I think that is incorrect. I live in Australia, and I have never had any actual dealings with Apple Inc. (or Apple Computer, Inc., for that matter). Apple Inc. does not operate in Australia, whether for sales or otherwise.
I have purchased all of my Apple hardware and software from Apple Computer (Australia) Pty. Ltd., a privately held company registered in Australia*, subject to Australian laws, including Australian business and taxation laws (specifically those applicable in the state of New South Wales, though most of the applicable laws are federal, not state based). This company is a completely separate entity that just happens to pass its profits/losses on to its parent.
Cheers,
js.
* Apple Computer (Australia) P/L is not traded on any stock market; it's wholly owned by Apple, Inc., just as Microsoft Australia P/L is wholly owned by Microsoft Corp.
Ah, another Melbournian to add to the Ai Mix. You've made some very good points. Essentially, we have *no friggin clue* how the 802.11n unlock will take place in Australia. Apple Computer Australia may be a privately held registered Australian company but the peoples in Cupertino, California, USA are the ones making the big calls.
At best though, sorry to say, Apple Computer Australia is a just distributor of Apple, Inc. hardware, software, services. Steve Jobs says: let's unlock 802.11n and also a way to spur Airport Extreme 802.11n sales. Apple Computer Australia says: "OK, just give us a bit of time".... and Apple Computer Australia will figure out some method that will keep Johnny Howard and Peter Costello and all the State Premiers happy. Whether it's free, $2AUD, $5AUD, $10AUD or shouting an employee of Apple Comp. Aust. a beer. 8)
You buy a product (a computer, a car, a house...) complete with all the features possibly required, but disabled. Then as desired, you pay to have them 'unlocked'. A bit like your satellite/cable TV package.
It's a term that I call (and maybe others) the 'extrinsic' value of a product.
I think that this is Apple's way of getting us used to the concept.
It's not a precursor of anything. Locked-out features have been present in products since at least the seventies -- think high-end televisions and hi-fi systems compared with their lower-fidelity cousins. In many cases, the only thing internally different between them was a single removed component -- maybe a missing resistor. Install that resistor yourself and you've voided the warranty, but you end up with all the enhanced features.
But to get a version of the TV with that $0.02 resistor pre-installed would cost you a few hundred extra bucks.
It significantly reduces fabrication costs if you can produce a set of common building blocks, and manufacture every product in your line-up with standardized combinations of those blocks.
Can anybody check: Has Apple re-released its draft-n capable product lines under a new SKU since the new feature was officially announced? If not, it's worth checking to see if they do so after the unlocking utility is released. If so, then their accounting explanation for the $4.99 fee might be that they are refurbishing the product to match the specs of the new SKU.
The proof will be to follow the money and see who complains.
If they really are doing this because some accountants believe it's mandated by SOX, and not because they want to squeeze another $5 out of all their existing customers, then they shouldn't complain when the enabler starts spreading through the file sharing networks (as all software eventually does). After all, SOX can't hold them responsible for what third parties do to their products - just like SOX wouldn't apply if you swapped out the hard drive.
If they start screaming about piracy, or install some kind of DRM to prevent it from spreading, then we'll know this goes beyond SOX. Possibly as a test case to see if people will pay for this kind of "upgrade" in the future.
Seriously, this is very legitimate. We are not only talking about following SOX, we are also talking about following GAAP, otherwise known as Generally Accepted Accounting Principles. As an accountant, it might take me a while to try to explain why Apple has to treat this situation the way they do.
It's going to be worse than that, to explain why they upgraded the 5G iPods for free late last year but not doing the same for their C2D machines.
And just think of the time you'll save with your wireless network running five times faster. $5 = 5x = 5 times more time for happy meals.
Quote:
Originally Posted by jpellino
$5 is nothing - the price of a happy meal. They certainly don't need your $5 - they could make more money other simpler ways. Hardly worth being 'stunade over.
They are stuck in the middle of the law, the emerging draft standard, the race to compete, and rapidly evolving hardware. Their choices were probably (1) hold up the manu line on the new macs (2) ship a buggy apx (3) run afoul of the law (4) shun the standard or (d) all of the above. They've had lawyers, engineers and MBA's up one side of this and down the other, I'm sure they've covered it as best they can. I doubt seriously if we're going to uncover something they missed.
Just start filinf complaints with the BBB. As much as MS gets bad-mouthed here, at least they didnt charge for Security Center in SP2,
You paid for the hardware, this is a driver update...you paid for tiger, they added more widgets in a point release and gave it away...so either Apple are fucking their customers blind or they have an accounting problem with OSX 10.4.x
If they start screaming about piracy, or install some kind of DRM to prevent it from spreading, then we'll know this goes beyond SOX. Possibly as a test case to see if people will pay for this kind of "upgrade" in the future.
Truth be told, My sister is going to get a Macbook, and I have advised her to wait: if it goes up on the file sharing systems and it is just one accountant bitching, and there is no protection, then fine, but if there is protection of any kind or if apple sues, speaks out or whatever...screw it, she should get an HP with Vista because that would just be a sign of things to come.
Core 2 Duo-based Mac owners who want to unlock next-generation 802.11n wireless technologies hidden inside their computers will first have to fork a few bucks over to Apple, AppleInsider has confirmed.
As a developer, there are tons of legislation that have to be complied with that 'some' will never appreciate except to state that our strategies are simply put in place to gouge your poor butt holes. If I knew who you 'some' really were, your price would be $500.
Truth be told, My sister is going to get a Macbook, and I have advised her to wait: if it goes up on the file sharing systems and it is just one accountant bitching, and there is no protection, then fine, but if there is protection of any kind or if apple sues, speaks out or whatever...screw it, she should get an HP with Vista because that would just be a sign of things to come.
So....
You'd rather run an OS with no real security, with a confusing and aggravating user interface, why? Because you don't want to pay $5 on top of the cost of a $1000+ computer?
Making your life miserable in order to make a point seems pretty foolish to me. If I'm going to suffer in some act of civil disobedience, it's going to be for something more substantial than a $5 software update.
It's going to be worse than that, to explain why they upgraded the 5G iPods for free late last year but not doing the same for their C2D machines.
If I had to guess, I would say because they were actually adding new features to the iPod. On the other hand, 802.11n was already there in the computers but had been kept secret from the consumer.
So with iPod you could say you got a finished product, they are just giving you something extra for free. With the computer, they are finishing the implementation of something that was already there, implying that the computer was "unfinished" when it was shipped.
I guess this is kind of the reverse of the practice in some countries to leave houses 'unfinished' (a few roof tiles or whatever) to avoid paying taxes that are due on completion.
It's not a precursor of anything. Locked-out features have been present in products since at least the seventies -- think high-end televisions and hi-fi systems compared with their lower-fidelity cousins. In many cases, the only thing internally different between them was a single removed component -- maybe a missing resistor. Install that resistor yourself and you've voided the warranty, but you end up with all the enhanced features.
But to get a version of the TV with that $0.02 resistor pre-installed would cost you a few hundred extra bucks.
It significantly reduces fabrication costs if you can produce a set of common building blocks, and manufacture every product in your line-up with standardized combinations of those blocks.
Can anybody check: Has Apple re-released its draft-n capable product lines under a new SKU since the new feature was officially announced? If not, it's worth checking to see if they do so after the unlocking utility is released. If so, then their accounting explanation for the $4.99 fee might be that they are refurbishing the product to match the specs of the new SKU.
Thanks for the response, lf.
I think there is a difference, though. In the 70s, functionality was 'built-out'. Now, the functionality is 'built-in'. The resistor was never expected to be inserted later as an upgrade, but today the functionality can be switched on, at a cost. Same economies of scale, but more chance to generate revenue later on down the line.
I'm not here to defend Apple, but I did want to clarify the accounting explanation for those who are skeptical. 128pluspb100siduo230 explained much of S-O earlier in this thread, but I'll try to break down the entire situation in layman's terms. Hope this helps illuminate the issue…
1. You buy a Mac in 2006. Mr. Apple Accountant records that sale in 2006, because that’s when it occurred.
2. Your Mac has N capability, but is not activated. Apple never officially says it’s there … but everyone quickly finds out thanks to AppleInsider.com.
3. Apple wants to offer a free N driver upgrade in 2007. You want to upgrade for free. What a great idea!
4. Unfortunately, Mr. Apple Accountant begins to worry. You bought the Mac in 2006 … but you will upgrade for free in 2007. So when did Apple sell you the FINAL PRODUCT: in 2006 or 2007?
5. The obvious answer -- one would think -- is in 2006. But Mr. Class-Action Lawsuit disagrees: “Apple technically didn’t deliver the FINAL PRODUCT until 2007. I can prove it – I bought my Mac in 2006 knowing (thanks to AppleInsider.com) that it had N built in. N wasn’t activated until 2007, so Apple’s sales and earnings for 2006 are incorrect. In conclusion, I will sue the pants off of Apple.”
6. Mr. Apple Accountant wakes up from his lawsuit nightmare. Why didn’t Apple just advertise that these Macs were “N Ready” at the start? Then we wouldn’t have this accounting problem.
7. Then he remembered why: If Apple did that, and N didn’t work properly for some reason … there would be a lot of people returning their computers and filing even more lawsuits. Bad idea.
8. Mr. Apple Accountant desperately needs a way to protect his rear from Mr. Class-Action Lawsuit. Eureka! Let’s sell the N driver upgrade for a penny! Separate the products, and prevent any accounting ambiguity. Problem solved, right?
9. Mr. Apple Accountant presents his idea to Mr. Jobs, who says, “We can’t sell this for a penny! First off, a penny still won’t protect us from getting sued. It’ll look as if we’re trying to “cook the books” just to avoid Mr. Class-Action Lawsuit – he’d like nothing more than to see us sell it for a penny. Secondly, our shareholders won’t like us selling something for less than what it cost – that’s bad for our earnings.”
10. Mr. Apple Accountant says, “OK, so to fully protect us from Mr. Class-Action Lawsuit, we HAVE to sell the upgrade at a price where we’ll either break even or make a profit. Mr. Jobs, I think it’ll cost us about $4.47* to develop, sell, and distribute each upgrade.”
11. Mr. Jobs says, “God, that’s such an ugly number. I want elegant, simple, easy to understand. Make it $5 instead.”
12. Mr. Apple Accountant is relieved that he won’t have to worry about Mr. Class-Action Lawsuit, but he knows some Mac buyers won’t want to pay $5. “Mr. Jobs, I’m worried that this onerous fee will anger some customers…”
13. Mr. Jobs explodes in anger. “Over Five bucks!?! What is that, one Starbucks coffee!?! If they can’t afford $5, they can’t afford a Mac in the first place!!!” Mr. Jobs calms down and says to Mr. Apple Accountant, “Look, you worry about Mr. Lawsuit, I’ll worry about the customers. If it helps, I’ll make sure to bundle in the N upgrade in Leopard and in our future wireless products for those who don’t want to pay $5. Besides, it’ll be pirated so fast once it comes out, it won’t even matter by then. But we have to charge this $5 to avoid any accounting issues. So make it happen.”
14. EDIT = Mr. Apple Accountant gets fired when he makes the price $4.99 instead of $5 as Mr. Jobs had asked. =D
*Just guessing here; I don’t know what Apple’s true cost is.
As a developer, there are tons of legislation that have to be complied with that 'some' will never appreciate except to state that our strategies are simply put in place to gouge your poor butt holes. If I knew who you 'some' really were, your price would be $500.
What I just do not understand is this: Why not just give it away, price it at $0 and enter it in the balance sheet as such? That sort of thing is done all the time with leaflets, brochures, update CDs, promo goodies like T-shirts, buttons, stickers, and so on. I have a feeling that may be how they could add new features to iPod in software updates for free and how they could add widgets and other functionality to OSX in free point-updates.
Better yet: why not, since it only works with the Macs, and only OSX, post it as a free-ware app?
If they didnt want to charge for it, they would not.
Also, my cable TV is billed a month ahead, I pay the Jan 5-Feb5 bill on ~Jan 4...they just, for the same price, upgraded the service from 3 Mbps to 10...is that an accounting violation?
If you sell something and don't deliver it you can not book the revenue. It becomes a liability you must carry on your books until you complete the sale by delivering the total product. This is a hardware feature set that is being enabled and not a software feature. It's no surprise that in the wake of Enron the Congress might seek to clarify our accounting rules and that is what the Sarbanes Oaxley Act is.
Sorry, but this is hogwash. From this perspective, any software update could be viewed as a hardware update. It would lead us down a dangerous road to what is the difference between a bugfix and what is a new feature.
The only way I could see Apple being legally required to do something related to this update is if Apple is paying someone a licensing fee (after the fact) to enable the (already sold) hardware. Even then, they should be able to write it off as some kind of good faith promotion to existing customers. I cannot fathom that they are required to charge for this.
I don't have any problem with them charging for this, but if there is something in the law that absolutely requires them to charge for this (with no alternative), then the law needs to be fixed. Hardware and software are symbiotic, and it's a slippery slope from enabling wireless N, to adding a new phone to the iSync profiles, to putting a menu item in a more convenient location.
Does this legislation work for the reverse situation? If the Sarb-Ox law had been in effect 6 years ago, would Apple have been able to release Mac OS X which did not support several of the original hardware features on the beige G3 (internal floppy drive, video input/output, DVD playback)?
Sarbanes-Oxley has caused a lot of headaches for a lot of companies, and this fee-for-feature thing is simply a manifestation of it. Once you figure in the overhead involved with having to maintain a separate part number, keeping accounting records, etc., Apple's probably not "making" much money on the deal.
Anybody who develops software for a public company knows all about having to pre-document a product's feature set before release, for SOX compliance.
What would surprise me, however, is if the 802.11n enabler isn't bundled with Leopard.
I think this is just Apple's way of getting the feature out to the user community, while avoiding a SOX audit.
The fee is nominal, and necessary. If they charged any less, they'd probably lose money on it.
[EDIT] I wonder if they could have avoided this by releasing the enabler as open-source? Hmmm...
[EDIT2] Haggar, I do not believe that SOX is retroactive. Sorry...
Haggar, I do not believe that SOX is retroactive. Sorry...
I am concerned about future attempts by Apple to release updated operating systems which cripple hardware features on systems which are supposedly "supported" by that OS. I don't want to see another Beige G3 controversy in the future. Are there any laws regarding this?
I have checked with an accounting expert -- and this guy knows what he is talking about. Here's the scoop.
1) Apple's logic (if it was, indeed, their logic -- sounded like it was some unnamed outside accountant quoted in the story) is bull. (The actual words my friend used were: "it is a rationalization without substance.")
2) If a product or service is "substantially complete" when it is sold, all the revenue can be recognized up front. When you sell a $2000 product, a $5 add-on is basically "not material." Materiality is the crucial issue.
3) Sar-box (as I suspected) has little to with this -- it has very few, if any, requirements on the content of accounting rules, but rather, focuses on the process of adopting and impementing these rules.
What I just do not understand is this: Why not just give it away, price it at $0 and enter it in the balance sheet as such? ... Better yet: why not, since it only works with the Macs, and only OSX, post it as a free-ware app?
This is a wonderful idea ... but for an accountant, it's legally impossible to enter it as $0 on the balance sheet. The freeware has to cost Apple something to develop, debug and distribute it. It has to show up as an expense (negative number) somewhere on the balance sheet. Without going into the accounting nitty gritty, that negative number could, for a zealous auditor or lawsuit lover, put Apple's previous financial statements into question. That would be bad for Apple.
Quote:
Originally Posted by a_greer
Also, my cable TV is billed a month ahead, I pay the Jan 5-Feb5 bill on ~Jan 4...they just, for the same price, upgraded the service from 3 Mbps to 10...is that an accounting violation?
No accounting violation at all - I'm not sure how this relates to Apple, because your upgrade I presume is available to ALL cable subscribers, not just a certain few. Now if only people with a certain modem can get the upgrade, then it opens up a can of worms, I suppose.
Comments
I think that is incorrect. I live in Australia, and I have never had any actual dealings with Apple Inc. (or Apple Computer, Inc., for that matter). Apple Inc. does not operate in Australia, whether for sales or otherwise.
I have purchased all of my Apple hardware and software from Apple Computer (Australia) Pty. Ltd., a privately held company registered in Australia*, subject to Australian laws, including Australian business and taxation laws (specifically those applicable in the state of New South Wales, though most of the applicable laws are federal, not state based). This company is a completely separate entity that just happens to pass its profits/losses on to its parent.
Cheers,
js.
* Apple Computer (Australia) P/L is not traded on any stock market; it's wholly owned by Apple, Inc., just as Microsoft Australia P/L is wholly owned by Microsoft Corp.
Ah, another Melbournian to add to the Ai Mix. You've made some very good points. Essentially, we have *no friggin clue* how the 802.11n unlock will take place in Australia. Apple Computer Australia may be a privately held registered Australian company but the peoples in Cupertino, California, USA are the ones making the big calls.
At best though, sorry to say, Apple Computer Australia is a just distributor of Apple, Inc. hardware, software, services. Steve Jobs says: let's unlock 802.11n and also a way to spur Airport Extreme 802.11n sales. Apple Computer Australia says: "OK, just give us a bit of time".... and Apple Computer Australia will figure out some method that will keep Johnny Howard and Peter Costello and all the State Premiers happy. Whether it's free, $2AUD, $5AUD, $10AUD or shouting an employee of Apple Comp. Aust. a beer. 8)
This is a precursor of things to come.
You buy a product (a computer, a car, a house...) complete with all the features possibly required, but disabled. Then as desired, you pay to have them 'unlocked'. A bit like your satellite/cable TV package.
It's a term that I call (and maybe others) the 'extrinsic' value of a product.
I think that this is Apple's way of getting us used to the concept.
It's not a precursor of anything. Locked-out features have been present in products since at least the seventies -- think high-end televisions and hi-fi systems compared with their lower-fidelity cousins. In many cases, the only thing internally different between them was a single removed component -- maybe a missing resistor. Install that resistor yourself and you've voided the warranty, but you end up with all the enhanced features.
But to get a version of the TV with that $0.02 resistor pre-installed would cost you a few hundred extra bucks.
It significantly reduces fabrication costs if you can produce a set of common building blocks, and manufacture every product in your line-up with standardized combinations of those blocks.
Can anybody check: Has Apple re-released its draft-n capable product lines under a new SKU since the new feature was officially announced? If not, it's worth checking to see if they do so after the unlocking utility is released. If so, then their accounting explanation for the $4.99 fee might be that they are refurbishing the product to match the specs of the new SKU.
If they really are doing this because some accountants believe it's mandated by SOX, and not because they want to squeeze another $5 out of all their existing customers, then they shouldn't complain when the enabler starts spreading through the file sharing networks (as all software eventually does). After all, SOX can't hold them responsible for what third parties do to their products - just like SOX wouldn't apply if you swapped out the hard drive.
If they start screaming about piracy, or install some kind of DRM to prevent it from spreading, then we'll know this goes beyond SOX. Possibly as a test case to see if people will pay for this kind of "upgrade" in the future.
Seriously, this is very legitimate. We are not only talking about following SOX, we are also talking about following GAAP, otherwise known as Generally Accepted Accounting Principles. As an accountant, it might take me a while to try to explain why Apple has to treat this situation the way they do.
It's going to be worse than that, to explain why they upgraded the 5G iPods for free late last year but not doing the same for their C2D machines.
It's going to be worse than that, to explain why they upgraded the 5G iPods for free late last year but not doing the same for their C2D machines.
That's a true point.
At first I thought that it wasn't comparable, and then I realised that it was.
And just think of the time you'll save with your wireless network running five times faster. $5 = 5x = 5 times more time for happy meals.
$5 is nothing - the price of a happy meal. They certainly don't need your $5 - they could make more money other simpler ways. Hardly worth being 'stunade over.
They are stuck in the middle of the law, the emerging draft standard, the race to compete, and rapidly evolving hardware. Their choices were probably (1) hold up the manu line on the new macs (2) ship a buggy apx (3) run afoul of the law (4) shun the standard or (d) all of the above. They've had lawyers, engineers and MBA's up one side of this and down the other, I'm sure they've covered it as best they can. I doubt seriously if we're going to uncover something they missed.
You paid for the hardware, this is a driver update...you paid for tiger, they added more widgets in a point release and gave it away...so either Apple are fucking their customers blind or they have an accounting problem with OSX 10.4.x
If they start screaming about piracy, or install some kind of DRM to prevent it from spreading, then we'll know this goes beyond SOX. Possibly as a test case to see if people will pay for this kind of "upgrade" in the future.
Truth be told, My sister is going to get a Macbook, and I have advised her to wait: if it goes up on the file sharing systems and it is just one accountant bitching, and there is no protection, then fine, but if there is protection of any kind or if apple sues, speaks out or whatever...screw it, she should get an HP with Vista because that would just be a sign of things to come.
Core 2 Duo-based Mac owners who want to unlock next-generation 802.11n wireless technologies hidden inside their computers will first have to fork a few bucks over to Apple, AppleInsider has confirmed.
Perhaps a few, heck most of you should visit
http://backstage.ilounge.com/index.p...-your-c2d-mac/
and in particular, read Comment 25.
As a developer, there are tons of legislation that have to be complied with that 'some' will never appreciate except to state that our strategies are simply put in place to gouge your poor butt holes. If I knew who you 'some' really were, your price would be $500.
Truth be told, My sister is going to get a Macbook, and I have advised her to wait: if it goes up on the file sharing systems and it is just one accountant bitching, and there is no protection, then fine, but if there is protection of any kind or if apple sues, speaks out or whatever...screw it, she should get an HP with Vista because that would just be a sign of things to come.
So....
You'd rather run an OS with no real security, with a confusing and aggravating user interface, why? Because you don't want to pay $5 on top of the cost of a $1000+ computer?
Making your life miserable in order to make a point seems pretty foolish to me. If I'm going to suffer in some act of civil disobedience, it's going to be for something more substantial than a $5 software update.
It's going to be worse than that, to explain why they upgraded the 5G iPods for free late last year but not doing the same for their C2D machines.
If I had to guess, I would say because they were actually adding new features to the iPod. On the other hand, 802.11n was already there in the computers but had been kept secret from the consumer.
So with iPod you could say you got a finished product, they are just giving you something extra for free. With the computer, they are finishing the implementation of something that was already there, implying that the computer was "unfinished" when it was shipped.
I guess this is kind of the reverse of the practice in some countries to leave houses 'unfinished' (a few roof tiles or whatever) to avoid paying taxes that are due on completion.
.
.
It's not a precursor of anything. Locked-out features have been present in products since at least the seventies -- think high-end televisions and hi-fi systems compared with their lower-fidelity cousins. In many cases, the only thing internally different between them was a single removed component -- maybe a missing resistor. Install that resistor yourself and you've voided the warranty, but you end up with all the enhanced features.
But to get a version of the TV with that $0.02 resistor pre-installed would cost you a few hundred extra bucks.
It significantly reduces fabrication costs if you can produce a set of common building blocks, and manufacture every product in your line-up with standardized combinations of those blocks.
Can anybody check: Has Apple re-released its draft-n capable product lines under a new SKU since the new feature was officially announced? If not, it's worth checking to see if they do so after the unlocking utility is released. If so, then their accounting explanation for the $4.99 fee might be that they are refurbishing the product to match the specs of the new SKU.
Thanks for the response, lf.
I think there is a difference, though. In the 70s, functionality was 'built-out'. Now, the functionality is 'built-in'. The resistor was never expected to be inserted later as an upgrade, but today the functionality can be switched on, at a cost. Same economies of scale, but more chance to generate revenue later on down the line.
Can you try? Thanks. (I am skeptical).
I'm not here to defend Apple, but I did want to clarify the accounting explanation for those who are skeptical. 128pluspb100siduo230 explained much of S-O earlier in this thread, but I'll try to break down the entire situation in layman's terms. Hope this helps illuminate the issue…
1. You buy a Mac in 2006. Mr. Apple Accountant records that sale in 2006, because that’s when it occurred.
2. Your Mac has N capability, but is not activated. Apple never officially says it’s there … but everyone quickly finds out thanks to AppleInsider.com.
3. Apple wants to offer a free N driver upgrade in 2007. You want to upgrade for free. What a great idea!
4. Unfortunately, Mr. Apple Accountant begins to worry. You bought the Mac in 2006 … but you will upgrade for free in 2007. So when did Apple sell you the FINAL PRODUCT: in 2006 or 2007?
5. The obvious answer -- one would think -- is in 2006. But Mr. Class-Action Lawsuit disagrees: “Apple technically didn’t deliver the FINAL PRODUCT until 2007. I can prove it – I bought my Mac in 2006 knowing (thanks to AppleInsider.com) that it had N built in. N wasn’t activated until 2007, so Apple’s sales and earnings for 2006 are incorrect. In conclusion, I will sue the pants off of Apple.”
6. Mr. Apple Accountant wakes up from his lawsuit nightmare. Why didn’t Apple just advertise that these Macs were “N Ready” at the start? Then we wouldn’t have this accounting problem.
7. Then he remembered why: If Apple did that, and N didn’t work properly for some reason … there would be a lot of people returning their computers and filing even more lawsuits. Bad idea.
8. Mr. Apple Accountant desperately needs a way to protect his rear from Mr. Class-Action Lawsuit. Eureka! Let’s sell the N driver upgrade for a penny! Separate the products, and prevent any accounting ambiguity. Problem solved, right?
9. Mr. Apple Accountant presents his idea to Mr. Jobs, who says, “We can’t sell this for a penny! First off, a penny still won’t protect us from getting sued. It’ll look as if we’re trying to “cook the books” just to avoid Mr. Class-Action Lawsuit – he’d like nothing more than to see us sell it for a penny. Secondly, our shareholders won’t like us selling something for less than what it cost – that’s bad for our earnings.”
10. Mr. Apple Accountant says, “OK, so to fully protect us from Mr. Class-Action Lawsuit, we HAVE to sell the upgrade at a price where we’ll either break even or make a profit. Mr. Jobs, I think it’ll cost us about $4.47* to develop, sell, and distribute each upgrade.”
11. Mr. Jobs says, “God, that’s such an ugly number. I want elegant, simple, easy to understand. Make it $5 instead.”
12. Mr. Apple Accountant is relieved that he won’t have to worry about Mr. Class-Action Lawsuit, but he knows some Mac buyers won’t want to pay $5. “Mr. Jobs, I’m worried that this onerous fee will anger some customers…”
13. Mr. Jobs explodes in anger. “Over Five bucks!?! What is that, one Starbucks coffee!?! If they can’t afford $5, they can’t afford a Mac in the first place!!!” Mr. Jobs calms down and says to Mr. Apple Accountant, “Look, you worry about Mr. Lawsuit, I’ll worry about the customers. If it helps, I’ll make sure to bundle in the N upgrade in Leopard and in our future wireless products for those who don’t want to pay $5. Besides, it’ll be pirated so fast once it comes out, it won’t even matter by then. But we have to charge this $5 to avoid any accounting issues. So make it happen.”
14. EDIT = Mr. Apple Accountant gets fired when he makes the price $4.99 instead of $5 as Mr. Jobs had asked. =D
*Just guessing here; I don’t know what Apple’s true cost is.
Perhaps a few, heck most of you should visit
http://backstage.ilounge.com/index.p...-your-c2d-mac/
and in particular, read Comment 25.
As a developer, there are tons of legislation that have to be complied with that 'some' will never appreciate except to state that our strategies are simply put in place to gouge your poor butt holes. If I knew who you 'some' really were, your price would be $500.
What I just do not understand is this: Why not just give it away, price it at $0 and enter it in the balance sheet as such? That sort of thing is done all the time with leaflets, brochures, update CDs, promo goodies like T-shirts, buttons, stickers, and so on. I have a feeling that may be how they could add new features to iPod in software updates for free and how they could add widgets and other functionality to OSX in free point-updates.
Better yet: why not, since it only works with the Macs, and only OSX, post it as a free-ware app?
If they didnt want to charge for it, they would not.
Also, my cable TV is billed a month ahead, I pay the Jan 5-Feb5 bill on ~Jan 4...they just, for the same price, upgraded the service from 3 Mbps to 10...is that an accounting violation?
If you sell something and don't deliver it you can not book the revenue. It becomes a liability you must carry on your books until you complete the sale by delivering the total product. This is a hardware feature set that is being enabled and not a software feature. It's no surprise that in the wake of Enron the Congress might seek to clarify our accounting rules and that is what the Sarbanes Oaxley Act is.
Sorry, but this is hogwash. From this perspective, any software update could be viewed as a hardware update. It would lead us down a dangerous road to what is the difference between a bugfix and what is a new feature.
The only way I could see Apple being legally required to do something related to this update is if Apple is paying someone a licensing fee (after the fact) to enable the (already sold) hardware. Even then, they should be able to write it off as some kind of good faith promotion to existing customers. I cannot fathom that they are required to charge for this.
I don't have any problem with them charging for this, but if there is something in the law that absolutely requires them to charge for this (with no alternative), then the law needs to be fixed. Hardware and software are symbiotic, and it's a slippery slope from enabling wireless N, to adding a new phone to the iSync profiles, to putting a menu item in a more convenient location.
Anybody who develops software for a public company knows all about having to pre-document a product's feature set before release, for SOX compliance.
What would surprise me, however, is if the 802.11n enabler isn't bundled with Leopard.
I think this is just Apple's way of getting the feature out to the user community, while avoiding a SOX audit.
The fee is nominal, and necessary. If they charged any less, they'd probably lose money on it.
[EDIT] I wonder if they could have avoided this by releasing the enabler as open-source? Hmmm...
[EDIT2] Haggar, I do not believe that SOX is retroactive. Sorry...
Haggar, I do not believe that SOX is retroactive. Sorry...
I am concerned about future attempts by Apple to release updated operating systems which cripple hardware features on systems which are supposedly "supported" by that OS. I don't want to see another Beige G3 controversy in the future. Are there any laws regarding this?
1) Apple's logic (if it was, indeed, their logic -- sounded like it was some unnamed outside accountant quoted in the story) is bull. (The actual words my friend used were: "it is a rationalization without substance.")
2) If a product or service is "substantially complete" when it is sold, all the revenue can be recognized up front. When you sell a $2000 product, a $5 add-on is basically "not material." Materiality is the crucial issue.
3) Sar-box (as I suspected) has little to with this -- it has very few, if any, requirements on the content of accounting rules, but rather, focuses on the process of adopting and impementing these rules.
So there you have it. Apple's $5 charge is silly.
What I just do not understand is this: Why not just give it away, price it at $0 and enter it in the balance sheet as such? ... Better yet: why not, since it only works with the Macs, and only OSX, post it as a free-ware app?
This is a wonderful idea ... but for an accountant, it's legally impossible to enter it as $0 on the balance sheet. The freeware has to cost Apple something to develop, debug and distribute it. It has to show up as an expense (negative number) somewhere on the balance sheet. Without going into the accounting nitty gritty, that negative number could, for a zealous auditor or lawsuit lover, put Apple's previous financial statements into question. That would be bad for Apple.
Also, my cable TV is billed a month ahead, I pay the Jan 5-Feb5 bill on ~Jan 4...they just, for the same price, upgraded the service from 3 Mbps to 10...is that an accounting violation?
No accounting violation at all