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Apple's $0.99 FaceTime Charge Due to Accounting Requirements
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Probably because those products are accounted for separately from the sale of the hardware; and if there never was revenue booked then there is no revenue to restate. SOX doesn't say you can't give things away for free; it says if you enhance the capabilities of a previously sold device you must restate the revenue booked from those prior sales. For whatever reason, Apple's lawyers and accountants have decided facetime enhances the Macs and thus would possibly trigger a restatement (a very bad thing to have to do) and avoided the hassle by charging.
First of all, SOP 97-2 relates to Deliotte's position on software, not hardware sales. Even so, if you look at:
While this deals with software recognition of revenue, looking at the guidance the question becomes - does Facetime result in a major difference or enhancement? I believe you could argue either side, but Apple's accountants appear to take the conservative route of assuming it does. That's not unreasonable, considering Facetime is tied to Mac hardware alone, will be offered in future hardware sales (but not sales of current models post introduction of Facetime), and is not really a standalone software offering. To give it away would mean Apple might need to restate prior Mac revenue numbers; thus the smart thing to do is have a nominal charge - such as when they upgraded machines to 802.11n.
That's exactly the part I'm having trouble understanding. What makes Facetime so different than say any software released by Apple, be it a new app like Safari or a simple software update. New apps by their very nature are new features that didn't exist before. You could even argue that software updates enable features by allowing them to work correctly.
I highly doubt that inside Apple they go, hmm E&Y may think this is a new feature, better charge for it. I also highly doubt that E&Y are allowed to go, hey thats a new feature because we said so. There are specifications somewhere in both companies that decide what has to be charged for and what isn't.
Given the mess that happens every time Apple charges for something like this, why haven't they migrated towards accounting that doesn't make them do this? I don't pay for updates to my xbox and there are tons of new features that have been added since its release. The only reason for not doing that, is that it gives them a reason to charge for it (E&Y makes us) and gets them a tidy profit in the process.
Only your lack of understanding. Are you incapable of reading what I wrote?
There is absolutely no requirement that makes Apple charge for FaceTime. NONE. They are CHOOSING to do so. It is a bald-faced lie for MacRumors to continue to insinuate this "requirement" propaganda over and over again.
Knew my firm would have something out there for this.
I read what you wrote, and you are arguing semantics. It's not a lie. You are just interpreting it a different way than it was used. Sure, Apple could have chosen to account for things differently and not charged for the update. But given their decisions, they were required to charge in order to meet certain accounting standards.
I'm not sure what the endgame of this grand conspiracy of lies is for you.
Changing accounting methods is not easy and something that is not normally done. Accounting gives consistency over periods so you can compare results. Changing that is not something firms do lightly.
As for profits from Facetime, Apple makes more in interest in a few hours than they'll probably make off of selling Facetime in a year.
Interesting enough and forgive me for not reading thru all 18 pages of posts on this, but it appears that the new MBP's come with the FaceTime HD application for free. I never purchased the software from the Mac Store yet I have it and it works from my iPhone4 to my MBP without issue.
Yes, that is normal. The new MBPs are supposed to come with the FaceTime app. The cost is built into the price you paid.
Maybe I'll pay for it when my friends actually USE it. Not many people I know have macs... and most don't even have an iPod touch.
i call bs. iOS 4 had printing and multitasking for iPads - very very substantial additions. it was free.
The iPad, iPhone, and iPod touch are currently accounted for in such a way as to allow for the delivery of substantial new features.
Thanks very much for this post... this information is EXACTLY what I was wanting -- an explanation of what was REALLY going on.
I don't really have a problem with the basic concept of paying $0.99 for this update... I probably won't because I don't know one single person with whom I could actually have a Facetime chat (everybody I know uses Skype), but I was still a bit annoyed that no real explanation was provided.
On the other hand, since the explanation here isn't actually coming from APPLE, I'm still a bit annoyed. Seriously, Apple, why is it so hard to release a paragraph or two of text that explains the situation?
Yep, but Free Apps don't require you to enter your credit card ready to be used on 1-click... That's all the marketing strategy.
If you don't believe me, just have to watch the first 2min of the Keynote, and listen Steve Jobs introduction. Guess what he's talking about?... 200 Millions account with Credit Card & 1-Click purchasing.
Spid