Friday, January 19, 2007

A dangerous precedent

Update A few articles have done the work of talking to actual accountants about what Apple could have done with this $1.99 fee. Ars Technica has a good write-up and CNET has their take. In short, it seems Apple didn't have to charge for this unless they wanted to defer revenue on a computer sale until all features where delivered. Here is a quote from Ars which is itself a quote from a Wall Street Journal source:
"If Apple had given the enhancement away free, Apple's auditors could have required it to restate revenue for that period and could possibly have required Apple to start in the future to defer all the revenue from computer sales until all such enhancements are shipped," according to WSJ's source.
I still don't understand what this means for future software only updates, as those have in the past frequently included new features that weren't part of the original sale.

Original Post It has been all over the web that indeed Apple is charging $1.99 to enable 802.11n in already shipped hardware, unless you buy the new AirPort Extreme with 802.11n already enabled, then it's "free".

The supposed reason for the fee is an accounting rule. I have no idea if that is true, but it seems so ridiculous to me for Apple to change $1.99 and then blame it on accounting rules that it must be true. And if it is true, what would this mean for any software upgrade to a product already sold coming for free. Is it only for hardware sold? The ramifications if this is true are far more disturbing than the cost for this upgrade, I hope some accountants chime into the conversation and either confirm or call bullshit on Apple for this move.