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

[guzhogi]

I don't like this. We already paid for the 'n' when we bought the computer. Now we have to pay for it again? Good thing this isn't Microsoft b/c I could see them say "Oh, let's not announce any of our new computer's features when we announce the computer, but still charge $1500 for it. After everybody has the computer, announce the features and make them pay an additional $1500 to use them!" I could see Apple (or anybody) charging for an add-in card that you buy after the computer, but not if it comes w/ the computer and then charging again for us to be able to use it. I know Apple has to do this w/ a certain law or something, but that law should change so that the consumers aren't paying for what people like the Enron execs did.

 

[DaveTheGrey]

1.
- 2$ isn't much
- nobody knew that the mac they bought would support N
- it's N for 2 bucks (aiport extreme card is 49,99$)
- you don't have to upgrade

2.
- it's hardware I already bought (even without knowing, I paid for the n card)
- it's not the apple way
- where can I buy this, do I need an apple store account, I don't have a credit card, no Apple Store around here...
- what about the future macs, will this become a regular method?


it's ok and it's not

Dave

 

[Stella]

Obviously because Apple thinks there is some principle involved. $1.99 just about covers their handling costs. It's preposterous to think that Apple is lying to cover up some profit-generating scheme, because there ain't no profit in this.

Let users download it free.

Apple allow other software to be loaded free i.e. iTunes.

 

[kentrox99]

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

I think most people are missing the point here. There are no GAAP rules on what or how much you charge a customer for anything. It is strickly how Apple accounts for it. They did not have to charge anything as long as they accounted for it correctly. Apple is blaming the fee on accounting rules, but the rules have nothing to do with what they charge.

 

[durvivor]

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

Yes, thank you... Yes, GAAP is not SOX.

Unless I mis-read last weeks reasoning that Apple is charging the fee due to SOX then today's article is comparing Umm, Oranges to Watermelons.

GAAP = Old, fundamental accounting rules.
SOX = New, lets prevent Enron from happening again.

Don't tell me that the new ford gets 20 miles to the gallon of gasoline and then come up with a feature article the next week that says, No, thats wrong, if you fill it with Diesel it will get 45 miles to the gallon. That car don't run on Deisel, you can't make the argument...

 

[fatfish]

who will pay

I'm wondering how many people will actually end up paying this anyway. If you regularly use your laptap on public networks, well maybe once there are enough public networks using n. For most of us there will be little point in enabling n on your macs if you don't have a newer airport in which case you won't be paying for the upgrade anyway.

It stikes me there is a whole train load of people out there making far more money out of the story than apple ever will out of the upgrade

 

[valkraider]

I don't like this. We already paid for the 'n' when we bought the computer.

No, you didn't. If you can show me your receipt dated BEFORE 2007 with 802.11n listed in the specs - I will send you my unneeded update disk.

Your computer was sold to you with 802.11b/g.

Now we have to pay for it again?

No, you don't. Your Airport Extreme card will work as it has since day one without any additional purchases.

 

[peharri]

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

Quite. There's a huge amount of disagreement, why, Apple believe one thing, and the entire rest of the world including the actual people who administer the regulations believe a completely different thing!

First "We must announce iPhone six months in advance because otherwise the FCC will leak all the specs to Thinksecret", now "We must charge $1.99 for new functionality in existing products or else the Feds will imprison Jobs for stock fraud."

Looks like someone left the RDF generator on in Apple's legal department.

 

[Stella]

Since Apple have announced the 'N' spec'd cards, all capable Macs that are being shipped now, do they contain the drivers?

If so, why not , if not - does that not seem strange - for users to have to pay for drivers for hardware that has been announced?

 

[Xyl]

For those that saying it's for greed, you're wrong.
Apple sold 1.6 million Macs last quarter.
If every one of those bought the "N" upgrade, this would amount to 0.045% (yes, with the % sign) of their last quarter's revenue.

 

[timber]

802.11n wireless is a feature that requires hardware, firmware and software.

So, Apple aren't "forced" to offer it for free. Everybody bought 802.11g computers and Apple provided just that.

Lots of stuff comes with pieces of future features. I'm certain that my car with it's turbo diesel engine (I'm european...) is already prepared for (some fo) the next version higher horsepower output. But I'm not expecting that they improve my engine for free when the next evolution comes out.

They can charge for the upgrade. But they shouldn't base that on some wierd (and just not true) reason. They should be honest.

They are selling a feature. And that usually has a price like anything else.

But I think they should offer the stuff in the next Mac upgrade. Charging for something like this only helps to annoy their existing users. They have more to loose than to gain.

 

[eenu]

Since Apple have announced the 'N' spec'd cards, all capable Macs that are being shipped now, do they contain the drivers?

If so, why not , if not - does that not seem strange - for users to have to pay for drivers for hardware that has been announced?

I don't know if they ship with drivers but the machines are still in the tech specs as being .g not .n which like you say is strange!

 

[jettredmont]

4 Points

1. Apple is making nothing off this. Seriously. $1.99 per n-shipped Mac, even if they got it, barely (if indeed it does) covers the cost of administering the deal. It certainly doesn't cover the "bad blood" relationship poisoning due to the program (which Apple knew full well would come about; you can't charge money for something without someone getting ticket off, even if none of that money actually makes it to your bank account).

2. It's the cheapest 'n' hardware you'll ever get. $2 to upgrade your computer from 'g' to 'n'? I'd gladly pay that, although I'm afraid my old non-Intel book isn't gonna make it.

3. The complication here is that Apple shipped hardware that cost extra, was disabled, and was unadvertised but discoverable. This is why we are in an accounting gray area. This is not a standard software update, nor is it a standard firmware update. It is enabling hardware that they never "sold", that cost them money to ship, and that one could argue drove some number of sales of its computers (because in some circles, like here, the 'n' capability was widely known). The argument they are guarding against is that of someone who bought with the understanding that 'n' capability was being shipped with the machines, with the knowledge that Apple had no reason to ship 'n' hardware unless it expected to use it. Then, that person didn't 'receive' their logically expected hardware until this quarter, well past when Apple reported the revenue. This is a no-no in GAAP, and explicitly illegal under SOx (for those wondering why they first said SOx and now say GAAP).

4. These general accountants, I am sorry, do not share any of the culpability Apple has if it does this wrong. Apple's being conservative here to avoid issues down the road. They've got enough current issues to deal with (which are due to following "standard" practices that many, many accountants tacitly approved in the previous ten years) that they don't need to risk more press time being spent on another "scandal" instead of their products.

 

[Dont Hurt Me]

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

Apple is king at squeezing every dollar out of its tech and its users. No doubt about it. No wonder they have a billion in cash in the bank.

 

[eenu]

lets put it this way. I won't need .n for a long time i may even have a new mac before then! But look at it this way, is it not nice that Apple were forward thinking enough to give me the hardware in my machine that will be nice and future proof? Not only that i bought it thinking it was .g ands now i find out for a measly £1-£2 i can future proof it! Awesome

 

[xli_ne]

if they offer the upgrade for free on all new macs purchased (which doesn't seem likely) I think its fair for c2d users to get it for free.

Most likely they will offer the 2 dollar upgrade as a custom option on their website and in the apple stores.

But I dont know if this falls into the same category to when they started offering glossy screens on their macbook pros either

 

[Stella]

Apple is king at squeezing every dollar out of its tech and its users. No doubt about it. No wonder they have a billion in cash in the bank.

Agreed. This sets a bad precendent for the future, perhaps.

For example:
Apple ship the iPhone.. and then demands more money to unlock hardware functionality from the user that the user has
already paid for.

"We gave the iPhone 3G hardware but didn't tell you. Now if you want to use it, pay us $50 to enable the 3G".

 

[ChrisA]

Does this even effect ANYONE?

OK so you have to pay $1.99 to enable "n". but why would you enable it unless you have a router then can also do "n". But if you buy the Apple router you get the enabler for free and don't have to pay $1.99

The only case where you would want to pay $1.99 is if you have an newer Mac and you plan to buy a non-Apple router. There are not many of these non-Apple routers around. I think we are talking about a very small number of users

 

[Stella]

Does this even effect ANYONE?

OK so you have to pay $1.99 to enable "n". but why would you enable it unless you have a router then can also do "n". But if you buy the Apple router you get the enabler for free and don't have to pay $1.99

The only case where you would want to pay $1.99 is if you have an newer Mac and you plan to buy a non-Apple router. There are not many of these non-Apple routers around. I think we are talking about a very small number of users

There are enough around - and cheaper too!

 

[eenu]

There are enough around - and cheaper too!

Got to agree with you there, the apple one is stupidly expensive!

 

[Peace]

Since Apple have announced the 'N' spec'd cards, all capable Macs that are being shipped now, do they contain the drivers?

If so, why not , if not - does that not seem strange - for users to have to pay for drivers for hardware that has been announced?

Stella the only hardware Apple is selling and advertising now with the draft-n spec is the TV and the Airport Extreme Base Station.

I'm guessing as soon as the first TV or Airport ships any draft-n spec'd Mac will have the N updated.Until Feb. 1st no Apple product ships with the N updated.

On a side note I make my own espresso's

 

[valkraider]

if they offer the upgrade for free on all new macs purchased (which doesn't seem likely) I think its fair for c2d users to get it for free.

Most likely they will offer the 2 dollar upgrade as a custom option on their website and in the apple stores.

But I dont know if this falls into the same category to when they started offering glossy screens on their macbook pros either

No. The cost of the new computer will reflect the 802.11n installed within it.

Look. Here is the problem in simple english.

Apple sold computers that it ADVERTISED with 11b/g specs in one quarter. For their financial statements they said "we made $x amount selling computers with 11b/g specs in this quarter". That statement impacts their stock values.

Now, if they were to go back and say "Oh actually, we sold computers last quarter that *really* had 11n cards, but you can't use them till this quarter" then THEORETICALLY they could be required to restate earnings from those computers and move them into this quarter, which would play all kinds of havoc with stock values - AND, most importantly, open them up for more investigation.

So, to play it safe - they are not taking any chances. They get to say "we made $x on the computers last quarter, and we made $x this quarter upgrading them to 11n". No restatements needed, everything is above ground.

From here on out, the computers will come with 11n and that "capability" will be represented in their earning statements.

But every time a person says "they suck, I want this for free" you are telling Apple - "hey, don't bother with future hardware upgrades because no matter what you do we will bitch about it".

I would rather Apple charge for the few upgrades than have to raise prices acrosss the board to cover fees and fines if they get called on it and investigated or whatever...

 

[Rocketman]

1. Apple is making nothing off this. Seriously. $1.99 per n-shipped Mac, even if they got it, barely (if indeed it does) covers the cost of administering the deal. It certainly doesn't cover the "bad blood" relationship poisoning due to the program (which Apple knew full well would come about; you can't charge money for something without someone getting ticket off, even if none of that money actually makes it to your bank account).

2. It's the cheapest 'n' hardware you'll ever get. $2 to upgrade your computer from 'g' to 'n'? I'd gladly pay that, although I'm afraid my old non-Intel book isn't gonna make it.

3. The complication here is that Apple shipped hardware that cost extra, was disabled, and was unadvertised but discoverable. This is why we are in an accounting gray area. This is not a standard software update, nor is it a standard firmware update. It is enabling hardware that they never "sold", that cost them money to ship, and that one could argue drove some number of sales of its computers (because in some circles, like here, the 'n' capability was widely known). The argument they are guarding against is that of someone who bought with the understanding that 'n' capability was being shipped with the machines, with the knowledge that Apple had no reason to ship 'n' hardware unless it expected to use it. Then, that person didn't 'receive' their logically expected hardware until this quarter, well past when Apple reported the revenue. This is a no-no in GAAP, and explicitly illegal under SOx (for those wondering why they first said SOx and now say GAAP).

4. These general accountants, I am sorry, do not share any of the culpability Apple has if it does this wrong. Apple's being conservative here to avoid issues down the road. They've got enough current issues to deal with (which are due to following "standard" practices that many, many accountants tacitly approved in the previous ten years) that they don't need to risk more press time being spent on another "scandal" instead of their products.

This post is a keeper.

 

[iomar]

Well, I have the macbook pro Intel. I don't think I have the capability on my computer, but if I have to pay $1.95 I will still pay to get better connection.

 

[nospleen]

Wah, wah.... We paid for G, but were lucky enough to get an 'n' card. It is 2 freaking bucks... I don't see the big deal... I say kuddos to Apple for sending them out with 'n' cards in the first place.