought a car that was advertised and sold to you as 120 hp even though nearly all engines today are capable of outputting much more than factory specs simply by using different engine timings and fuel injections, via a simple software upgrade.

Here's another example - Microsoft Vista. Vista has something like 6 different versions, everything from a Home Basic version to Ultimate. Yet even if you buy the basement, relatively featureless Home Basic version for $199, guess what? The Home Basic installation has all the features of Ultimate, but disabled. By sending Microsoft a couple of hundred dollars, you can instantly upgrade Home Basic to Ultimate without needing a new set of installation discs.

Again, by your logic, since your Home Basic installation came with all the features of Ultimate on the disc (but disabled), Microsoft should be taken to task for not offering Home Basic users the ability to upgrade to Ultimate for free, because all that software was already on the installation discs when you bought it.

By your logic, Microsoft ripped you off and deceived you when it sold you Vista Home Basic for $199 because you were really buying Vista Ultimate that had been downgraded to Home Basic.

Sorry to say, but no one is going to believe you if you try to claim that. If you bought Home Basic, that's what you bought because that's what Microsoft advertised that it was selling to you for $199. It doesn't matter if the Home Basic installation can be instantly upgraded to Ultimate features, you paid for the features that were advertised, not the Ultimate parts that were hidden and disabled in Home Basic.

The difference is, Apple is charging a measly $2.00 for enabling 802.11n capability. To make you happy, Apple should just shipped all C2D Macs with straight 802.11b/g AirPort cards, and then offered to charge everyone $100 to physically swap those cards with new 802.11b/g/n cards.

All I have to say is, with that kind of attitude, you are going to be seriously unhappy for the rest of your life (as you are now, apparently).

 

[revman]

What I mean is what section of SOX does this relate to? I do not recall a section of SOX dealing with recognition of deferred revenues that can subsequently require a nominal charge to customers. One member stated EITF 00-12 and SOP 97-2, which does deal with revenue recognition, but those are not SOX.

SOX does not define any accounting. It just requires that the policies are clearly stated and followed. By necessity, it means that GAAP is followed. Since the majority of restatements are caused by revenue recognition, the SOX compliance and revenue recognition policy are heavily scrutinized

 

[tyroja00]

SOX does not define any accounting. It just requires that the policies are clearly stated and followed. By necessity, it means that GAAP is followed. Since the majority of restatements are caused by revenue recognition, the SOX compliance and revenue recognition policy are heavily scrutinized

So revman,

Is it Apple's contention that a portion of the revenues that they recognized in their Q1 (on N-draft machines) may have to be reversed and as such they have to charge us so that they can say that it wasn't part of the revenues that they recognized?

 

[ClimbingTheLog]

Right... if they are really about "user experience", they should chuck accounting, 'cause it's way too boring.

Nope, they should hide it from the users, not pile it on them. The often mentioned instant rebate is one way to accomplish this.

Or were you just trying to be cute?

 

[macenforcer]

For the last time, in terms of accounting, you did not pay for n hardware.

Hahaha. In terms of accounting?

In terms of real life we DID pay for n hardware. Nuff said.



Hey guys, the earth is flat not round.

Had that come from apple it would be a fact here.

 

[Whistleway]

This is silly. How come other manufacturers don't ask $2 for enabling. Isn't Dell, Hp and others subject to SOX? I smell rotten apples.

 

[TheSpaz]

2 Questions:

1. Does this do anything for non Intel Macs running on Airport Extreme?

2. Also, does this do anything for Intel Macs that are wired to the Airport Extreme via Ethernet?

If the answer is no to both of these questions, then I won't be buying the upgrade. $1.99 is hardly any money at all. I mean, I'd buy an energy drink for $1.99 at the store. I could go without one for 1 day for a cool Apple upgrade (not that I actually will though).

 

[MikeTheC]

One question I would have is:

What's the real reason Apple feels compelled to charge for this particular upgrade?

 

[morespce54]

Do we know when it's going to be available?

 

[hagjohn]

Apple should have taken the hit on this one and not charged their customers.

 

[rjfiske]

Hahaha. In terms of accounting?

In terms of real life we DID pay for n hardware. Nuff said.



Hey guys, the earth is flat not round.

Had that come from apple it would be a fact here.

In terms of real life (which so often is different from accounting) you paid for metal and plastic. In terms of accounting, which is the only thing Apple is concerned with, you paid for a computer with 802.11g functionality. This is what you expected, were promised, and charged for.

I know it's frustrating that because of accounting compliance companies have to do silly, sometimes incoherent things. But it's not new. The good news is that if you do not pay this fee, you lose no functionality in your computer. Nothing. So rest easy, knowing that not paying this ridiculous unfair fee will have no effect on you whatsoever.