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802.11n Upgrade Fee Confirmed at $1.99
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By allowing the fact that n chips were in the computer to become public knowledge, then it became clear that additional software was required to turn on this feature. Since this software was not available at the tim eof the same put appl in a tough position. If they had provided it for free it would have been classified as an "unspecified software upgrade."
As such it would fall under SOP 97-2 and SOP 98-9. With no market value on this it would have required total deferral.
They can now sell it for $1.99 thus avoiding the fact is was free software upgrade impied at the time of the sale.
US GAAP in play. IFRS differs considerably in this area.
Hope this helps
That's a mischaracterization. Other vendors had finished, feature-complete drivers to ship with their hardware. Apple didn't. Until it finished the drivers, there's no way they could have sold that product in its n-capable state.
If Apple had had the drivers ready, it would have been released as an n-ready device, the accounting would have been squared off (paid for and delivered), and no one would be charged for anything. It would be business as usual. This is the first case where Apple has shipped hardware without a complete set of drivers. The Mac mini part numbers clearly identified what went into the "stealth upgrades"--in accounting, the specs were accurate and up-to-date. The advertising and marketing materials were not, but there's no rule about under-advertising (only over-advertising), so there were no potential penalties to face.
Unfortunately, that's not what happened here. Since it didn't have drivers, it had an unfinished product. Would you have preferred that Apple had gone back and replaced its hardware order with lesser chipsets (knowing full well that the retail price would stay the same) so that it didn't have to worry about this issue at all? It could have shipped a fully finished product and had zero accounting woes. You'd have paid for and received a b/g wireless Mac. And two months from now, it would still be that b/g wireless Mac.
Instead, for $1.99, they're giving you something extra, if you want it, rather than making you buy a whole new Airport card because their drivers people were behind schedule. Anti-consumer this is not.
As I have been reading through this $1.99 thread, I have been shaking my head. At first, I was wondering what exactly I was missing. Surely, this could not be about a ~$2 charge to activate the advanced features of wireless card. "No, that is impossible. Apple was hammered for not including it awhile back, and posters were excited they may see this offered soon". And besides, who would make a fuss over $2, after Apple explained why they had to levy a nominal charge. What was I missing?
Then it flashed - this is FOX news smelling blood in the water. Take something totally benign and make it a major 'golly, gee-whiz' story. Now, I suspect there are some of you ultra-tightwads who are just bashing because that is what you do. But, this is really a troll-rich thread. Trolls, go back to MS and tell them the monopoly days are coming to an end. And, if you do not start making better product, and soon, Apple is going to hand you your head.
Then it flashed - this is FOX news smelling blood in the water. Take something totally benign and make it a major 'golly, gee-whiz' story. Now, I suspect there are some of you ultra-tightwads who are just bashing because that is what you do. But, this is really a troll-rich thread. Trolls, go back to MS and tell them the monopoly days are coming to an end. And, if you do not start making better product, and soon, Apple is going to hand you your head.
Other people are starting to question Apple's reasoning on this.
http://www.macnn.com/articles/07/01/19/apples.80211n.fee.redux/
As I suspected, this is all a bunch of nonsense.
http://www.macnn.com/articles/07/01/19/apples.80211n.fee.redux/
As I suspected, this is all a bunch of nonsense.
If you are really crying about a 2 dollar download, thats pretty sad. What is that, like half the price of a cup of coffee from Starbucks or something? Its nothing. You probably have that much just sitting in your couch cushions.
As far as I know the card is a/b/g/n capable but OSX only uses the B/G part. If they are unlocking N I wonder if they are unlocking the A too?
a/b/g/n
Devices operating with different versions of 802.11 may interfere with each other and cause slowdowns and disruptions. Limiting the number of versions commonly available in their products might be Apple's way of attempting to avoid such problems. That may be why 802.11a is missing.
As stated many times before, the fee makes perfect sense from an accounting standpoint. This fee actually can save their customers money in the long run by avoiding the risk of being forced to correct accounting irregularities which cost the company money that would then be passed on to the customer in future products. Conservative accounting practices will keep Apple out of hot water which is good for everyone.
Devices operating with different versions of 802.11 may interfere with each other and cause slowdowns and disruptions. Limiting the number of versions commonly available in their products might be Apple's way of attempting to avoid such problems. That may be why 802.11a is missing.
As stated many times before, the fee makes perfect sense from an accounting standpoint. This fee actually can save their customers money in the long run by avoiding the risk of being forced to correct accounting irregularities which cost the company money that would then be passed on to the customer in future products. Conservative accounting practices will keep Apple out of hot water which is good for everyone.
Be prepared to pay for point updates. Apple didn't advertise their products to be certified 100% bug free, when we purchase a Mac or OS X it is implied that these products have bugs and we hand over our credit cards on account of that. Bug fixes constitute added value to said software product, profits on which should not have been realised at time of sale blah blah blah....
In short, fanbois, take off your panties.
In short, fanbois, take off your panties.
Worse than that. I think Apple is the new M$. Albeitit cooler and hipper, but just as money grubbing. I'm a hard nosed capitalist, and have quite a bit of AAPL, but this kind of nickel and diming Apple has started with (first with having to pay $49 just to have an Intel FCP compatible version and now this) is insulting and irritating. But then when Apple tries to cover up their unmitigated gall with LIES about how GAAP and/or SOX REQUIRES them to charge for the "n" firmware it really just brings Apple down a notch.
I don't own a C2D machine, but to have to fork over $1.99 after already pushing $1000+ Apple's way is just ubsurd, especially when the same C2D machines shipping in Feb will have the "n" feature enabled.
Sadly Apple fans have become passive in the past couple of years and are happily bending over for this, encouraging Apple to do more of the same in the future.
So while the OS X is more user friendly OS than Windows, Apple IS NOT a more consumer friendly company than M$. I suppose we should start referring to Apple as Apple$.
Would you quit with this tripe? Software updates to software products are unaffected. There is no further revenue to recognize and no possibility to screw up. If you ship 1 copy of iLife, you've collected a report for the boxes, the discs, and the little pamphlets. Unless you want to send out a second round of discs at some later date and try to pretend that set never happened in the books, you won't end up in the same boat. It's really not that hard to understand.
Hardware bugs, on the other hand, are handled by a whole different set of procedures, but if it's not a recall-worthy bug, then you already had to pay to fix it, and then only if there ever was a fix made.
I've had about enough of the "bend over" metaphors. They're crude, inappropriate, and convey no useful information. If you want to be righteously indignant when you've got no reason to be, that's your choice. It doesn't mean anyone is taking anything up the ass just because you think something should be free. Here's a tip: they don't owe you anything. They're not "good guys." They're a corporation. Expect them to act as such and maybe you'd appreciate when they do something helpful when they could have done nothing. They could double everyone's RAM tomorrow, because OS X is a little slow on those computers with 512MB, but it doesn't mean they should, nor does it mean anyone can reasonably expect them to.
Hmmm, well you have to read this carefully:
"You charge whatever you want. GAAP doesn't even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn't charge for it."
Absolutely correct! GAAP does not tell you whether to charge or what to charge! As long as the correct accounting is followed when you decide what todo.
Neither of these references address what the accounting is in this case.
Also remember when most of the .com accounting issues 🙂
They asked each of these guys the wrong question.
Just a thought
Here is a thought.
So let's start from the beginning here.
1. Apple sells an iPod for $300. No future implications. They book $300 in revenue (let's exclude any warranty accruals here, okay!)
2. Apple sells an iPod for $300 ,and says it will support wi-fi downloads in 2008 via a software update. (internal accounting has no VSOE for this enahnacement). No brainer, every revenue accountant in the world will defer ALL this revenue until the wifi download enhancement is available. Under 97-2 100% deferral. NOT A PENNY OF REVENUE.OUCH!
3. Apple sells an iPod for $300 ,and says it will support wi-fi downloads in 2008 via a software update and will charge $1.99.
Okay, this is a grey area, but let's just say that this $1.99 is the first time they have done this. Probably requires full deferral until VSOE is established. Could go either way here!
4. Apple sells an ipod for $300, and then later says it will support wifi downlaod for $1.99. BINGO. They are establishing standalone value for the driver. They book $300 at the time of sale and $1.99 at the time of the download.
NOW HERE is my hypothesis.
5. Apple sells an iPhone for $499, and says "It will support 3G." But not in June???? Oh, ****! But the internal accountants are going to say that the 3G upgrade will be available as a software download and based on precendent the value of that download is $1.99 based on similar history. They can still give it away for free, but will defer $1.99 and recognize $498.01 on the phone sale. Microsoft has done this FOR years.
I would say that is a fair accounting treatment....
OK, CPA's what do you think? Thought of this in the shower this AM 🙂
Here is a thought.
So let's start from the beginning here.
1. Apple sells an iPod for $300. No future implications. They book $300 in revenue (let's exclude any warranty accruals here, okay!)
2. Apple sells an iPod for $300 ,and says it will support wi-fi downloads in 2008 via a software update. (internal accounting has no VSOE for this enahnacement). No brainer, every revenue accountant in the world will defer ALL this revenue until the wifi download enhancement is available. Under 97-2 100% deferral. NOT A PENNY OF REVENUE.OUCH!
3. Apple sells an iPod for $300 ,and says it will support wi-fi downloads in 2008 via a software update and will charge $1.99.
Okay, this is a grey area, but let's just say that this $1.99 is the first time they have done this. Probably requires full deferral until VSOE is established. Could go either way here!
4. Apple sells an ipod for $300, and then later says it will support wifi downlaod for $1.99. BINGO. They are establishing standalone value for the driver. They book $300 at the time of sale and $1.99 at the time of the download.
NOW HERE is my hypothesis.
5. Apple sells an iPhone for $499, and says "It will support 3G." But not in June???? Oh, ****! But the internal accountants are going to say that the 3G upgrade will be available as a software download and based on precendent the value of that download is $1.99 based on similar history. They can still give it away for free, but will defer $1.99 and recognize $498.01 on the phone sale. Microsoft has done this FOR years.
I would say that is a fair accounting treatment....
OK, CPA's what do you think? Thought of this in the shower this AM 🙂
you know what?
I have sold more Macs than Apple itself, i am a Macgeek, MacHead, whatever you want to call me, to the degree that my friends say that Apple should hire me, even my Thesis was about Apple computers.
But SJ has his head up his arse now and i think that that shouldn't be paid.
I'm getting fed up with the rude, offensive comments on this thread. It you don't like the nominal $1.99 fee, on which Apple will realize no profit, then go ahead and complain, but keep the crude references out of it.
Until now, Macs were sold as G-capable machines only. Apple was explicit about this in the published specs. To complain that it will cost $1.99 for the upgrade to pre-N for use with a third party pre-N router (you don't need to buy this if you use the new Airport Extreme or ?TV), when it entitles you to Apple technical support for use with that third party router, is silly.
Anyway, why don't you complain to the router manufacturer that it didn't provide Apple drivers? After all, it's their product, not Apple's. Remember, Apple's pre-N routers come with the necessary software, so isn't it other router manufacturers' responsibility to do the same?
Until now, Macs were sold as G-capable machines only. Apple was explicit about this in the published specs. To complain that it will cost $1.99 for the upgrade to pre-N for use with a third party pre-N router (you don't need to buy this if you use the new Airport Extreme or ?TV), when it entitles you to Apple technical support for use with that third party router, is silly.
Anyway, why don't you complain to the router manufacturer that it didn't provide Apple drivers? After all, it's their product, not Apple's. Remember, Apple's pre-N routers come with the necessary software, so isn't it other router manufacturers' responsibility to do the same?
"Accounting doesn't require any charge for anything," says Edward Trott, a member of the Financial Accounting Standards Board, which writes the accounting rules. "No, GAAP doesn't tell you to do anything. You need to work out your transaction with your customer, and GAAP will tell you how to reflect your transaction with that customer."
Sorry guys, this is what I have been trying to tell you. Apple is not required to charge us. It may be benificial in the future for them if they do so, as to not defer revenue or restate their quarterly. And if you don't know, FASB is the authority here not Apple's revenue department. Let me put it this way, in my limited 7 years of auditing, with several clients larger than Apple, I have never had to require that my client charge their customers. I have consulted (not when auditing) that it would be benificial to charge more, but I did not tell them to charge; it was their prerogative.
Actually, if I told Apple to charge their customers (as an auditor), I would be breaking my separation of duties and be in trouble myself, because this would be construed as business consulting which is not allowed by the auditors.
As for Apple not making anything on $1.99, I guess you are arguing that that they make nothing on iTunes downloads either.
Oh, YES, I will be getting the update because it is WELL WORTH THE FEE. I wasn't promised N (eventhough I knew it was there) so I am happy for the forethought by Apple.
I just don't like their excuse.
Sorry guys, this is what I have been trying to tell you. Apple is not required to charge us. It may be benificial in the future for them if they do so, as to not defer revenue or restate their quarterly. And if you don't know, FASB is the authority here not Apple's revenue department. Let me put it this way, in my limited 7 years of auditing, with several clients larger than Apple, I have never had to require that my client charge their customers. I have consulted (not when auditing) that it would be benificial to charge more, but I did not tell them to charge; it was their prerogative.
Actually, if I told Apple to charge their customers (as an auditor), I would be breaking my separation of duties and be in trouble myself, because this would be construed as business consulting which is not allowed by the auditors.
As for Apple not making anything on $1.99, I guess you are arguing that that they make nothing on iTunes downloads either.
Oh, YES, I will be getting the update because it is WELL WORTH THE FEE. I wasn't promised N (eventhough I knew it was there) so I am happy for the forethought by Apple.
I just don't like their excuse.
That's not the usual way Apple works but a third party will make either a PC Card or a USB-attached version. If the chipset is compatible with Apple's, like certain current Belkin cards using the Broadcom 802.11g chipset, the cards would work.
If I was their auditor, I would say give us more money so I can test the value of this and go to the nicest restaurant in Cupertino and drink some Dom, just joking.
Seriously, I would not accept this. First, since they announced that the iPhone would support 3G, that establishes a "right of return" under EITF 00-21, whereas there is no such right for the current issue (I can't return my Macbook and say it doesn't do draft-N). Secondly, the value of having 3G will differ than the value of having draft-N. And as such, I would look like an idiot when my files were reviewed and I didn't do some sort of valuation test or ask other colleagues as to their valuation with their respective clients who use 3G.
Just to clarify my position on this, I believe, as per the link and quotes in my previous post, that Apple's reasoning behind charging $1.99 for n functionality is incorrect.
Having said that, if Apple wants to charge $1.99 to enable this feature and their customers are happy to pay that fee, I don't have a terribly big problem with it.
I just don't think that from an accounting perspective it is necessary.
Having said that, if Apple wants to charge $1.99 to enable this feature and their customers are happy to pay that fee, I don't have a terribly big problem with it.
I just don't think that from an accounting perspective it is necessary.
They say that there is no bad press, but...
I am in the market for a notebook computer.
Seeing Apple do something like charge their customers for unimpinging a current driver makes me angry.
I'm asking myself: Is Apple'$ future more dirty that Microsoft's? Do I want to endorse a company that would do this?
If Apple does this with a 10% market share, what are they going to do if they had a 80% market share?
Is Apple acting in good faith?
I am in the market for a notebook computer.
Seeing Apple do something like charge their customers for unimpinging a current driver makes me angry.
I'm asking myself: Is Apple'$ future more dirty that Microsoft's? Do I want to endorse a company that would do this?
If Apple does this with a 10% market share, what are they going to do if they had a 80% market share?
Is Apple acting in good faith?
I don't believe the accounting line. I've worked as an adjunct to accounting at times and don't see any reason, other to justify the cost of the upgrade.
I don't see a huge problem here. They're charging for an upgrade that the Core Duo people won't be able to get at all.
U.S. Robotics put out modems with hardware that was well in advance of a standard, just to claim big speed increases. When most of the modems couldn't be upgraded, what did people do? They were either SOL and used their modems at a lower speed when the standard was implemented or they bought another modem.
I'd expect that some of the current pre-N hardware won't work with simple upgrades. Imagine spending $130 on a router and finding that you need to buy a new router because the company guessed wrong.
Apple isn't charging a fortune, but the excuse is the problem, not the fee.
I actually do not think they established a right of return with the language from the keynote.
Agreed no right of return issues on the macbook
My point here is that they are trying to establish standalone value of a software driver upgrade. Apple no little to now history of this.
Also they have not officially announced it, that is you cannot buy it. Hence no right of return has been established.
But I guarantee the hardware will include 3G capability on shipment, hence the similarity to th n-issue.