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Apple Charges For 802.11n, Blames Accounting Law
If you have a Core 2 Duo Macintosh, the built-in WLAN card is capable of networking using (draft 2) 802.11n. This capability can be unlocked via an update Apple distributes with the new AirPort Extreme Base Station. Or, they will sell it to you for $4.99. Why don't they give it away for free, say with Software Update? Because of the Sarbanes-Oxley Act (which was passed in the wake of the Enron scandal). iLounge quotes an Apple representative: "It's about accounting. Because of the Act, the company believes that if it sells a product, then later adds a feature to that product, it can be held liable for improper accounting if it recognizes revenue from the product at the time of sale, given that it hasn't finished delivering the product at that point."
Imagine if they even charged $1 for every patch, for every user. There are more MS patches for a product than every dollar in the asking price for said product. I'm aware that Apple are scared because it's a "new feature", but MS has done that a lot.
mo' money, mo' money, mo' money. Apple, greedy? Say it ain't so!
... I'm not a fanboy ... and they're just like any other corporation ...
Oh wait
I am, therefore you think.
How exactly does this work in their little minds?
This explanation doesn't hold water -- then why don't they charge for software updates, and why not charge $1.99, or $0.99, or even $0.01, instead?
Sounds like someone had way to much to drink before going live.
Either that or someone high up in apple is really jumpy right now and it playing it safe to insane degrees.
Either a) anyone who offers a patch that fixes a bug or adds a feature and doesn't charge for it (which happens all the time, for example: windows update) is breaking the law or b) Apple is delusional / wanted an excuse to charge you more money.
I know which one I believe.
Philosophy.
So why does it cost $4.99 for a feature which tas taken very little work to implement?
OK, so it's fair that they're charging for it - if you believe their excuse, but why not $0.99 or $1?
I thought this was common knowledge - I've been arguing that the effects of Sarbanes-Oxley are detrimental for some time now.
The major problem is that it invites software companies (I'm not making any accusations here) to put out shoddy software, full of bugs and not-ready-for-primetime features, giving themselves the option to *not* charge for upgrades later, perhaps for business-reasons. Bugfixes, you see, are not subject to the S-O ruling. This is not the way I'd like to see the s/w industry go...
Simon.
Physicists get Hadrons!
Oh, wait....
Nothing great was ever achieved without enthusiasm
That's about the most lame excuse I've ever heard. What's with Microsoft updates? They also "complete" the product. What about free updates of all kind?
And even if they believe their own propaganda, why don't charge one dollar, or even one cent? The accounting principle wouldn't be broken.
Rome taught me patience and assiduous application to detail. Virtues which temper the boldness of great, general views.
If it's only the law they're trying to circumvent, why not charge $0.01?
Oh... Because it's not. Nevermind.
Talk about turning Sarbanes-Oxley on it's ear and using it as a scape goat for profit. What is Apple thinking? People are buying the product the way it ships. However they expect (and with good cause) that if a feature is in the product but not turned on that Apple should supply the update to allow that feature to be used. This has nothing to do with accounting and everything to do with politics and greed. Once again, short on Apple stock!
So will Apple start charging for service packs and security fixes as well? I read the article, and they try to differentiate between features and fixes, but when you're resorting to blaming SOX for this, and saying it's because you want to avoif the appearance of not having finished delivering the product, what's the difference between a security fix and a new feature?
I was forced by copyright law cop out to post it on pirate bay. I had to the copyright laws made me do it!
Do not look at laser with remaining good eye.
Apple stole the BSD Mach kernel to build OS X. They regularly fuck their own developers (anyone remember how Apple took possession of that freeware utility that one of their developers wrote IN HIS OWN TIME?) and customers. I know this opinion isn't popular and that there are hundreds of Mac fanboys who read slashdot. But what did you really expect?
Does anyone remember how Steve renigged on his promise that iTunes content is the property of the purchaser, and that songs purchased from iTunes belonged to the person doing the purchasing? How about when the closed the kernel source code?
Apple is in the same league as Microsoft. Is it really news that they are fucking over their own customers... again?
Ads? What ads?
The company has every right to decide to charge money for a service. Even if it "should" be free. It seems like they want to paint themselves victims of Sarbanes-Oxley. Perhaps they want to win some sympathy points from the customers?
I don't know whether regulation is good or bad but this seems a bit excessive. An unfinished product isn't being delivered. What if I wrote and started selling a program that had a feature commented out, then later decided to uncomment it? Would I not be able to claim that I'd made money for the program? It's a bad example, but you get the idea. There's something very nonsensical going on with this.
I've always pictured the color of OS zealotry as a sort of bright flamingo pinkish hue
Then they could have fixed it in an update and followed the letter of the law.
They probably could have even stated in the product documentation that that feature was still in beta and "might" not work properly.
This explanation only makes sense if you consider the product "not delivered" until the last features are added. This makes no sense whatsoever, because it's not like people are saying, okay, I'm buying this Apple product, but my contract with them says that I get my money back if they don't add features x, y, and z. That would be what should cause an accounting department worry. Looks here like Apple just found a flimsy accounting excuse for trying to collect more money, and ran with it. Given all the negative media attention they are gathering recently, you have to wonder about this sort of thing.
I admit knowing next to nothing about SOX - or accounting. Is there a reason they chose $5? Why not charge a few cents (via iTunes or something) just to cover the credit card processing fees and post a cent profit per transaction?
... why this feature was not provided in the first place, and what really stops them from providing a "feature" for a lower price. I mean, if they now unlock it, providing 802.11n (draft) for the price of 802.11g, where does the unaccounted-for "revenue" come into picture? I'm by no means an expert on SOX or accounting, but I somehow feel this is not the real reason.
n/t
I regret that I only have one mod point to give per post.
If you have a GeForce/Quadro, it is called 'NVIDIA PureVideo Decoder'.
Another poster made the point about SW being exempt. But is this a hardware fix, e.g. flashing the firmware? Does this cause it to fall in a different category? Or is it in a grey area which could cause ppl. to CYA? Why can't it be shipped fully functional?
putting the 'B' in LGBTQ+
It's a bug!
If that were the case, wouldn't Apple just charge some symbolic amount? Perhaps $1? On the other hand, Apple can't possibly be making very much money off of this, and it's not like they're hurting for cash.
Further, I would think that Sarbanes-Oxley would include a provision for things like hardware that could be updated through software. Other people have pointed out that software is updated all the time with added features for free. This does seem different to me though; Apple is adding a hardware feature, even though they're doing it without any physical modification to the device. What about when some iPods were suddenly able to do voice recording through a firmware update? I think that would fall into the same situation.
Regardless, I expect this patch to show up on the torrent networks within hours of its release. I also expect a lot of people to try installing it on older hardware, just to see if it works.
Help I'm a rock.
It sounds like Apple are hiding behind this legislation, in much the way government departments in the UK when criticised hide behind the Data Protection Act, giving the DPA ungodly powers it doesn't actually have - but no one knows better. This smells awfully similar.
Oolite: Elite-like game. For Mac, Linux and Windows
I have a first-rev MacBook Pro with the Core (1) Duo. I *wish* I could upgrade from g to n for only $5!
Some patches are worth more than other patches, as George Orwell might say if he owned a computer. ;)
Apple *could* charge you nothing and give you new functionality - they just have to go through a mountain of paper work to do it. By charging you they are saving money by not doing said mountain and making money of you. They could have charged you a cent or something I guess they want some beer money. Rotten Apple.
Reality must take precedence over public relations, for nature cannot be fooled.
Microsoft started it with their "Vista" XP-successor where you can
"upgrade" to "Premium" or "Ultimate" versions with your credit card,
how long before Apple turns around and says
"I see you are trying to use your bluetooth adapter. For a one-time use
feature please authorize a $2.99 charge to your credit card. If you want to
use this feature for longer periods of time the following plans are
available: 2 weeks of operation $8.99, 4 weeks of operation $14.99.
Time limited options extend automatically with recurring charges to your
credit card. Unlimited feature activation $49.99 one time charge."
In related news, Linux and BSD are still free.
org.slashdot.post.SignatureNotFoundException: ewg
People who are gungho about moving to 802.11n are not your run of the mill typical home PC user. There going to be people who know how to pirate. No problem here.
The greatest revenge in life is massive success.
If the $5 charge is too aggravating don't you suppose it might be possible to get a free copy without too much effort? Just think of it as conscientious objection to Sarbanes-Oxley regulation. Apple seems to be saying they would rather not charge you so do them a favor and comply with their wishes.
The place where this might get more aggravating is when it is applied to the minor system software updates, e.g. 10.4.7 -> 10.4.8. In the past such updates could include changes that go beyond just bug fixes.
Can someone please post the link to where I buy the unlocking software? After spending $3K on my C2D MacBook Pro, you really think I care about paying another $5?
Sure it could have been a penny, but that may have been construed as trying to sell the feature for less than market value. I'm not an accountant, but I know that you can get in trouble for stock options granted at less than estimated market value for a private (unlisted) company, therefore you have the pick the lowest number that can be seen as a reasonable value. I was lucky to get my shares at $0.02 a piece since when I was granted the options the startup company I started working at had yet to make their first sale. A year later they had to grant options at $0.50 and up.
In all honesty $5 is cheap for a draft-N card. Consider the alternative of buying a PCMCIA Wireless N card and tell me its not a deal?
So, if a web service (let's say Flickr) adds a new feature to its paying customers (let's say convert pics to grayscale), they have to charge extra money for it? I'm not saying that this is the end of the Web as we know it, but it would be quite a revolution and quite an advantage for non-US services.
I worked at a place that abused accounting principles. They'd book revenue on hardware that hadn't shipped or even been made, software that wasn't installed or even sold yet, and move all kinds of valid and imaginary revenue from the vague future to the current quarter like crazy.
I understand why we need laws about when you are supposed to book revenue because I've seen it abused. The whole house of cards collapses hard when growth slows. My job was lost when the dotcom bubble burst and they couldn't hide their baloney in triple digit growth any more. Same thing happened at many other companies.
This seems like an innocent case, but I thought I'd point out there are other possibilities.
Man, you really need that seminar!
This is actually a real problem. If you sell a product that has upgradable firmware then you need to only recognise revenue as you provide the service. For example let's say you sell a device for $1000 and provide free firmware upgrades for 1 year. You might structure this that the base product is worth $900 and the 12 months tech support is worth $100. You then recognise the revenue as $900 at time of sale and $100/12 per month.
For a product that has free firmware upgrades "forever", you might introduce some reasonable lifetime (like 3 years), perhaps the typical depreciation period for the product.
Now Apple beancounters fucked up. They recognised all revenue immediately. They should have really defered some of the revenue recognition but they wanted to look all shiny for Wall Street (Enron, on a smaller scale). By chraging for this upgrade they're probably hoping to create a loop hole.
Needless to say, MS most likely just moons the act and does not care any more than they care about the DOJ nailing them with anti-trust.
Engineering is the art of compromise.
Nickel and diming for stuff that should already be there. It seems that dancing with a US cell network provider did more damage to Apple's worldview than initially suspected :-).
Schwab
Editor, A1-AAA AmeriCaptions
...for the common sense impaired, the hardware needed to run Linux/BSD still isn't free.
Even before Sarbanes-Oxley (e.g. in the mid-1990's) ethical, conservative CFO's [admitted a rare breed] were very careful about "recognizing revenue" for a product when a newer or better version was in the works. Our "head up the ass" Congress passed Sarbanes-Oxley and now companies have hire many more lawyers to cover their asses. Lots of companies in Apple's situation would simply do NOTHING - no charge, no upgrade: WYSIWYG hardware. Is that in the consumer's best interest? I think not!
Can we get an actual expert or SOX consultant to comment on this interpretation of accounting law (and not random geeks talking out their asses)? From what I've seen second-hand regarding SOX-compliance work, especialy where IT intersected with finance and accounting, I get the impression that there can be apparently unrelated consequences and complications arising from SOX. Rules for apparently simple things like revenue recognition are probably less cut-and-dry than you'd expect. All the enterprise budgets allocated to paying SOX consultants must be for something...
IANAL but this doesnt seem correct.
.11n, didnt list it as top feature, or if people expected it anyway, what they are saying is BS.
What they are saying can only be true if its proved that they used 802.11n as a product, something that caused people to buy more Mac than they would have otherwise bought. If they didnt advertise for
Here's how Apple can get around SOX: Put the update on their site, list it as BETA, let anyone register to be a "Beta Tester" for the application, they have to agree that this is a Beta, and you have to uninstall the product when the final implimentation comes out...kind of like what MS does...then let people have the file. Or they can charge you $4.99 for it, but give you a special once-only keycode that's worth $4.99 off any purchase. Result: a wash, accounting-wise. No odd accounting practices, no shuffling of cards, just people getting the app.
It's funny how BIOS updates and other drivers aren't seemingly worried about SOX...or how Microsoft Update isn't either...
I'm wondering if Apple didn't get dinged for claiming revenue from the upgrade and now they are being backed into a corner and forced to charge for the upgrade?
802.11n was never advertised openly and originally as part of the capabilities of the products in question. For that matter, Quicktime Pro's feature sets are not advertised as part of standard Quicktime... but you don't see anyone complaining that users have to pay a license fee to unlock the Quicktime Pro bundle of features that already exist on your Mac in a disabled state.
For that matter, the same can be said of many different types of software. If you get a digital converter box from your cable company, by virtue of having the box you aren't granted access to every channel the box can theoretically decode.
So how much should a company report for performing 'apt-get update' on its servers?
I am becoming gerund, destroyer of verbs.
Indeed. In my last job at a software company we went through the same issue - we couldn't improve our product during patches; and had to hold them off for paid-for-releases even when we wanted to make our customers happy.
Same stupid revenue recognision rules prevented customer support from having easy ways of troubleshooting ("If you're having trouble with version 2.0 on your old laptop, here's a key for 5.0. Sorry for the trouble we caused you.)
Bottom line - if you want to make your customers happy, don't incorporate in the US - and certainly don't go public; where the laws pretty much make you screw your customers.
maybe this "fee" will be included in 10.5
Back in the days when a KiloByte was considered a lot of memory, IBM, CDC, and other manufacturers used to ship mainframes with memory, virtual memory hardware, and sometimes higher speed clock options, installed, but disabled. Contract to the higher lease rates and the technician would appear with a wire-wrap gun and "move a wire" to "install" (nee enable) the additional capabilities. Those were days when the profit margins made it worthwhile to sell, but prevent use of, features until they were paid for. So how is Apple different than just doing business the usual way of the last .5 century?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Where I work (one of the top 10 largest software companies) they take this *very* seriously, doing the same thing for upgrades, etc. (or more often avoiding upgrades because of the headaches this causes).
This is nothing new. But I've wondered for a while why Apple never seemed to follow it - until now I guess. Which is nice - more of a level playing field.
---
I type this every time.
Give me a break. Who among the Slashdot readers besides the .01% group you obviously belong to finds anything common knowledge about Sarbanes-Oxley?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Hey, Apple! Your product was already defective. The 802.11n wasn't working correctly. So you supplied a bug fix to deal with the problem. What's so hard about that?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Enron got in to trouble because they were booking sales on unshipped product. THe wayapple is looking at this put in enron accounting terms would look something like this. 1) holding company owned by enron agrees to buy 10 barrels of oil from enron. 2) enron books the sale even though they just paid themsleves 3) but they don't book the liability because they just deliver 9 barrels of oil and defer delivery of the tenth to a later date. Here apple is scared that they will get flagged for booking the sale of an incomplete product. I don't really see how this applies but I can see why they are paranoid.
Some drink at the fountain of knowledge. Others just gargle.
Please note that while iLounge's article is interesting, it's based on two unnamed Apple representatives, quoted without their position at the company being mentioned. This is fine, but let's not take this as an official Apple position or statement. I'm a regular print and online journalist, so I asked Apple about the $5 charge. They said they don't comment on rumors and speculation, and repeated that the updater would be available on the CD with the new AirPort Extreme update that will ship in February. To me, that's like saying, "hint, hint." The CD will have an unlocked updater that can be used with any compatible Core 2 Duo or Xeon Macintosh. Thus, Apple may or may not have a Sarbanes-Oxley issue (stranger things have happened), and they may or may not charge $5 for the updater. Nonetheless, an unlocked "enabler" application will be in the hands of thousands of early purchasers (like myself). I've written more about this on my Wi-Fi blog in a post about why I think the $5 charge is unlikely, but unnecessary for anyone to pay even if it's attempted to be levied.
Freelance tech journalist for the Economist, MIT Technology Review, Macworld, and others
I don't care in the slighest either way. On the one hand, $4.99 is literally and figuratively peanuts (about what I earn in 12 minutes, or a massive half hour if I were on national minimum wage); and on the other, even low-speed WiFi is still faster than my high-speed internet connection.
I don't care about upgrading, but if I did, their price is lower than the cost of my time to find a trustworthy 3rd party.
Apple should just beta the .n enabler for OS X 10.4 and never get around to finalizing it, kind of google extended beta. OS X 10.5 will have .n support in box and therefore everybody wins.
It's amazing what gets 'blamed' on Sarbanes-Oxley. And most of the time, completely off base. While there is surely some money-grubbing from Apple, this is probably nothing more than Apple making a conservative decision to apply existing accounting policy more stringently. The previous poster here gets it right.
I am a forensic accountant - I do large corporate financial investigations, which involve accounting analysis and numerous interviews of management.
And I can't tell you how many times I've heard people in companies, when asked about $FOO, say "we had to do this because of SOX". Most of the time, they couldn't tell you what SOX is, or why that is the cause of $FOO.
SOX has turned into the Boogeyman, the shadow lurking in the background of any financial discussion. Unknown reason? SOX made us!
At its simplest, SOX requires that companies document what they do and how they do it. "404" is just a requirement that companies have a complete set of working documents describing accounting processes and the controls around those processes, and that they have actually tested to see that the processes and controls work properly.
Along with 404, SOX also heightened the burden on the financial accounting groups. Now CEOs and CFOs sign statements in quaterly and annual SEC filings, under penalties of civil and criminal law, that certify that they are "responsible for establishing and maintaining internal controls", including upward reporting from subordinates and subsidiaries, and that the controls have been tested and reported on in the filing.
As a result, corporate accounting departments have tightened up, More documentation of different types of accounting processes mean that existing, latent accounting issues are being surfaced and addressed. More conservative usually, in the sense that one does not 'push the envelope' of GAAP.
This is not really 'SOX made us do it', but rather as result of the analysis that SOX calls for. Sematics, but an important difference, I think.
Accounting Background - What is at work here?
SOP 97-2 "Revenue Recognition for Software Products with Multiple Deliverables".
SEC and AICPA: Revenue generally is realized or realizable and earned when all of the following criteria are met:
- Persuasive evidence of an arrangement exists
- Delivery has occured or services have been rendered
- The seller's price to the buyer is fixed or determinable, and
- Collectibility is reasonably assured
So, Apple decided that at the time of the sale of the computer with 802.11n (but not yet functional), with no additional amounts due from the customer, that since Apple had not perfected delivery of the complete laptop with 802.11n, they had not finalized all terms of the delivery, and thus had not "earned" all of the revenue from that sale. This would cause them to 'defer' some portion of the revenue (a liability on the balance sheet) until the final piece of the sale (802.11n) was delivered to the customer.
Under Apple's current policy, the computer is sold without 802.11n, delivery of this total package is complete when the customer receives the laptop, and Apple recognizes that entire sale as current revenue. Then a new $4.99 sales happens when the customer purchases the upgrade.
See: NY Society of CPA's discussion of SOP 97-2.
Now, there are certainly valid objections to the scope and scale of 404, but those are fairly focused on the size of companies that SOX should apply to, and how much testing the auditor should demand that they and the company do around 404.
The time for paying for patches has been coming down the pipe for a long time now. Likely we'll see "service contracts" with ordinary users and not just limited to corporations. The accounting laws might be used as an excuse, but really they don't need an excuse to successfully charge us more for software.
Honestly the law and reasoning seems legitimate. Although why Apple wants $5 instead of $2, I don't know. (other than greed)
What impact does this have on open source. if I ship some whiz-bang product (like a linksys router) and people are buying it because of some opensource upgrade that is going to be released next quarter does the law apply. or only if i want to ship some upgrade myself in the next quarter but count the revenue for the sales in this quarter?
“Common sense is not so common.” — Voltaire
I wouldn't be surprised if the reason was that this is the minimal charge that credit card companies (one or more) will accept.
Dog is my co-pilot.
You mean now Steve Jobs is paying attention to the law, because in another case it's threatening to publicly humiliate him in the worst way: having him fired from Apple for options backdating, when he is already wealthy many times over, and any money that he or others would have made on the options is paltry compared to the humiliation he would suffer in the eyes of Gates and other "enemies", not to mention a lot of America.
If you watched the last 5 minutes of the Macworld 2007 Keynote speech by Steve, what you see is a guy scared that he is going to lose his position, which is why he spends those 5 minutes thanking people at Apple, thanking John Mayer, and just otherwise looking very emotional and inwardly scared.
I'd bet, barring a hearing with the government in which they say "No, you need not charge for this", that Apple will charge $5 bucks. It's a waste of money. Our wireless speeds are far faster than any internet connection they will be hookedup to, unless you're at a University campus. Why bother spending for it? It won't yield any extra download or upload speed.
You pay for new features. Like Spotlight, Dashboard, etc. Patches (things that repair existing functionality), of course, are free.
It's (supposed to be) like paying for a "new OS" -- like paying for Vista as an "upgrade" from Windows XP.
Additionally, since there's no penalty for not upgrading (you still get patches), you could stick with your old version. For example, if you like the Windows update cycle of a major change every five years, you could choose to update from OS X 10.1 to OS X 10.5. This would be at least as big a change as the change from XP to Vista, and not merely "patches" as you claim.
a.) screwing customers b.) avoiding work c.) both
*adjusts foil hat*
Maybe Apple is learning business practices from Microsoft. MS presently gives members of the RIAA money for every Zune sold because "it could be used for piracy." The real reasoning though, is to influence recording studios' deals with Apple/iTunes and make matters more difficult for Apple. They have - based on the reactions of executives in the industry - poisoned the well when it comes to Apple's future in digital music.
Apple may well be charging this little fee so that they can point fingers at Microsoft some time down the road and say "hey, they're not charging for this product! They're in violation of SOX!"
This is really just some guesswork on my part.
Software products are advertised for their core functionality. They're intended to be fluid products, and accounting doesn't care what features are added or removed in software, as long as Photoshop stays an image editor and Dreamweaver stays a web content editor, the rules are met.
Not the same with hardware. Any material change in the product has to be accounted for. If Apple already filed its disclosure statements indicating that its products had b/g wireless chipsets in it (which it would have), it can't go back and change that later and say "oops actually it's 802.11n." Doing so would be a "material misstatement" punishable by the PCAOB under Sarbanes-Oxley. By charging for the 'upgrade' they can file current accounting documents saying that the products were upgraded with new functionality.
I'm reminded of all those people who bought "software-based" modems for their PCs under the marketed idea upgrading the modem would be as simple as downloading new software. Then the software-based upgrades for higher connection speeds never materialized, and to get a higher speed modem the consumer ended up having to buy a new modem, just like the people how bought modems with their own hardware controllers.
The lesson: If you don't get it when you buy it, expect that it may not appear at all.
It doesn't add up. Apple bought and paid for a piece of silicon which can do draft-n. They put this piece of silicon in a motherboard and sold it as a computer to someone. Therefore, this someone bought draft-n hardware.
The product is finished. The silicon is capable of draft-n. This is just $5 for a driver update.
:(){
It's amazing how infuriated people can get over $5 when you're going to have to spend $100-$200 an 802.11n access point anyway.
Don't become a regular here -- you will become retarded.
OBVIOUSLY this means Microsoft shouldn't charge us for Windows unless it's a full, complete, and perfect version, so free Windows!
As far as everyone claiming windows updates and such are just bugfixes and therefore different, I have the perfect analogy.
IBM sells servers, rackmount, intel architecture. Some were sold when they released. They did not implement/support the 'PowerExecutive' stuff. Some of those have released free service processor firmware updates that enable that feature.
It wasn't that it was broken at release time, it wasn't implemented at *all*. This is a fairly distinct feature that is provided via a completely free update.
Now I'm not a big apple fan (I think they are mostly adequate, but overpriced products), but this seems a tad ludicrous, particularly since they have no official Apple statements, just anonymous Apple representatives.
The other possibility posted on how SOX (much like ISO-9000) is a lot about proving you have documented processes and those processes are followed, and that Apple fubared their process and would end up having to not be able to officially provide it for free. It could be the case that the processes in place at the time of sale must be observed, I dunno, so if it was broken they may not be allowed to fix it...
There's an obvious difference between adding a new feature and patching a bug.
-- Slashdot: When Public Access TV Says "No"
That's a poor choice of words. You do realize that Steve Jobs has pancreatic cancer, don't you?
If they were blaming this on anything other than Sarbanes-Oxley or HIPAA, I wouldn't believe them.
How will I feed my children?
Like my title says, I don't get this move. They sell a product as a whole with all possibilities for upgrades later, known. Plus, if they wanted to look at it as having to sell the individual parts/upgrades because of their accounting issues, couldn't they have sold the mac and listed 4.99 for accrued revenue and put it under an account payable which will later be paid off by the unlocking of the new feature rather than actually charging people the 4.99 later as a new expense?
thats the lamest excuse i've ever heard in my life. companys add features with patches and updates all the time. make no mistake, you have already paid for that hardware, it wasn't free. they are double dipping on you. now watch all the fanboys try put some spin on it to make it seem like apple just a good company. WRONG THEIR JUST ASSHOLES
If you mod me down, I will become more powerful than you can imagine....
...another vendor... Oh wait, you can't.. I forgot that if you want a Mac, you have ZERO choice of hardware and software vendors. Sucks to be you I guess.
I deal with SOX daily and we do some crazy stuff to satisfy the rules.
Some days I may spend my entire day on paperwork getting authorization to actually do work the next day.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Apple was not obligated to provide updates to 802.11N so there is no revenue recognition issue. Everyone who bought the machine bought it under specs that said 802.11g. If Apple had claimed at the time the machines were sold that 802.11N would be enabled at a future date, then there would be an issue. Additionally, under this interpretation of SOX, Apple would have to hold back money on every sale of every piece of hardware as deferred revenue to pay for patches. Since Apple would already be holding back revenue as deferred revenue in case it needed to patch the drivers for security hole, it simply could used that money rather than charging users more. I think this SOX excuse is a smoke screen to justify grabbing an extra $5.
I can't wait to see the Mac vs PC ad version with this theme.
Which is one of the advantages to a subscription service or maintenance contract. Instead of booking $100,000 in January for the product, you book $80,000 and record the remaining $20,000 over the next 12 months.
Of course, nobody wants to do that for something like Windows or Office where you'd pay a yearly license without any real upgrades for years at a time, but it makes sense in a large corporate environment for some applications.
This
A lot of unix systems back in the 1980s and early 90s did this sort of trick with their multi-user capability. The login program had a limit to the number of simultaneously logged-in users, usually 2. If you paid for an "upgrade", you'd get a patch that removed the limit. This patch consisted of changing one byte in one binary config file. Which byte wasn't documented, of course, and there were reports that it moved around in different releases to make it difficult for users to find it and tell others.
I had a bit of fun with this when for various reasons, I wrote a new login program. The main motive was to add a lot of diagnostic capability, so you could learn why serial-port+modem connections to other systems were failing. I didn't include a login limit, and in several online discussions, I explained that this was because I didn't know where the login limit count was stored, but if the vendors or someone at AT&T would tell me where to find it, I'd be happy to add the "feature".
I never heard from them. And a lot of people told me that they downloaded my program so they wouldn't have to pay several hundred dollars for the bogus "upgrade". I kept hoping that some company's lawyers would contact me and make some sort of claim about "hacking" their system. It would have been fun to post their letters online.
Logins via serial port are now somewhat a dead issue, and I haven't used the program for years. And I haven't seen a unix system with a login limit for a while, either. I wonder why they gave up on it.
There was also the similar trick that Microsoft has used to sell a "server" system. Their TCP code in some configurations limits the number of simultaneous TCP connections. This effectively prevents users from using apache, since it limits the number of simultaneous clients to a very low number. The get rid of the limit by "upgrading" to IIS server. Then, if you prefer, you can switch to apache, but they'll have your money and you'll be listed as a satisfied IIS customer in their sales stats. That was a few years ago; I wonder if they still do this? And has anyone found where the limit is stored?
Lots of people have really wished there were some way to make this sort of crippling illegal. But I suppose there's no hope for that given the nature of most legislatures in this world.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
Someone says Apple is just like any other corporation and it's moderated Flamebait ? I'm sorry, but some people here are really, really naive (and as superficial as any blonde who thinks mode magazines are the most important things in the world).
I would bet Apple is just posturing. Congress is due to start hearings soon on the cost and consequences of SOX compliance and this will give Apple exactly the kind of ammo they and other large publicly traded companies want to bring to the table. They can point to it as a lose/lose for both Apple and Apple's customers by showing that it costs Apple more than $4.99 to provide this upgrade (which is probably accurate if the number of paid upgrades is small enough).
Using Sarbanes Oxley (SOX) as an excuse for various problems, seems to be a popular crutch for not remedying problematic situations. It's used by companies with weak legal deparments and CxOs (CEO, CIO, CTO...) that don't have enough guts to fix something when it's wrong. I work for an company where the IT department is always saying that something can't be done because of SOX.
In this case, SOX is an excuse for greedy corporate types. They want to sell you something because they are greedy. They sugar coat it by saying that SOX requires it. Prime example of why I don't purchase Apple, Inc. crap.
First it was SCSI.
Then it was the consumer GUI OS.
Then the 3.5" "floppy" disk.
Then Firewire.
Then USB.
With the deniable "pay-per-patch" Apple introduces to the industry a new standard that soon all will follow!
Each and every post that attempts to justify Apple's actions is yet another example of the sheer marketing genius of Apple. Do not pretend for a second if EVERYTHING in this scenario was the the same except that the company pulling this bullshit was Microsoft instead of Apple that these macbois would not be screaming bloody hell.
Apple are trying to cover their tracks. If some shareholders want to hound Apple at some point for some less-than-stellar performance on Wall St, they could easily bring up the fact that Apple recognised this revenue too early and thus brough the profits forward a few quarters (meaning that profit that should have happened a few quarters later did not show up). If you had just bought Apple's shares you might have reason to be pissed.
While the accounting is a drag, it is not that huge a deal. It only takes a few minutes to figure out a revenue realisation policy that you will use for a particular product. The real issue though is that many companies sell unfinished products and want to recognise revenue immediately. This makes for poor products and engineering: "Just ship it to get revenue this quarter. We'll fix it next quarter". Sarbanes-Oxley counters this which is good for product development.
Engineering is the art of compromise.
The modding is going crazy these days; just check out the modding at the top of the page versus the bottom. One liners are being modded full marks whereas down at the bottom decent comments are being ingnored. Who cares anymore.
It may be possible that Apple is trying to set precedent with this excuse. If enough people buy (i.e., not complain about paying for) the 802.11n enabler, then they can just blame SOX again when they charge $50 next year to "unlock" the 3G capabilities of the iPhone. Nobody's saying Apple doesn't have a right to charge for unlocking features. It's the claim that they're doing it because of SOX (meanwhile insulting the intelligence of anyone who has ever received a new feature from a free firmware update) that smells foul.
really they are some of the the most stupid uncreative beasts to walk the planet.
some twit accountant likely misinterpreted - this is stantard practice in the software industry - heck you could say it is an update to "keep in pace with natural technology progression" my bet is some idiot is going to get fired.
[Calibrating...] Have you seen the price on the new iPods??
SarbOx - the swiss army knife of lame corporate excuses.
Apple added this feature as an update with iTunes 7.
Are we sure this charge for the 802.11n update is official from Apple? They do include it on the disc that comes with the new Airport Extreme. I don't see it available anywhere else yet, or mentioned anywhere else.
Ever been to a store that says "Due to the high cost of credit card transactions, we cannot accept them on totals under $5?"
That's because Visa, MC, etc all charge for transferring money around. Sure, they could charge you $0.01, and end up paying $2 for the transfer to their accounts. Total profit: -1.99 USD.
Per Downloader.
Steve Jobs may be a lot of things, but a foolish businessman is not one of them.
I cannot see anything the SOX Act that would force Apple to do this — I have Section 404 attached to my cubicle partition — but then I am not an accountant or a lawyer (I do IT SOX). But I suppose it must be revenue-recognition, which is not SOX per se, it is accounting.
Regards, Martin IT: http://methodsupport.com Personal: http://thereisnoend.org
I don't know diddly about SarbOx but I know that Enron didn't get in trouble by getting all the cash *first* and then providing services. They did the opposite, http://www.pkarchive.org/column/062802.html, the signed a contract, made an assumption about margins in their favor and booked year & years of revenue in that one quarter. If Apple want to take the cash flow now, *and* recognize the revenue now, the only problem is matching associated cost. But it seems like the service is already developed and there are no R&D expenses to amortize, just the rollout.
I'd be suspicious that this is a red-herring from Apple.
But of course, for Apple, I'll need to back date the check to October 2002.
How is this different from Microsoft adding 1080p support to the 360 (for free)?
Using Enron as precedent to rip off customers. How funny. That's almost like using OJ as a precedent to murder someone.
Your premise is false -- it is not a firmware update. If your premise were true, users who install an 802.11g device driver to an Apple-Bootcamp-configured installation of XP on these machines would not have been able to establish 802.11g connections because all added was a device driver and they do not yet have the firmware update.
... Apple is proposing to charge $5 for a device driver (a move which doesn't bother me a bit) and some representatives are claiming that SOX/SarBox requires Apple to charge for any new device driver (a blatently BS move that makes me quite upset as I see them nickel and diming me worse than Microsoft ever did if I want to transition from XP on my 4-month-old Mac Mini to OS X).
Yet users found out months ago that a device driver was, indeed, all that was preventing establishment of 802.11g connections under OS X. So
then the law is an ass (fyi iaal)
http://forums.macrumors.com/showthread.php?t=24561 7&page=3/
7 2/
Vista builds back in September also installed 802.11n drivers on these machines http://forums.macrumors.com/showthread.php?t=2369
Apple seem alot more evil these days.
Mutated by Scientists.
I was fortunate enough to get my 17" C2D laptop as a warranty replacement for what was nearly a 3 year old 17" PB G4, so on one hand I am a very happy customer.
a te2006002.html
I was pleasantly surprised when I loaded bootcamp and found out that I could load DLink N drivers and use the fully functional N-draft card.
After using it for a bit I noticed a few problems with accessing my Airport Express; software update offered this:
http://www.apple.com/support/downloads/airportupd
I bit, ran the updater and didn't think much of it until I booted natively into my Windows environment, dude, wheres my N-spec card? the D-link drivers
no longer seem to work, remove and reinstall fails but using the Apple (bootcamp) provided driver works.
Sell the laptops with enabled cards cause your in a hurry to get them to market knowing that the N functionality requires drivers, discover that your users have figured
it out, disable the N functionality in firmware with an *update* (Dec 13) wait a month and offer an *upgrade*
It bothers me a bit, but only because it seemed to work previously and they disabled it; $5 is cheaper then buying an N spec card and replacing the
one that came with it but I am pretty certain that Apple paid full price for the cards that went in to this laptop and they've realized full profit from those that bought them.
So what gives? This logic suggests that every *new* feature in software should be paid for or its illegal, firmware *is* software.
Unix, an obscure operating system developed by bored researchers in an attempt to get a better game playing experience.
If they were serious they would just give you a credit of .01 on thier store by registering your product then sell the download update to you for .01. Then they would be in compliance with the law.
SOX is Government BS. Its only a matter of time before a new congress decides it was a total waste of time and completely unenforcible, and gives up on it. Its government where government should not be...
Any wireless performance that is less than optimal (less than wired equivalent?) can be considered a flaw. Thus RottenApple's claim that they need to charge for a "new feature" is complete and utter bull.
RottenApple is going down faster and faster. They are well making up for lost time in the being "evil" department. Wanna take bets on how long they'll take to reach MS's level?
If you look at evil "growth", RottenApple has MS beat hands-down. They just haven't had any product with large enough market share to really screw a large number of people (like their "Appletunes" DRM product)...
Instead of making it per download, they could offer a life time membership which would enable access to all patches of this nature in the future for $5. Problem solved once and for all..... unless of course they see it as a way to milk just a little bit more money (considering its not $1... I believe this could be the real reason)
Per Downloader. Then how does Apple make money on iTunes Store customers who only buy the occasional song?
This is a lame excuse.
Here is the logic behind this: SOX punishes CEOs and CFOs for false financial statements. If we deliver something after the customer has paid, we can not recognize all the revenue when we receive the cash. Since we want to recognize the revenue right away because it boosts our earnings, we can't deliver you the update or else we will commit a fraud. Hence, we make you pay for it separately.
The controversy started at the end of the '80s, early '90s, when Circuit City had to restate its earnings because of FASB 90-A that regulates accounting for extended warranties and service contracts. M$ used that rule to decrease earnings in the wake of the antitrust case by postponing recognition on Office sales and also built cookie jar reserves to smooth earnings.
Firstly, anyone owning a Core 2 Duo Mac (that paid for it themself) is not going to have trouble paying an extra $4.99 to enable state-of-the-art wireless technology. Hell, even someone with a minimum-wage job who got it as a gift could shell that out.
Secondly, everyone's stance on this seems to be "extortion for extra profit". Please. Their reason sounds legitimate to me, but let's look at what Apple even has to gain from this:
Currently, over 50 million people own an Apple product (I'm getting this from a quick Google search, and all the following numbers are just arbitrary guesses to prove my point). Let's say half of those are iPods. And of the 25 million computers, how many are the new Core 2 Duo mac? Let's say 1 million (that's being generous, I'm sure, as this is a higher-end model, correct?). And how many of the owners of these are going to need (or want) 802.11n? Let's say half. So 500,000 people at $5 a pop, 2.5 million dollars.
And Apple is what, a multi-billion dollar company? Does everyone here really think they'd do something to upset their customers like this over 2.5 million dollars? I don't think so. They could simply raise the price of every computer $5 for the same effect, with less backlash.
I realize these numbers are incredibly rough estimates, but my point is there's no way they're making enough money off this (with the bad press and all) for it to be some evil for-profit extortion.
WHO NEEDS SHIFT WHEN YOU HAVE CAPSLOCK/ DAMN1
Perhaps (and I'm totally hand waving here), the difference between this software update and other bug fixes and software updates is that to get to 802.11n there are probably additional IP licenses required by Apple. I would assume that there are some new patent licenses required to achive the faster speeds in "n"... so it's hard for Apple to argue that this is part of a regular maintenance update.
i asked this elsewhere too when this came up...... could the driver be in 10.5?
this sounds like the G4 towers a few years ago. they shipped with the USB2.0 chipset, but not drivers. people started using some 3rd party drivers, but it was eventually included in the OS. how is that different? the USB ports worked 100% as USB1.0, but were USB2.0 capable.
it sounds like a weird way to get not anywhere near $5 after all their costs are incurred. i understand the drivers not being included before, since it's really still draft-N and they would probably have to support why their draft-N stuff is not working right with other draft-N stuff. we are still something like a year away from the final 802.11N specs. draft2-N is due about now, right?
...you'd actually pay for Windows? ^_-
I went to the Apple website to confirm this product was available before I posted one way or the other.
No, not on the front page. Not in the store either. Not in the news section... Hmm...
If there's no official Apple announcement, and the linked article doesn't name anyone from Apple, or link to any official document this seems like nothing more than a rumour.
It may be completely true, and that's when I'll get irritated (before spending the few dollars plus buying all new routers, modems, etc for several hundred dollars more). Until there's some indication that it's a *real* thing, I'll suspend judgement.
Big companies pay a %, not $2.
Hell, it's not $2 for ANYONE.
I'll probably get modded down by some fanboy jackass, but here goes.
This is further proof that Apple, which does produce some excellent products (I'm the owner of several of them), is, at its core, an evil corporation. Steve Jobs is the subject of a criminal investigation for securities fraud relating to options backdating. In other words, billions weren't enough, he had to have trillions.
So, presumably it'll be a free patch in Europe where this Sabarnes Oxley gubbins doesn't apply?
... says what is obvious to me.
Apple (ie: the minions working there) is afraid to make a decision about a overly complex, confusing, and burdensome law (SOX).
Some knob-head plucked a silly idea out of his ass, and suggested that it might solve the problem, and since nobody dared shoot it down for the idiotic idea that it is, it made it through to policy.
Such is the working of socialist capitalism. It will only get worse my friends.
Apple cannot complain this on SOX. And there is nothing in the revenue recognition requirements of US-GAAP that requires them to do this the way stated by the article!
This has only, and I want to mention only again, to do with Apples internal controls.
This is blinging
Of why most companies now think SOX was a mistake and it's costing more to implement it that it would ever have saved in additional costs from fraud etc.
I want a list of atrocities done in your name - Recoil
They don't. They lose money on these customers. They make it up on people who buy several songs at once, and I think they also try to put charges together, so you aren't charged for every single song when downloading several different songs during a short period of time.
In the end, Apple doesn't make much money on the iTunes store, though. They make money on the iPods, and the iTunes stores is supposed to help selling these.
That said, this is a U.S. law. What about customers outside the U.S. Why should we be charged for this?
By this argument, the savings inherent in not having to retool manufacturing to include the N-featured chipset that you're going to later announce and support could be considered unrealized income as well.
On my planet, anyway. Your planet may vary.
You have just jumped the shark. The investigation of Apple's questionable accounting practices probably has a lot to do with this.
They want to track who has this feature
Adults are obsolete children. - Dr. Seuss
Given that the wireless card is built-in, and there are those of us who own core 2 duo laptops that aren't macintosh (but have the same hardward inside), one wonders if this upgrade is possible for us linux types? Anyone know the answer offhand?
Now, about those backdated options Mr. Jobs....
Maybe Apple should change their catchphrase from "It just works" to "It will work when you give us some more money."
-Eric
SJW: Someone who has run out of real oppression, and has to fake it.
Apple has already mastered micropayments there, why not start adding this and other widgets for a buck?
Mission: To provide products that consume time and energy as entertainingly as permitted by the laws of thermodynamics.
The workstation cards the same as the desktop but the software unlocks extra capabilities.
It would explain why they won't open up the specs: they'd have to do so for both series of cards and then the penny would drop...
There has been *NO* hardware change. Apple is not going to modify or change the hardware of your mac in any way. The 802.11n support is enabled by a software change only.
Using your logic, if Apple released a new (wired) ethernet driver that supported the new WHIZBANG protocol which allowed it to talk to previously unsupported gadgets they would have to charge for it as well. More generically, any new feature which provided new function for the hardware would have to be charged for as well.
In spite of what other replied, Apple made a deal with Visa to get lower prices than most retail stores can get.
"Atheism is a religion like not collecting stamps is a hobby."
If somebody made a point of vigorously telling everyone they met that they didn't collect stamps, and tried to convince everyone they met who did collect stamps that they should stop collecting stamps, I would indeed call their not collecting stamps a hobby.
It might sound witty, but it really just proves that atheism is a religion.
Since Apple is calling this an accounting error, not a revenue grab, a rebate seems like a fair oportunity to NOT stick it to the customer.
Beauty is truly in the eye of the tiger
Then why can't Apple charge $0.99 for the AP firmware upgrade the same way it charges $0.99 for a single on iTunes Store? Why does it have to be five times as much if the charge is just for accounting purposes?
Me lost me cookie at the disco.
Remember, if you go and buy a new Airport Extreme base station, it will come with the enablers for you machine. The $4.99 fee is for enabling 802.11n functionality if and only if you don't purchase a new base station. I guess they somehow built the update price into the cost of the base station.
Marketing bull! Why is it $4.99 and not $0.01 if they feel they have to charge, the problem is Mac users are so doe-eyed they'll probably suck it up and be thankful! Let's face it they still charge for there sub-par e-mail accounts!
Apple's excuse of charging $1.99 for the software update to satisfy accounting rules is not credible, according to members of the Financial Accounting Standards Board. FASB writes the rules, known as GAAP, that Apple is eluding to. So there goes that excuse. See the full article on WSJ (Reg. required): http://online.wsj.com/article/SB116925153861582055 .html?mod=home_whats_news_us
(Can someone find a free version of this story?)
OSX's hidden intel interoperability presents the same scenerio.