Prominent Accountants Blast Apple's $1.99 802.11n Upgrade Reasoning

[sccaldwell]

My view:

Most people bought their existing systems without any clue that it might support 802.11n with a flash upgrade, so they DID NOT PAY expecting that functionality. Apple was under no obligation to ever provide 802.11n in those systems, either free or at a charge.

The fact that Apple has chosen to release a flash upgrade that WILL support it is a bonus. Nice of them to offer that upgrade for older systems. Sure, it would have been even nicer if it was completely free, but if you can afford a $1000 computer, then $1.99 is nothing to you. But if $1.99 isn't worth it to you for 802.11n, then don't pay it.

 

[kalisphoenix]

I'm glad to see that this idiotic argument can be sustained a little bit longer.

 

[mkrishnan]

You need to shop elsewhere besides Starbucks.

True, but if you want good coffee, it still won't cost less than $2.

 

[byamabe]

Revenue Recognition

I'm not an accountant, but I've been at enough small companies to know that revenue recognition is a sticky situation. If you deliver a product with incomplete functionality you can't recongnize the full revenue until the product is completely shipped. My assumption was that this was a CYA because Apple already recognized the full revenue for each of the affected systems. If they didn't charge the nominal fee, they would have to restate past earnings because they had shipped "incomplete" systems. The nominal fee lets them say this is "added" functionality.

UPDATED: I shouldn't say "have to restate past earnings", but some regulatory agency or busy-body shareholder group might bring action against them because of this technicality.

 

[IlluminatedSage]

it's silly to charge for a firmware update.

no other company does such. why apple?

also... i guess i wont be charged cause im getting the new base station. guess alot of people are.

 

[shelterpaw]

$1.99 won't even buy a cup of coffee these days, so what's the big deal?

If someone says, "It's the principle of the thing," then I'd say, "You need to learn how to choose your fights."

I understand your point as it's cheap, but it's the nickel and diming that makes me and others upset. You paid for the hardware already. This is just a firmware or driver update, so there's no reason to charge other than greed. Why not just charge the price for admission when you bought the computer?

I don't have a computer that'll effect me with the $1.99 (though I have a non-Apple wireless solution), but I don't think it's right. I still say it's nickely and diming.

 

[Rocketman]

Seems there disagreement over whether apple need to do this, so Apple are playing safe and charging.

Of course, you would think the obvious solution would be for Apple to talk to the regulatory body and simply ask them.

If the defense lawyers are confused then so must be the prosecution council.

I have direct experience trying to do that in a different industry. They are not at all helpful. Just like the IRS they give inaccurate information and then punish you when you follow their advise.

It is not like going to the local police station and getting a ruling or a verbal permit. Regulators justify their existance through fines and actions and make the rules as complicated and conflicting as possible to maximize "selective enforcement". Regulators make the rules unilaterally, yes they publish for public comment, but their reply to public comment 95% of the time is, forget you. I know I have done it.

It is under this enviroment Apple acted with an abundance of caution and made sure to make it as public and clear as possible they were doing it.

Rocketman

 

[kalisphoenix]

True, but if you want good coffee, it still won't cost less than $2.

I seem to have a hazy recollection of these things called "coffee machines." But then, I've always been delusional about things like this.

 

[Lucky736]

You don't think it costs Apple $$$$ to go back to the FCC to get this new capability certified and approved? You bought something that on the spec sheet states b & g. That's what you got. Pay the 2 bucks and you get n, otherwise you get exactly what you paid for in the first place.

 

[Matthew Yohe]

GAAP? Wasn't this an issue with the Sarbanes-Oxley Act?

 

[shelterpaw]

True, but if you want good coffee, it still won't cost less than $2.

I make good coffee every morning. I buy San Francisco Coffee beans and I use my peculator or coffee press. Starbucks tastes awful. Peet's Coffee is worth paying for and you can get a nice cup for $1.35. Not the place for fru fru coffee drinkers.

 

[aljlin]

Big business just getting bigger... all about the bottom $$.

*shrug* big business is getting bigger, but not much bigger, and really apple isn't getting much bigger because of this. Thinking about it, How many of us are actually going to go get a Wireless-N Router right now just because we bought the 1.99 upgrade. Not sure what the big deal. ok if it was $5 or $10 I can see the frustration, but $1.99? Geez, is everyone that cheap? I mean it's only 2 dollars.. It's nothing compared to the wireless-n router that you are going to have to purchase! And realistically yes they never said that they were forced to, but it was just their choice to go this route rather than restating earnings. Just think about this, if they were to restate their earnings, as a business it would cost a LOT more for them to do that than doing this $2 dollar charge. It's BUSINESS. They're not here to lose money, and they could have tried to jip customers by forcing us to pay more for that since they could. . . I mean think about it, if people wanted it badly, they'd pay for it. as long as it's reasonable. $2 dollars, they're more likely to get a widespread purchase vs a $10 dollar price which will get a smaller amount or something like that. Just thinking of it business wise, for them to go through their earnings and re-state their earnings for the previous quarter, and also, having to distribute the cd's or stuff like that . . . (though i guess it could just be a software update in that case . . .) is likely to cost them significantly more to do that than to just pass this $2 dollar fee. It just seems to me to be more cost effective for them as a company to pass it on to us . . . sure it's 2 dollars out of our pockets, but ... *shrug* they're keeping it reasonable at least. If they were truly out to be profitable they'd ask for more ... just my opinion.

 

[mkrishnan]

I make good coffee every morning. I buy San Francisco Coffee beans and I use my peculator or coffee press. Starbucks tastes awful. Peet's Coffee is worth paying for and you can get a nice cup for $1.35. Not the place for fru fru coffee drinkers.

Well at home, yeah. Of course the great coffee I make at home costs less than $2. But that's a different matter. And I account for it differently. Although if you drink half my cup and intend to come back asking for a refill, I'm charging your ass $1.99 in order to comply with SOX.

 

[FoxyKaye]

I'll wager that within 10 minutes of the release of the "n" updater, a complete disk image or set of images will be posted on every peer-to-peer network in existence.

Honestly, I think Apple's reasoning on this is pretty idiotic as well, but there will also come a time when all new Macs will ship with 802.11n enabled. And in the meantime, if you're that set against buying the upgrade you can either live perfectly fine with your current b/g network for many years to come (knowing that if you buy a new Airport station it will ship with the "n" updater), or steal the updater from peer-to-peer networks.

Yes, it is the principle of the $2. However, everyone also pitched a fit when Apple started selling iLife as well, but here we all are mostly running the latest version.

 

[phasornc]

Macromedia did this too. . . write to your US congress reps

Remember when software companies routinely added new features in service packs? MS added the Windows Firewall, Greatly improved wireless configurator and several other useful features in XP Service Pack 2. However when the 7.01 update for Macromedia Studio came out, I remember reading on Macromedias site about how they brought back the timeline from MX, but they couldn't change the way it worked because that would have been adding new features which they implied would have been illegal.

So this is great, no companies are using post Enron laws as an excuse to give less value for your money. I think all US citizens should write to their representatives about this. I know our elected officials use software just like we do, and many are actually kind of geeky, and would love to take and issue like this that they could probably get bi-partisan consensus on, and have a brief moment in the sun with it.

 

[MrSmith]

Why is everyone quoting a cup of coffee as the measure of whether or not this is an acceptable payment? Some people don't drink coffee. And those that do are crazy to pay for what they have at home for a minute fraction of the price if they can only be patient enough to wait until they get there. Next you'll be buying air and trying to excuse it. Is this another example of the American Dream: The right to be shafted?

 

[paradillon]

Apple charged you as the consumer for the cost of the draft n card when you purchased the computer, I hardly believe they looked at the current price of a b/g wireless card and only charged for that portion of the component. Otherwise you would have to believe that Apple hasn't yet charged you for what they have already purchased from their supplier in the hopes you will pay them for it later.
Kind of double dipping. How would you do the accounting on that?

But ehhh... 2 bucks, there are bigger things to worry about.

 

[akac]

i would not have a problem at all if apple would have simply said they will charge $x.xx for the update. not that i want to pay, but they are running a business and they can charge whatever they want (even though almost nobody charges for firmware updates).

*however*, i hate being sold for a fool, and that is exactly what apple did by coming up with a totally bogus and stupid reason why 'they had to' charge for the update... yes, accounting rules made us do it! no, it is SOX!!!! wait, homeland security forced us to!

Then i think you're being a bit self-centered. Apple is not playing you for a fool - they simply are trying to cover their bases and be very very careful with all the options stuff. From what I understand, its not GAAP but SOX they are concerned about.

 

[Diatribe]

Next you'll be buying air and trying to excuse it. Is this another example of the American Dream: The right to be shafted?

You are not paying for something you already have. Is that so hard to grasp?
You bought the computer without the n specification according to what Apple advertised.
Now if Apple upgrades the thing it is their choice to charge for it and yours to pay it.

Nothing will have changed the computer as you bought it.

Nobody requires you to pay. Nobody required Apple to offer the upgrade at all.
Just be happy that they did, I don't understand why this is so hard.

 

[dernhelm]

This smells like Apple wanting desperately to avoid some phantom accounting scandal that would simply never materialize. They were probably directed by some corporate lawyer that they better charge for it now, since they did not originally charge for 'n' functionality when they rolled out their systems. If they didn't the fear is that they would have to endure increased accounting scrutiny because they might be in violation of some crazy law or another. And as well all know the last thing Apple needs is increased accounting scrutiny.

This feels like a move made out of corporate paranoia, as opposed to a move made out of corporate greed. You'd have a hard time convincing me that Apple would feel it necessary or beneficial to squeeze their current customers for $1.99 just for '802.11n' functionality.

 

[jebarne]

GAPP Rule

It doesn't require you to change how you charge, but if you don't establish a price for the feature, the SOX requirements could cause the entire release revenue to be deferred until the features are fully activated or "fair value" is established for the feature.

By Charging $1.99, they're establishing fair value.

so both sides are accurate...the accounting guys are way too defensive on this.

jb

 

[sblasl]

We are burning our bridges.

Apple will definitely think twice before adding a feature that can be enabled in the future. With all of this whining and negative press what motivation would there be to do it?

Instead of receiving thanks & recognition, they are being clobbered.

Anyway, from my perspective - Thanks Apple, I do appreciate the forward thinking on your part and providing me with the latest & greatest wifi abilities.

 

[Diatribe]

We are burning our bridges.

Apple will definitely think twice before adding a feature that can be enabled in the future. With all of this whining and negative press what motivation would there be to do it?

Instead of receiving thanks & recognition, they are being clobbered.

Anyway, from my perspective - Thanks Apple, I do appreciate the forward thinking on your part and providing me with the latest & greatest wifi abilities.

At least some sane people in this thread.

 

[eenu]

Isn't it the case that until you get rid of all your b/g kit, you'll be "living without n" anyway?

No it is b/g compatible AFAIK.

I have said this across several of these threads and no one has listened to me....won't a clean leopard install enable this for us? And if not someone will hack it.

Thing i wonder is why not charge $0.01 why $1.99. When i have dealt with companies that want to give me something but have to charge so its shown on the books as being official etc they charge me £0.01p

 

[valkraider]

Everyone is missing the whole point. (although several people posted almost the same thing since I hit "reply" and finished typing my comment. So not EVERYONE is missing the point. (smile))

Apple does not HAVE to charge. They simply ARE charging to avoid a POTENTIAL issue with earning statements, which could be prudednt considering the scrutiny that Apple is under right now. Would people rather Apple have to submit to costly investigations and/or possibly pay fines?

Also, people are overstating who will need this.

1. You must have a Core 2 Duo MacBook or MacBook Pro sold before February 2007.
2. You must have a NON-APPLE 802.11n base station (or potential to have one in the future).

If you don't fall into BOTH of those - you don't need the update. That is a pretty small number of people who will be affected. MOST of the people who bought Core 2 Duo mac laptops will not even know about 802.11n - or care. For a LONG time we are going to be using b/g simply because of the prevalance of public acccess points..

If you buy the Apple base-station it COMES WITH THE UPDATE. So it really is almost a complete non-issue.

And I am getting an Apple base-station but I do not have any of the 802.11n ready cards, so if anyone wants to buy my update disk I will sell it for 99 cents US. HALF PRICE!!!!