Originally Posted by maxmann
the problem is really bigger than a simple idea that apple is doing this to make money. In fact, apple, being a Consumer Electronics Company, has every intention of selling hardware and giving the software (tools) to sell it away. So, the SEC legal rumblings are not untrue - but rather complicated. The stock price alone, might be 50% higher at this moment if wall street recognized the true earnings of the company. Don't forget, ATT is paying them up front the 350.00 plus per phone and it could be recognized in the quarter report instead of amortized over 720 days. As hard to believe as it is - wall street does not recognize all that cash as profit until it is shown as actual profit divided out over the life (720 days) of the phone. This is not ideal for apple, investors or ipod touch users. However, you can't skin a cat two ways in this case - as the relationship with ATT is with a subscription model. Apple did not invent it - and in fact started out selling their phones for full price without it. However, the phone business requires the subscription model to be successful (see competition). So, can anyone bitching about the $10.00 stop and realize you can't have a subscription model with the phone (software free) and then give it away with the touch for free without a subscription model. it isn't rocket science. it is business and following the complex legal requirements of the SEC and public markets we invest in. AS it is, the SEC has enough corruption and cheating to go around for everyone. Do you think Apple should just not follow the law to keep your little hearts happy? Well, they are not following the law to make $10!!!
The $10 has to show fair value for what is set up in the subscription model for upgrades. it is called a standard. it has to be reasonable and not subject to question. In fact, it is much harder to justify $10 than $20 and not the other way around with giving it away for a dollar as some suggest here as solutions (see you in jail). AGAIN.. Apple did not invent the subscription model. If any other company comes out with a two product line up - phone and touch example, they will have to do some very fancy accounting to avoid what is already a standard in accounting practices with similar circumstances to what Apple has encountered. AGAIN.. APPLE DIDN'T COME UP WITH THIS PLAN ON PURPOSE - THEY CAME UP WITH IT BECAUSE THEY HAD NO CHOICE WITH A SUBSCRIPTION BUSINESS FORMAT THAT HAPPENS TO CROSS OVER INTO THE IPOD TOUCH PRODUCT USING THE SAME SOFTWARE.
DO YOU REALLY THINK APPLE COULD GIVE A CRAP ABOUT THE $10?.. WHAT THEY WANT TO DO IS SELL HARDWARE HARDWARE HARDWARE. THE NAME AFTER APPLE IS "CONSUMER ELECTRONICS" .. ARE YOU ALL JUST STUCK IN A COMPUTER MIND SET OR CAN YOU ADAPT TO WHAT HAS BEEN GOING ON NOW FOR OVER TWO YEARS?
This guy-- Maxman-- is clearly a moron-- or an accountant-- but let's face it when it comes to business this is usually the same thing. You can tell by the condescending attitude. Hate to break it to you but accounting isn't that difficult, it's just REALLY boring. So we get it, trust us.
Keep in mind SarbOx is a law, that while unquestionably flawed, was created to protect us from unethical and incompetent accountants. They couldn't help the company be profitable so they manipulated the numbers.
The only thing he's right about is that this isn't a money grab on apple's part, because it's really a branding issue. I'll get to that in a minute.
Apple does NOT have to charge for this update. They are choosing to because their accountants and legal people are recommending that they do from a liability perspective. Because they are a big company and have deep pockets, they don't want to take any chances that they could get fined. So they are limiting risk.
Apple could easily charge 99 cents for this and that would mitigate any risk they have. The $9.95 doesn't protect them any more than a 99 cent charge would. But they aren't charging $9.95 to make money on the update, they are doing to increase the value of their software.
What's the difference between the Zune and Ipod? Most people would say user interface i.e. software. This "interpretation" of the law allows Apple the opportunity to maximize the perceived value of their biggest differentiators, the software. A 99 cent charge would be a foolish thing to do. You don't give away "things" people value very often if you want to keep the value of that "thing" maximized. It's basic business and is core to their specific business model. Apple provides premium products priced "appropriately" for their worth. That's the model and they are forced in this case to charge a decent price for the update if they are going to be true to their brand.
It kind of sucks-- I have a touch and an Iphone-- but if we're honest, it's what most of us are buying from Apple, that brand. We want to be amazed at Apple's next product, next software innovation. But those things cost money to develop and if we want Apple to continue to change the game, we have to be willing to pay the price. If they give this away it will start to chip away at their very healthy profit margins. They owe it to their shareholders to not undersell their brand.
Now on the merits of this upgrade, I have it on my Touch and I see no discernible benefit but on the IPhone it's significant, so until there is a must-have 3.0 only app, the Touch upgrades will significantly lag behind the Iphone. Some will be because of the cost but most will be because the user doesn't see the value.
But people that complain about this aren't whiners or idiots. It's a viable position and there's plenty of evidence-- which others have posted about-- which supports their position. It isn't as cut and dried as Maxman would have you believe. So save the attitude buddy and go back to bean counting....