appleinsider.com— Core 2 Duo-based Mac owners who want to unlock next-generation 802.11n wireless technologies hidden inside their computers will first have to fork a few bucks over to Apple, AppleInsider has confirmed.
Jan 15, 2007View in Crawl 4
There are precedents...In the Good Old Days IBM had an upgrade on their System/370 mainframes. It was Virtual Memory; not all that common back then, especially on IBM hardware. To upgrade a /370-145 (no VM) to a /370-148 (with VM) required the engineer to cut a few jumpers. The cost to the customer was not trivial. The VM support was in every /370 box shipped but without the jumper-snipping it was not active.
> is not draft-n compatible and won't be compatible with the 802.11n cards when they come outActually, Pre-N stuff works fairly well with Draft-N stuff. And whose to say it won't work with 802.11n stuff when it finally comes out? The standard may not change that much.Hell, there's a lot of draft-G hardware out there that works fine...
A comment by Steve from iLoungeI have been working in the software industry for the last 6 years in finance and accounting roles and I have a lot of experience around revenue recognition rules for publicly traded software companies. What Apple is doing is common practice in the industry and is a pain for most product managers because it makes no sense from a customer’s perspective. There are very specific revenue recognition rules on delivering incomplete and/or promising future updates that provide new features and/or functionality to a product. Based upon how Apple is charging for the “unlocking fee”, it confirms that they began shipping the newer Mac computers before they finalized 802.11n. From a revenue recognition standpoint (remember, we live in a cash based world, but publicly traded companies live in an accrual-based accounting world), there are different ways to account for the decision to ship incomplete hardware to customers and then providing a finished product in the future. 1) Do not charge for 802.11n: This is what everyone probably wanted to hear from Apple, “We are shipping 802.11n enabled hardware, but it will not be ready for X months. Customers who purchase now will be able to enable the hardware with a software update when it becomes available.” If Apple made this commitment to its customers, it would have to defer a portion of the revenue from each unit that ships with the 802.11n cards. Sometimes this amount can be trivial, but based upon Apple’s decision to charge to unlock 802.11n, I would assume the amount was not trivial to them. For example, if we assume that a brand new 802.11n wireless card would cost $100, an auditor would assume the value of providing 802.11n to the customer is worth ~$100. Let’s say a computer costs $2,000, then the company would be able to recognize $1,900 now and then recognize the $100 once the feature has been delivered to the customer. If this happens within the same quarter, it is not a big deal. But if you cross a quarter or multiple quarters, it is can be a big deal. In some EXTREME cases, the auditing firm may say, “Since the wireless card is an integral part of the computer, you’ll have to defer the entire $2,000 until you ship 802.11n.” This is an extreme example, but in some cases, it does apply. (Don’t rationalize it! It’ll make your head spin…)2) Charge for 802.11n: Do not get this confused with bug releases, patches, and other non-feature releases of a product. There are rules that allow companies to “fix” their products if they are broken, such as security patches to fix critical flaws in your software, bugs, etc, without charging a fee. It is assumed that the product should function and companies are allowed to fix them. BUT, in Apple’s case, they are not providing a hot patch or bug fix, they are providing a new wireless standard that was not complete when you purchased it. So to avoid revenue recognition hell (see above), Apple doesn’t announce that hardware has been shipping with 802.11n hardware and charges customers to activate it once the standards have been finalized. This allows them to avoid deferring a large portion of revenue from their hardware sales, but really sucks for the customers. This probably sounds all crazy and you probably think I work for Apple (I don’t), but this applies to all software companies… Ever wonder why there are certain windows of time that qualify for free upgrades? Why companies have very odd cross product upgrade paths??? Hahaha! Welcome to the world of publicly traded companies and public accounting!
Well the one feature they did enable with that firmware upgrade was the ability to play 640x480 videos. The hardware was capable of it, they just didn't enable it until then. And that firmware was free.
I think this is more an issue of business law rather than accounting laws. Apple delivers the product to the consumer upon the customer's receipt of the product. If the product meets the promises of Apple, (in this case, 802.11g,) and the customer is satisfied with the product, the delivery is complete. Had Apple promoted 802.11n functionality in their computers, only then would delivery be incomplete, preventing them from fully recognizing the revenue. I don't think Apple's interpretation of this was correct, but I can sympathize with their desire to be in full compliance with accounting standards during these times. Maybe they were just testing the waters, but hopefully it will be realized that this is unnecessary.
mirag3Jan 16, 2007
"getting a hooker and then finding out she will do N standard router"dude wtf.
warragulJan 16, 2007
There are precedents...In the Good Old Days IBM had an upgrade on their System/370 mainframes. It was Virtual Memory; not all that common back then, especially on IBM hardware. To upgrade a /370-145 (no VM) to a /370-148 (with VM) required the engineer to cut a few jumpers. The cost to the customer was not trivial. The VM support was in every /370 box shipped but without the jumper-snipping it was not active.
t3hxJan 16, 2007
> is not draft-n compatible and won't be compatible with the 802.11n cards when they come outActually, Pre-N stuff works fairly well with Draft-N stuff. And whose to say it won't work with 802.11n stuff when it finally comes out? The standard may not change that much.Hell, there's a lot of draft-G hardware out there that works fine...
wasternJan 16, 2007
read the article s**t dick. Its $5 so they can comply with Sarbanes-Oxley and not get pinched on some more accounting issues
myschizobuddyJan 16, 2007
A comment by Steve from iLoungeI have been working in the software industry for the last 6 years in finance and accounting roles and I have a lot of experience around revenue recognition rules for publicly traded software companies. What Apple is doing is common practice in the industry and is a pain for most product managers because it makes no sense from a customer’s perspective. There are very specific revenue recognition rules on delivering incomplete and/or promising future updates that provide new features and/or functionality to a product. Based upon how Apple is charging for the “unlocking fee”, it confirms that they began shipping the newer Mac computers before they finalized 802.11n. From a revenue recognition standpoint (remember, we live in a cash based world, but publicly traded companies live in an accrual-based accounting world), there are different ways to account for the decision to ship incomplete hardware to customers and then providing a finished product in the future. 1) Do not charge for 802.11n: This is what everyone probably wanted to hear from Apple, “We are shipping 802.11n enabled hardware, but it will not be ready for X months. Customers who purchase now will be able to enable the hardware with a software update when it becomes available.” If Apple made this commitment to its customers, it would have to defer a portion of the revenue from each unit that ships with the 802.11n cards. Sometimes this amount can be trivial, but based upon Apple’s decision to charge to unlock 802.11n, I would assume the amount was not trivial to them. For example, if we assume that a brand new 802.11n wireless card would cost $100, an auditor would assume the value of providing 802.11n to the customer is worth ~$100. Let’s say a computer costs $2,000, then the company would be able to recognize $1,900 now and then recognize the $100 once the feature has been delivered to the customer. If this happens within the same quarter, it is not a big deal. But if you cross a quarter or multiple quarters, it is can be a big deal. In some EXTREME cases, the auditing firm may say, “Since the wireless card is an integral part of the computer, you’ll have to defer the entire $2,000 until you ship 802.11n.” This is an extreme example, but in some cases, it does apply. (Don’t rationalize it! It’ll make your head spin…)2) Charge for 802.11n: Do not get this confused with bug releases, patches, and other non-feature releases of a product. There are rules that allow companies to “fix” their products if they are broken, such as security patches to fix critical flaws in your software, bugs, etc, without charging a fee. It is assumed that the product should function and companies are allowed to fix them. BUT, in Apple’s case, they are not providing a hot patch or bug fix, they are providing a new wireless standard that was not complete when you purchased it. So to avoid revenue recognition hell (see above), Apple doesn’t announce that hardware has been shipping with 802.11n hardware and charges customers to activate it once the standards have been finalized. This allows them to avoid deferring a large portion of revenue from their hardware sales, but really sucks for the customers. This probably sounds all crazy and you probably think I work for Apple (I don’t), but this applies to all software companies… Ever wonder why there are certain windows of time that qualify for free upgrades? Why companies have very odd cross product upgrade paths??? Hahaha! Welcome to the world of publicly traded companies and public accounting!
Closed AccountJan 16, 2007
Well the one feature they did enable with that firmware upgrade was the ability to play 640x480 videos. The hardware was capable of it, they just didn't enable it until then. And that firmware was free.
zachlutzJan 17, 2007
I think this is more an issue of business law rather than accounting laws. Apple delivers the product to the consumer upon the customer's receipt of the product. If the product meets the promises of Apple, (in this case, 802.11g,) and the customer is satisfied with the product, the delivery is complete. Had Apple promoted 802.11n functionality in their computers, only then would delivery be incomplete, preventing them from fully recognizing the revenue. I don't think Apple's interpretation of this was correct, but I can sympathize with their desire to be in full compliance with accounting standards during these times. Maybe they were just testing the waters, but hopefully it will be realized that this is unnecessary.
rtiniJan 19, 2007
It's only going to cost $1.99<a class="user" href="http://digg.com/apple/Apple_to_charge_1_99_for_802_11n_enabler">http://digg.com/apple/Apple_to_charge_1_99_for_802_11n_enabler</a>
sequenceApr 18, 2009
Now, I want a Big Mac.