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

[jbernie]

Why not call it a service pack and charge nothing for it?

It is only $2 to you but it could a lot of $$$ to Apple if enough people upgrade.

Sell it via iTunes?

 

[HumanJHawkins]

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

You would think so, but have you ever tried that? They can't answer that kind of question for a number of reasons... 1) If this were allowed, they would get so many requests for answers to questions that they couldn't do anything else... That's why lawyers can charge the big bucks. And 2) Because that is legal advice. And if they got anything wrong, another agency could interpret the issue differently and charge or sue Apple. Then they would be responsible because Apple was just acting on their advice.

It's kinda like when I had a building inspection... Just some simple steps outside of a door. The guy could tell me that I was out of compliance as far as the material I had used for the landing, but could not answer any questions about what material I would need to use to make it compliant!

 

[nagromme]

I don't mind $2, especially since I won't pay it until and unless I have anything to connect TO regularly that uses n speeds. Which may be a long time coming. Meanwhile I'm glad my machine has a surprise additional capability that I didn't know I was getting when I bought the machine!

The whole thing is weird, though, and .25 would make more sense for a token charge. Maybe it's caused only INdirectly by accounting, along the lines of "this makes it easier" rather than "this is required with no legal alternative." So they are doing this to prevent other effects on their accounting, and are not actually lying. If, on the other, Apple IS lying, why not go for the full $4.99? It's also possible someone simply spoke out of turn about something they didn't understand--something that has been discussed but not decided. Is the $1.99 figure on Apple.com yet?

I've also kind of assumed that this "added functionality" thing--if true--applied to hardware (which fits this case) and not software (which fits all the free Software Updates from Apple). I'm only speculating. I suspect this has been mentioned in posts I skipped over though

(Interesting how more peope voted that this is OK without explanation than WITH )

 

[bcrawf]

no problem

Apple did a good thing by building-in (in recent Macs) the ability to update to "n." If charging a couple bucks for that now instead of just putting it on Software Update will keep the legal opportunists from dragging it into court, that's great.
Bob

 

[pr43]

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

To answer a number of issues:

1. This is not a SOx issue. SOx is about the reliability of internal controls and published financial statements.

2. SOx does require thorough documentation of business policies and procedures and I suspect proper functioning of SOx compliance within Apple probably "caught" this issue. Why this issue was raised now and not at the time the "n" chipset equipped MBP were shipped is a substantive issue.

3. The statement from members of the accounting rulemaking bodies (FASB and SEC) that GAAP does NOT tell the company what to charge is living in denial. Rules dictate behavior. Companies set their pricing policies and sales terms to achieve a desired result -- generate revenue that can be reported. This is Darwinism applied to accounting -- adaptation to changing regulatory environment. To suggest accounting rules do not dictate how or what a company charges for it products/services may be accurate in the vacuum of accounting theory; but that statement is wholly void of any sound business reality of judgment.

4. Apple blaming the accountants is ridiculous. They are a big company and should have a staff of qualified, technically-literate accountants, who should have long ago identified this issue. The accounting profession is being arrogant to suggest the FASB and SEC rules do not affect corporate behvior. What should have occurred was the accounting profession loudly stating the obvious -- these revenue rules were promulgated in 1997 -- more than seven years ago! This should not be a surprise to Apple and they blew it themselves. "They made me do it" was never an excuse to be tolerated from a ten year old. Why should Apple think they can you that excuse now.

 

[whatever]

i believe it's confirmed, by their own spokesperson

Like I said, it's not on their website or officially announced by Apple.

Who is Lynn Fox? Did CNET say that this was from an official Apple Press Report?

Is it common for Apple to announce things concerning pricing with only a Spokesperson, without putting anything up on their website or an official Press Release?

Please think about this for a moment. The statement was quoted a week ago and still not official word from Apple.

This is 100% false.

 

[dejo]

Who is Lynn Fox? Did CNET say that this was from an official Apple Press Report?

Yeah, who IS Lynn Fox? All I know is that Teresa Brewer, Apple’s Mac hardware public relations manager was quoted in a MacWorld article as saying:

“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”

And I've no reason to believe that MacWorld would make this up.

 

[benpatient]

Funny how apple didn't retroactively have to "account for" the UNPUBLISHED increase in mac mini speeds last year.

If they were really interested in making this "consumer friendly" and just trying to watch their behind, they could easily charge 99 cents for it instead of 1.99, and include in the software a code for a free song download "coupon" from the iTMS.

 

[benpatient]

and also, how can apple justify not charging for the update to Aperture 1.5?

it has features that weren't advertised or present in shipping copies of Aperture 1.0....

(such as the feature where it works)

 

[mdawson]

For a change someone ask a really good question.

I thing not yet as they have not yet update the specification on the web site.

Communications
Built-in 54-Mbps AirPort Extreme Card (802.11g standard) (3)
Built-in Bluetooth 2.0+EDR (Enhanced Data Rate) module (1)
Built-in 10/100/1000 BASE-T Gigabit Ethernet (RJ-45 connector)
Works with 56K V.92 Apple USB Modem (sold separately)

Once they do then the answer would be yet. I don't think they will change the specifications until "N" is signed off by the standards board.

The thing is... the standard won't be signed off on until 2008.

 

[mdawson]

I can't believe this discussion is even happening.

The problem isn't the $2, it's the fact that this sets a dangerous precedent for charging for future firmware updates.

We all love our Apple products, or else we wouldn't be here. That doesn't mean we have to love all Apple's decisions.

 

[3282872]

If this is just a firmware update, what are the chances of the firmware update "floating around" cyber space and into the hands of Mac users?

 

[kentrox99]

3. The statement from members of the accounting rulemaking bodies (FASB and SEC) that GAAP does NOT tell the company what to charge is living in denial. Rules dictate behavior. Companies set their pricing policies and sales terms to achieve a desired result -- generate revenue that can be reported. This is Darwinism applied to accounting -- adaptation to changing regulatory environment. To suggest accounting rules do not dictate how or what a company charges for it products/services may be accurate in the vacuum of accounting theory; but that statement is wholly void of any sound business reality of judgment.

Wow. I almost spit out my coffee on that one.
Please show me where the FASB or SEC requires that a company make "sound business judgements". They could care less if a company "achieves a desired reslut". Apple is not required to stay in business. Anything under the sun can have an affect on prices, but do they require you to set them a certain way? No. Apple knows what the rules are and it is up to them to make sound business judgements.

 

[guzhogi]

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.



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

Actually, I did pay for it, whether it was listed in the specs or not. If someone sold you a rose but it was advertised just as a flower, does that mean that it's not a rose? And after you buy it, the guy you bought it from says "Oh, this is a rose, so you'll have to pay $1 more to call it a rose." Just because it's not advertised as 'n' doesn't mean it isn't one.

While I admit some software you should pay for like film editing, word processing, etc. b/c it's for a feature you don't have and your computer isn't made specifically for that purpose. But with the C2D computers, they already have 'n', even though Apple didn't advertise it. Plus, these cards were specifically designed to run n as well as b & g. What I'm saying is that we paid for 'n' cards, whether we knew it or not. The $1.99 is indeed cheep, but this is about the principal of having to pay anything at all.

 

[kingtj]

Two thoughts here....

First of all, my reaction to this whole thing was that Apple was trying to poke a stick in the eye of govt. that created accounting rules like SOX. (They get investigated for violating federal laws on handling their stocks, so they "return fire" by trying to piss off their customers with new charges for firmware updates - claiming it's all due to this type of government legislation.)

Second, Apple has a long history of charging for some updates/upgrades while giving the others away free. (Hell, you can't even get a copy of Quicktime bundled with ANY version of MacOS without paying Apple $20 or so to eliminate all the built-in advertising, telling you to "Go Pro!" with a fully functional version.) Personally, I'm just fine with it if Apple feels I should pay them $1.99 or whatever, any time I want a flash upgrade to a piece of their hardware that adds a new capability it didn't have originally. (90% of the time, firmware upgrades fix bugs or incompatibilities with things ... They rarely add significant new features. Back in the early days of 56K modems, I remember lots of companies charging you some fee to exchange your k.flex modem for a true v.90 standards-compliant 56K model. I had to pay $25 or something like that to get an external Zoom modem upgraded.)

The problem isn't the $2, it's the fact that this sets a dangerous precedent for charging for future firmware updates.

We all love our Apple products, or else we wouldn't be here. That doesn't mean we have to love all Apple's decisions.

 

[AidenShaw]

Apple has added firmware functionality for free in the past....

All you cats who are dual-booting Windows and OSX on the MacIntels - how much did you pay for the firmware update that enabled support for operating systems that use BIOS instead of EFI?

Apple is behaving in a dubious manner here...

 

[ITASOR]

Is the N upgrader just a program? If it's a program that just runs on anything, you can bet it will be widely available on the internet to download, and Apple probably won't even care.

 

[jettredmont]

Actually, I did pay for it, whether it was listed in the specs or not. If someone sold you a rose but it was advertised just as a flower, does that mean that it's not a rose? And after you buy it, the guy you bought it from says "Oh, this is a rose, so you'll have to pay $1 more to call it a rose." Just because it's not advertised as 'n' doesn't mean it isn't one.

Very poor analogy.

1. You buy flowers after looking at them. It is obvious that the flower is a rose to the average person. You bought your computer based on a spec sheet and perhaps in-person testing. During that testing, of course, the wireless speeds were limited to those of b and g, not n. The average person would not know that there is 'n' hardware in the box.

2. Apple doesn't care what you call your airport. Call it 'n', call it 'w', call it 'guzhogi's super wifi airport MAX'. The fact is, you bought 'g' hardware, and the 'n' capabilities were undisclosed and unactivated. Apple doesn't get in trouble if you call it 'n'. Apple gets in trouble if they activate a significant portion of the hardware now, many months after they shipped it.

 

[guzhogi]

Very poor analogy.

1. You buy flowers after looking at them. It is obvious that the flower is a rose to the average person. You bought your computer based on a spec sheet and perhaps in-person testing. During that testing, of course, the wireless speeds were limited to those of b and g, not n. The average person would not know that there is 'n' hardware in the box.

2. Apple doesn't care what you call your airport. Call it 'n', call it 'w', call it 'guzhogi's super wifi airport MAX'. The fact is, you bought 'g' hardware, and the 'n' capabilities were undisclosed and unactivated. Apple doesn't get in trouble if you call it 'n'. Apple gets in trouble if they activate a significant portion of the hardware now, many months after they shipped it.

You're right, it was a poor analogy, but you got n whether you knew it or not.

 

[benbondu]

Actually, I did pay for it, whether it was listed in the specs or not. If someone sold you a rose but it was advertised just as a flower, does that mean that it's not a rose? Just because it's not advertised as 'n' doesn't mean it isn't one.

You did not pay for a 802.11n card that functions like a 802.11n card. Hense, you do not have a 802.11n card that functions like a 802.11n card. What you paid for was a 802.11n card that functions like a 802.11g card, and that's exactly what you have now. And it's exactly what you'll continue to have unless you pony up 2 bucks.

Would you have preferred the MacBooks to ship with a true 802.11g card and with the option to later upgrade it for $50 or more? (accounting for additional hardware and labor costs)

I honestly don't understand why people feel like they've been cheated on this.

 

[Rocksaurus]

All you cats who are dual-booting Windows and OSX on the MacIntels - how much did you pay for the firmware update that enabled support for operating systems that use BIOS instead of EFI?

Apple is behaving in a dubious manner here...

BAM. I want you to know that I love you, AidenShaw.

A brief review...

Apple purchased the N cards and included them in the Macs. Since they paid N card prices (as the hardware is N capable) they included the extra cost to them for an N card vs. a G card. Then, like any business, they passed this extra cost along to the consumer. You already paid for it.

The firmware update makes it so OS X can use the capabilities you already paid for.

The only cost here to Apple is to produce the firmware update. I'd say Bootcamp, which is free, cost them more than this N card firmware update. And don't make the argument that it's "beta" because that shouldn't exclude it from these accounting things, and quite frankly Bootcamp is a finished product. Yes, they will be charging Tiger users for it in the future, but if the "beta" status makes it exempt from this accounting fluff, then I would encourage Apple to label their "N" drivers as "beta" and just give them to us.

Dubious indeed.

 

[jettredmont]

All you cats who are dual-booting Windows and OSX on the MacIntels - how much did you pay for the firmware update that enabled support for operating systems that use BIOS instead of EFI?

Apple is behaving in a dubious manner here...

Aw, crap, Aiden. Yup, you figured Apple out.

Apple's goal here is to finally have more cash on hand than Microsoft by charging $2 for an unnecessary update, that only a small number of recently-shipped computers can use, of which a significantly smaller portion of those computers can take advantage (connecting to pre-n routers which are compatible with Apple's pre-n implementation), and which only a small portion of owners care to have in the first place.

Note, of course, that your argument about BIOS/EFI is dubious at best. Was there a hardware BIOS chip that Apple bought and shipped without telling us? I didn't think so.

 

[ShnikeJSB]

Geez, if you are too cheap to pay $1.99 -- less than a friggin' value meal, and DEFINITELY less than a couple bottles of Evian -- then just wait a couple days. By then it will be all over Bittorrent, P2P networks like Gnutella, among other places... It isn't a big deal... And if you are complaining that you can't afford $1.99, then you have other problems -- you shouldn't have an expensive relatively new computer in the first place.

Just my 2 Pfennigs

 

[AidenShaw]

Note, of course, that your argument about BIOS/EFI is dubious at best. Was there a hardware BIOS chip that Apple bought and shipped without telling us? I didn't think so.

Yes, the silicon logic and firmware controlling the CPU startup (be it OpenBoot, BIOS, EFI or whatever) was purchased and shipped by Apple.

That silicon had the capability of booting BIOS systems, but Apple disabled that feature in the firmware that it shipped.

Apple later restored the feature that it had disabled.
_________________________________

To me, that description fits both the BIOS boot and the pre-N feature.

 

[jettredmont]

A brief review...

Apple purchased the N cards and included them in the Macs. Since they paid N card prices (as the hardware is N capable) they included the extra cost to them for an N card vs. a G card. Then, like any business, they passed this extra cost along to the consumer. You already paid for it.

The firmware update makes it so OS X can use the capabilities you already paid for.

You are not a very good businessman if you charge for your product based on your cost and not what the market can bear. Apple did not charge us for 'n' hardware. They shipped more than what was purchased, with the extra functionality disabled.

Apple is in a competitive market where price matters (ie, they are not a monopoly). 'n' hardware is more expensive than 'g' hardware. If they were charging for 'n' hardware and delivering 'g' performance, two factors come into play:

1. their price for a 'g' computer is too high. Fewer people buy.
2. they lower the price of the hardware to be in line with 'g' competitors. People buy, but per-unit profit is less than had they simply shipped the advertised 'g' hardware.

Either way, from an accounting perspective, Apple has lost the difference in price between 'n' and 'g' hardware (obvious in the second extreme; take the first extreme, and compare the profit there with Apple shipping 'g' hardware instead and you see the same is true in the first extreme as well).

You did not pay for 'n' hardware. You paid for 'g' hardware. Apple didn't 'lose' money on the overall computer sale, but they made less money than they should have been making were they shipping the advertised hardware instead of the 'n' hardware.

Again, posit the scenario where Apple shipped 'g' hardware with all those boxes instead. You would still have exactly what was advertised, still would have paid exactly the same price, still would have just as much company amongst Mac buyers, etc. Your behavior wouldn't have changed, because nothing you knew about changed. However, now, you'd be in a much worse position, having to replace your Airport Extreme card for $50-90 to get 'n', at best, or not able to get 'n' speeds without buying an additional external dongle or a whole new computer, at worst.

The ONLY argument that can be made is that you bought Mac boxes expecting 'n' hardware to be present, based on evidence presented on web sites. Which is a straw-thin argument, as (1) such web sites don't speak for Apple, (2) specific components can and do change throughout a manufacturing run so the fact that some people could see 'n' hardware in their box didn't mean you would get the same, and (3) the existence of hardware in a box does not imply the utilization of hardware.

So, you either bought 'g' hardware the best you knew, and are getting one hell of a deal to upgrade to 'n', or you took a risk acting on hearsay and rumor and it didn't pay off for you.