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Wireless (Apple) Hardware Technology

Apple Charges For 802.11n, Blames Accounting Law 471

Posted by kdawson
from the don't-release-early-or-often dept.
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."
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Apple Charges For 802.11n, Blames Accounting Law

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  • by celardore (844933) * on Tuesday January 16, 2007 @06:20PM (#17636824)
    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.
    • by BWJones (18351) * on Tuesday January 16, 2007 @06:24PM (#17636926) Homepage Journal
      The issue here is that Apple's patch can be construed as "new functionality" as there is significantly increased network performance in products that have been shipping for months, whereas most of the patches from MS are attempting to fix existing, yet broken functionality.

      • by Anonymous Coward on Tuesday January 16, 2007 @06:28PM (#17636992)
        Microsoft add new features too. The security centre & windows firewall for one example.
        • by Jon Luckey (7563) on Tuesday January 16, 2007 @06:38PM (#17637188)
          Microsoft add new features too. The security centre & windows firewall for one example.

          Wait! You forgot the most important new feature of all: Windows Genuine Advantage®

          Hard to picture how we could get along without it, these days.
        • by Ucklak (755284)
          What hardware did that enable?

          The update in question enables dormant hardware that isn't being charged for in the purchase of the product.

          It's the same as if Apple sells 2 types of iSight cameras. One that is the normal web camera that uses the visible spectrum and another that enables x-ray vision.
          The cameras are the the same but the software package that accompanies the camera is different.
          They could sell an update to those who purchased the visible camera to enable the x-ray vision at an additional cost
          • by skinfitz (564041) on Tuesday January 16, 2007 @08:01PM (#17638532) Journal
            ... enables dormant hardware that isn't being charged for in the purchase of the product.

            Yes it is. If you bought the hardware you paid for everything. There are no 'free parts' - all the components are part of a whole. The fact that something isn't enabled is completely irrelevant - you were charged for it and paid for it.

            What happens if we apply this thinking to patches? Oh I'm sorry - we fixed that last exploit with a new version of Safari that adds xxxxx feature, but because it wasn't there when we sold you the computer, we are going to have to charge you.

            This is nothing more than fleecing users for cash.
            • by StrongAxe (713301) on Tuesday January 16, 2007 @11:14PM (#17640944)
              When I was in high school, we had an IBM 1130 system. We had a slow line printer. IBM sold two different versions of that printer - a slow one, and a fast one. The fast one cost several thousand dollars more. The difference? one jumper (which, if you switched manually, you voided the warranty).

              Often, manufacturers will sell a range of products, and it's cheaper for them to sell artificially castrated versions of the expensive versions as cheap ones, rather than manufacturing a cheaper product separately.

              If you pay for a cheap unit and they give you an expensive one with the additional features disabled instead, you have no cause to whine about it being disabled, since you didn't pay for it - you got it for free.
              • Re: (Score:3, Insightful)

                by gbulmash (688770) *
                Reminds me of cell phones. It's depressing reading review after review that says the manufacturer put 85 capabilities in a phone, then the phone company that sold it to you has had half of them crippled or shut off entirely in the firmware.
      • Re: (Score:3, Insightful)

        by UnknowingFool (672806)
        I guess then it should not be called a "patch" but an "upgrade". A patch implies that it was not working properly in the first place.
        • Re: (Score:3, Informative)

          by Divebus (860563)

          Upgrade through extortion is not uncommon at all in the high powered computer [graphics] world.

          First, buy a $600,000 Quantel compositing workstation. You want glints, glows and shadows with that? $15,000 later, they send the 60 digit unlock code. No hardware change required. First time I saw that, I said *WTF* so loud they heard it back in England. If it's in there, why can't I use it NOW?

          Same with some of the old 3D modeling software on SGIs etc. Not even an updated piece of software, just a bunch of key

      • What about Xbox? (Score:4, Insightful)

        by Corngood (736783) on Tuesday January 16, 2007 @10:29PM (#17640428)
        How is this different from Microsoft adding 1080p support to the 360 (for free)?
    • NVIDIA has done this (Score:4, Informative)

      by Anonymous Coward on Tuesday January 16, 2007 @06:28PM (#17637002)
      If you have a GeForce/Quadro, it is called 'NVIDIA PureVideo Decoder'.
    • Re: (Score:3, Insightful)

      by Lux (49200)
      I believe MS already defers some of the income from Windows sales by considering the product partially delivered and feeds that into the support teams over time. The practice would predate Enron though, and was probably started to keep the stock price stable. Ie: they can show a more steady income stream on paper despite long product cycles.

      If only Apple were so savvy! :)

      *ducks*
    • Again, bugfixes are specifically not the same under S/O.
    • Re: (Score:3, Informative)

      Except software has never really been considered a 'feature'. Free updates that include new functionality in software are not considered a problem.

      It's HARDWARE that has the problem. For example, if Ford sold a car, then six months later said "bring your car in, and we'll turn on Anti-Lock Brakes for free!" that there's a problem. The car really had to include it all along, so it could be considered that this feature wasn't delivered until six months later, so they shouldn't be able to count the income f
  • bs (Score:5, Insightful)

    by joesao (466680) on Tuesday January 16, 2007 @06:21PM (#17636860) Homepage
    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?
    • Re: (Score:2, Interesting)

      by RFaulder (1016762)
      That seems to make mroe sense, a 99 update over te iTunes network would be simple enough.
    • by mr_matticus (928346) on Tuesday January 16, 2007 @07:41PM (#17638264)
      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.
      • Re: (Score:3, Interesting)

        by DRJlaw (946416)
        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.

        Your argument concerning material misstatements is self-contradictory. The original statement that it has a b/g wireless chi
        • Re: (Score:3, Informative)

          by mr_matticus (928346)
          It was sold and marketed as a b/g wireless chipset; it was reported in accounting as a b/g wireless chipset. As far as the documents filed are concerned, it did NOT have the n-capability. Wireless-n did exist in the hardware, but it was activated and it wasn't ready. They were stuck with two subpar options: 1) file that the hardware was 802.11n capable and risk getting in trouble for not supporting advertised features or 2) not advertise the capability and deal with the upgrade later on. Obviously the
          • Re: (Score:3, Informative)

            by DavidTC (10147)

            That makes no sense at all.

            Deferring the income would be selling it as a 802.11n device that will be turned on later.

            Magically converting a device that no one knew was 802.11n to 802.11n is not 'deferring' anyway, anymore than cars have 'deferred' upgrades when the car dealership randomly gives them a free cup holder at their 30,000 mile oil change.

            The law is designed to stop companies from selling things that don't exist yet, and accounting for them now, before they've actually made them. I.e, selling a

            • by mr_matticus (928346) on Tuesday January 16, 2007 @11:24PM (#17641044)
              When Apple started shipping the components, the standard wasn't finished or available to be implemented. Had they announced 802.11n support and something had changed wrt the spec, they would have been completely battered and hung out to dry for not delivering on an advertised feature. By not disclosing the capability, they had absolutely nothing to lose. Keep in mind that they had NO obligation whatsoever to enable the n-mode on these machines, since it was never an advertised or reported feature.

              Exactly as you specified, the law prohibited Apple from marketing the devices as n-compliant, and it also prohibits them from retroactively restating its hardware. They can't go back and say, "oh by the way, the last 800,000 computers we shipped had different hardware than reported in our disclosures." They HAVE to treat material changes as product upgrades, and in order to include it in accounting filings, there has to be money involved. Yes, it is a very strict interpretation of the PCAOB rules, but keep in mind they're being investigated at this very moment for their accounting practices. Now's not the time to play fast and loose with the regulators.

              The law requires ACCURATE reporting of products and services, and expenditures therein. In order to revise an existing product, you must handle each as a new upgrade according to a strict interpretation; anything else represents a material misstatement, something which can come with heavy fines in the post-Enron age. If Intel shipped an update uncrippling its old Celerons to full-blown Pentiums, they'd be in the same boat--those products were sold as Celerons, not as Pentiums.
      • Re: (Score:3, Interesting)

        by eh2o (471262)
        Shouldn't they have disclosed that it contained latent n capability in the first place? I mean, even if it is disabled, it is still *there* and the job of accounting is to describe exactly what is there, not to mention keeping the paper trails consistent which must have already mentioned the n feature at some prior point.

        IMHO, they screwed up and are now using a technical loop-hole to avoid being fined for a material misstatement. Worse, they found a way to turn the loop-hole into profit. Even worse, the
        • Re: (Score:3, Informative)

          by mstone (8523)
          You're confusing the physical capacities of the chips with the law.

          The law says 802.11g and 802.11n are different products. Moving from one to the other is a material change in your computer, and the law doesn't care whether you have to swap out hardware or just patch the firmware.

          When Apple sold the computer, it said the computer had 802.11g functionality. The fact that the chipset was capable of something else is irrelevant. Apple only had to be able to prove that the chips it used did in fact deliver
  • Finally! (Score:5, Funny)

    by Protonk (599901) on Tuesday January 16, 2007 @06:21PM (#17636862) Homepage
    NOW Apple pays attention to accounting laws!

    :)

  • mmm.. boooze.... (Score:2, Interesting)

    by jythie (914043)
    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.
  • Wow (Score:2, Insightful)

    by Umbral Blot (737704)
    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.
    • Re:Wow (Score:5, Insightful)

      by steve_bryan (2671) on Tuesday January 16, 2007 @06:27PM (#17636976)
      How about (c) You are incapable or unwilling to actually read an article before typing your uninformed opinion. The change due to Sarbanes Oxley only applies to new features, not bug fixes. Now you may return to anguished seething about how much you hate Apple and Steve Jobs.
      • by killa62 (828317)
        But can microsoft reasonably argue that the windows powertoys do not add new features?
        http://www.microsoft.com/windowsxp/downloads/power toys/xppowertoys.mspx [microsoft.com]

        I think that apple is just trying to eek out a profit
        • Re: (Score:3, Informative)

          by UnknowingFool (672806)

          PowerToys is considered a beta offering. Microsoft will not support it and thus is not a product. From the page:

          We take great care to ensure that PowerToys work as they should, but they are not part of Windows and are not supported by Microsoft. For this reason, Microsoft Technical Support is unable to answer questions about PowerToys. PowerToys are for Windows XP only.
          • The crucial thing is not that it's a beta or that it'r not supported, the crucial thing is that it is not part of Windows. It's an additional product, which happens to run on Windows. Apple would have a fairly hard time arguing that a patch to its hardware's firmware is a seperate product, the patch obviously adds a capability to a product Apple has already sold. It's also not a bugfix, since it's also a feature they haven't advertised in the past. (I'm not taking a position here, this is the reasoning as I
        • Re: (Score:3, Informative)

          by steve_bryan (2671)
          I suspect Apple is just spreading the pain resulting from Sarbanes-Oxley and as time passes others, probably including Microsoft, will be forced to a similar position. At this point the idea that Apple has to "eek out a profit" is comical. Take a look at the financial numbers for Apple to see how silly that comment is. There are reasons why their stock price is at its highest level ever.
        • Re:Wow (Score:5, Insightful)

          by Trillan (597339) on Tuesday January 16, 2007 @06:51PM (#17637452) Homepage Journal
          No, Microsoft can't possibly argue that PowerToys don't add new features. But PowerToys is not hardware, and it has been out longer than the Sarbanes-Oxley Act.

          Apple doesn't need a few hundred people spending $4.95 to be profitable. I think they're on to something here in their interpretation of the law, unfortunately. I'm not a lawyer, but you can bet Apple had their lawyers look at it.
          • Re:Wow (Score:5, Funny)

            by Junior J. Junior III (192702) on Tuesday January 16, 2007 @07:53PM (#17638430) Homepage
            How much do you want to bet that Apple Legal said "Yep, you can go ahead and release this patch for free." and then when Apple looked at the bill from Legal for this advice, decided that they needed to charge $5/download just to cover the consultation fees.
            • Re: (Score:3, Insightful)

              by steve_bryan (2671)
              they needed to charge $5/download just to cover the consultation fees

              You probably meant this to be a humorous comment. On the off chance you were serious it should be pointed out that Apple is a large multinational company and as such they have an entire legal department. They are paid a salary, not consulting fees. Ocassionally they may be given a biscuit for a particularly nice trick.
    • by Lumpy (12016)
      Microsoft has done this before.

      Windows 98 was a $100.00 patch to windows 95. Windows 98SE was a patch to windows 98 that ALSO cost money.

      I dont consider Windows ME to be an upgrade to anything.
    • 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 hi
      • Re: (Score:3, Interesting)

        by Brickwall (985910)
        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.

        Oh yeah baby! In the wild days of telecom in the late 80's, a company called Datapoint had a bonus structure based on revenue billed in the quarter. One group of sales managers booked millions of dollars of orders to "Joe Custome

    • Option (c) (Score:5, Insightful)

      by EmbeddedJanitor (597831) on Tuesday January 16, 2007 @06:46PM (#17637370)
      They might want to just take a poke at the act because it makes it hard to conduct business.

      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.

      • Re:Option (c) (Score:4, Interesting)

        by bluephone (200451) * <grey@nOsPAm.burntelectrons.org> on Tuesday January 16, 2007 @07:07PM (#17637726) Homepage Journal
        But would this still apply if you never promise to upgrade it? TFA says that the clarification from Apple is that they may be accused of selling unfinished products, and recognizing revenue from those unfinished products too early (which is retarded IMO, but then I'm not an accountant). If they never come out and state they WILL offer new features, but DO later with these firmware updates, could they not then claim the product was finished, but these were free bonus features? They can justly state that consumers bought the product as sold with no promises of future expansions, thus the customer wasn't buying some potentially unfulfilled future promise (which, IIRC was the point of anti-Enron laws, to keep companies from spending now money that had to be used to fulfill their obligations).

        Similarly, what if: with the products there's a disclaimer that Apple makes no guarantees that there will be future product enhancements, only bug fixes for the declared product lifespan (like MS does with Windows support lifetime declarations), and that any future product enhancement that MAY exist MAY OR MAY NOT be offered for free to existing users of this product.

        This is where we get asinine workarounds just to comply with poorly drafted and overly expansive laws that are crafted too quickly and reach too far. This is why accounting, and law in general, is so byzantine needed the existence of entire cadres of lawyerbots just to navigate the waters...
  • by Cap'nPedro (987782) on Tuesday January 16, 2007 @06:22PM (#17636874)
    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?
    • by bar-agent (698856)
      Overhead?
    • by Anonymous Coward on Tuesday January 16, 2007 @06:27PM (#17636966)
      Prolly because Apple users don't feel right (ie superior) if they don't pay 200% or more markup on something...

      -Ac
      • Re: (Score:3, Insightful)

        by creimer (824291)
        I had the same thought when I heard the pricing on the iPhone and Apple TV.
    • by xenocide2 (231786)
      Or, why not value it at marginal cost, and give it to users for free and write it off under goodwill? I'm no accountant, but it smells like something fishy is going on. Charging 5 dollars for what amounts to a software upgrade puts a huge dent in adoption rates; are they perhaps worried that some of their other devices without 802.11n support will be hurt against competition that does support n?
      • Re: (Score:3, Interesting)

        by Kadin2048 (468275)
        I think they realize that very few people are probably interested in 802.11n, because few have equipment to work with it. In any case, this functionality will almost certainly be included in the next major OS upgrade, so the market for this patch is a very small minority of Mac users, who aren't that huge a market to start off with. I think that's why it's not cheaper (like $1 or $0.01, as others have suggested). It's probably only going to be a few thousand copies that they move anyway, before the next big
      • '' Or, why not value it at marginal cost, and give it to users for free and write it off under goodwill? I'm no accountant, but it smells like something fishy is going on. Charging 5 dollars for what amounts to a software upgrade puts a huge dent in adoption rates; are they perhaps worried that some of their other devices without 802.11n support will be hurt against competition that does support n? ''

        I guess the whole thing sound ridiculous to you, as it does to me, and probably to Apple's accountants as we
    • 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 think most people are missing the point. I suspect it's not the software feature so much that users are paying for. Apple told users they were getting 802.11G cards and sold them as such. In reality, some were also capable of 802.11N. Since that feature was disabled, that was just fine, but if they're going to send ou

    • OK, so it's fair that they're charging for it - if you believe their excuse, but why not $0.99 or $1?

      It might have to do with spirit of the act. By charging anything Apple covers themselves with the letter of law but they have to charge something nominal in order to comply the spirit of the law. After all, what is the wholesale cost difference between a 802.11g card and a 802.11n card? Probably around $5.

    • by soft_guy (534437) on Tuesday January 16, 2007 @07:16PM (#17637898)
      You know what doesn't make sense to ME? It is that everyone on Slashdot seems to be assuming that this is real when in fact it comes from some guy's blog and he's reporting it as something that someone said on the floor at MacWorld.

      I think I'll wait until Apple actually announces this before I even think about reacting to it one way or the other.
    • I wouldn't be surprised if the reason was that this is the minimal charge that credit card companies (one or more) will accept.
  • Well understood (Score:5, Insightful)

    by Space cowboy (13680) * on Tuesday January 16, 2007 @06:22PM (#17636878) Journal

    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.
    • Re: (Score:3, Interesting)

      by mandelbr0t (1015855)
      In the words of a SOX-IS Project Manager I once worked with, "Incompetence is an excuse." That certainly doesn't inspire any confidence in me that SOX-IS controls actually do anything useful.

      mandelbr0t
    • I thought this was common knowledge - I've been arguing that the effects of Sarbanes-Oxley are detrimental for some time now.

      Give me a break. Who among the Slashdot readers besides the .01% group you obviously belong to finds anything common knowledge about Sarbanes-Oxley?

  • the obvious fix (Score:3, Insightful)

    by fishdan (569872) on Tuesday January 16, 2007 @06:23PM (#17636884) Homepage Journal
    Is for Apple to leak to a blogger a way to unlock the "feature"...

    Oh, wait.... [theregister.co.uk]

  • 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.
  • I was forced by copyright law cop out to post it on pirate bay. I had to the copyright laws made me do it!
  • 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.
  • 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?
  • 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 feat
  • 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.
  • 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 recurrin
  • 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.
  • Link Please... (Score:5, Insightful)

    by nonsequitor (893813) on Tuesday January 16, 2007 @06:46PM (#17637352)
    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?
    • Re:Link Please... (Score:5, Insightful)

      by soft_guy (534437) on Tuesday January 16, 2007 @07:25PM (#17638030)
      Right - there isn't a link because this isn't an official announcement from Apple. This is a rumor on some guy's blog that he heard from someone walking around on the floor at MacWorld.

      Also, even if you believe the "article", you could get the software patch for free by buying the new 802.11n Airport Extreme base station from Apple which in theory you would need anyway in order to use this.

      If you think about it for a second, this idea doesn't even make sense. How is it not just free software that they give in order for the router to work? Apple gives out lots of free software.

      This thing sounds like someone talking out of their ass. Possibly it is a fake rumor that someone at Apple planted to track down a leaker.

      Do you detect a note of skepticism in my post? It is because I don't believe a word of this.
  • That's the SEC (Score:5, Informative)

    by toonerh (518351) * on Tuesday January 16, 2007 @06:54PM (#17637506)
    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!
  • Oh, poo on that... (Score:4, Interesting)

    by fudgefactor7 (581449) on Tuesday January 16, 2007 @06:58PM (#17637576)
    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?
  • To be fair... (Score:5, Insightful)

    by SnowDog74 (745848) on Tuesday January 16, 2007 @07:00PM (#17637612)
    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.
    • by SnowDog74 (745848)
      "the same can be said of many different types of software" ... and hardware, I meant to say.
  • So how much should a company report for performing 'apt-get update' on its servers?
  • 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
  • by eggboard (315140) * on Tuesday January 16, 2007 @07:23PM (#17638000) Homepage
    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 [wifinetnews.com], but unnecessary for anyone to pay even if it's attempted to be levied.
  • IAACPA - I Am A CPA (Score:5, Informative)

    by Steve Hamlin (29353) on Tuesday January 16, 2007 @07:28PM (#17638066) Homepage

    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 [slashdot.org] 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. [nysscpa.org]

    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.

    • Re: (Score:3, Interesting)

      by bill_mcgonigle (4333) *
      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.

      Would there be any problem with Apple offering the upgrade for $5 and offering a $5 instant rebate?
  • Weak Excuse (Score:3, Interesting)

    by jay2003 (668095) on Tuesday January 16, 2007 @08:26PM (#17638854)
    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.

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