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Behind Apple's pay-to-play pre-N driver

01/18/07 | by Adam | Categories: Macintosh

Link: http://mjtsai.com/blog/2007/01/16/buy-base-station-to-get-software-update/

Apple recently released their new version of the Airport base station with 802.11 pre-N support. There's nothing particularly special but what has got a lot of people annoyed is that Apple has also been including 802.11 pre-N hardware in their revised laptops released prior to the Airport. However, in order to activate the pre-N functionality, Apple is requiring a payment for the new driver.

Sounds really cheap on Apple's part, right?

Well, people have been digging and are now saying that this is an effect of the Sarbanes-Oxley Act. The act was introduced after Enron in order to cut down on corporate shenanigans when it comes to accounting. The idea is this: when booking revenue, the item sold has to be complete; adding functionality after the fact implies that whatever was sold was incomplete and should not have been booked as revenue at the time. In the case above, although Apple includes the functionality in the original device, releasing the driver for free would imply that it was incomplete at sale time and therefore the revenue should not have been booked until it was complete. This in turn would cause an accounting restatement of revenue and earnings. This is a royal pain in the butt and companies can avoid it by selling the "missing" feature as a new extension to functionality.

This is where I have a problem with the Sa-Ox interpretation. Yes, I'm not a lawyer, and yes, I'm not an accountant either so take my commentary with a grain of salt. As far as I'm concerned, the device is as advertised and if that is what's sold, then the revenue can and should be booked at that point. So, if the Apple Core 2 Duo MacBook Pro is sold as a 802.11b/g device although it has the hardware support for pre-N then the delivery is complete. All that was promised has been delivered. Had the MacBook been sold as including pre-N and there were no drivers, then I can understand refusing to allow the booking of revenue until there were. However, in this case Apple was very pointedly not mentioning the pre-N hardware; it was third parties that took the computer apart in order to publicise this change to the hardware.

So that takes us back to the original assumption that Apple's being cheap for charging for a driver. Possibly after the whole backdating of stock options they're being ultra-cautious in the how they're doing business, but I have to say I'm inclined towards believing the less favourable interpretation.

As a further comment, not related to Apple particularly, this could be really nasty for the software industry where patches are a fact of life. Imagine if you cannot book revenue for a software sale until it's complete and "complete" is defined as fully functional (i.e. to all intents and purposes, bug-free.) Reckon any software development house on Earth (or at least in the United States) could ever book revenue?


DaringFireball
has more on this.

Oh, and here's another one, via Gizmodo.

 

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