Is Sarbanes-Oxley Forcing Apple To Charge You To Upgrade Your WiFi?

from the say-what-now? dept

Well, here's a weird one. It's no secret that Sarbanes-Oxley is a law with lots of problems. It's become a huge pain for businesses, forcing all sorts of useless, but expensive, procedures to be put in place that have little (if anything) to do with protecting investors from being taken in by unscrupulous companies. It's been a huge net loss to the economy, and has scared away plenty of companies from the public markets. While that may have held some "bubble euphoria" in check by keeping investment opportunities away from the public, the net result is bad for the overall economy. Last week, there was lots of talk about Jim Clark's decision to quit Shutterfly while blaming Sarbanes-Oxley for limiting what he could do at the company. Now comes the latest odd SOX complaint. Apparently Apple is forcing Mac owners to pay an extra $5 to unlock next generation features of WiFi that were bundled with recent machines. In order to unlock the pre-standard 802.11n features, you have to pay $5, with Apple saying that they cannot be seen as "giving away an unadvertised new feature of an already sold product without enduring some onerous accounting measures." The thinking, basically is that they would be unfairly recognizing the revenue early, since they hadn't completely delivered the product. The alternative would be to not recognize all the revenue ahead of time, but that presents other problems, and could even be more costly. Thus, consumers get the fun of having to pay extra to upgrade. Yet another fun unexpected consequence from excessive meddling from politicians.


Reader Comments (rss)

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    Bumbling old fool, Jan 16th, 2007 @ 6:19am

    What a week!

    First we have blizzard charging me to "unlock" content I already have installed, that I already paid them to develop, and now apple is goign to charge me to "unlock" the hardware they already sold me?

    Hey, just because they didn't "advertise it" doesn't mean I didnt base my decision on it. The fact that 802.11n chips were in the latest MBP was one of my deciding factors when I bought it. It may not have been advertised, but it was a well known fact.

     

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    John Duncan Yoyo, Jan 16th, 2007 @ 6:23am

    SOX is a paperwork nightmare

    My wife works in SOX compliance at a large corporation and she spends a good her day approving work requests for other supervisers and submitting work requests to other supervisers. Job must be pre-approved by a few people before it can go on.

    It will make even good coorporations bloat their management structure to handle the reporting requirements.

     

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    Aaron, Jan 16th, 2007 @ 6:24am

    Sarbox?

    Revenue recognition has little to do with Sarbox but a whole lot to do with standard accounting practices. In accounting, the general idea is recognize revenue as it is earned and expenses when they are incurred. The net effect is that cash may or may not have been collected or paid when revenue is recognized or expenses are incurred. Sarbox is more of an auditing law that tells public corporations what and how they must be audited to some extent and greatly increases auditing costs. In all honesty this sounds a lot like the tubes argument that many of the telco execs have been using recently. In my opinion it would be a whole lot easier to simply roll out the 'pre n' activation codes or whatever as an Apple update. Apple could say, we sold the hardware, but the software, formware or whatever was not able to be finished due to lack of standardizations.

     

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    Russ Stebbins, Jan 16th, 2007 @ 6:26am

    Bogus

    For all the faults of SarBox, it has become the "national security' of the business world. It is an excuse for doing or not doing anything that won't bear close examination.

    In Apples's case, it sounds like an excuse to charge extra for a feature already delivered. SarBox has damn little to do with the money grab, but it ends the discussion when trying to justify the extra charge.

    Just like 'national security' stops any discussion of actions by a governmental agency

     

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      chris (profile), Jan 16th, 2007 @ 7:23am

      Re: Bogus

      amen to that.

      like "el nino", sarbanes oxley has become a sort of magic word to deflect blame. the word already conjures up feelings of frustration, so it's a usual suspect for annoying policy or procedural changes.

       

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    The infamous Joe, Jan 16th, 2007 @ 6:36am

    The real important thing.

    Wait... what content is Blizzard charging me to unlock??

     

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      Araemo, Jan 16th, 2007 @ 7:50am

      Re: The real important thing.

      I'm going to guess that burning crusade has been pre-loaded onto every WoW install, and blizzard is going to charge you to play Burning Crusade (Oh noes!)...

      Really, I think that's a nice maneuver, allow people to download the seldom-changing assets as soon as they're ready, but keep them under lock and key until the full game is out (And even if some artwork does get changed between initial preload and final release, a good delta-based patcher should be able to minimize the download to get the new artwork.

       

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      Bumbling old fool, Jan 16th, 2007 @ 9:06am

      Re: The real important thing.

      Wait... what content is Blizzard charging me to unlock??

      The entire expansion pack.

      Every user, whether they re-activate their account or not, must get all content installed. Everyone who still plays on a regular basis already has all the content installed. All they need to do now is ( wait for their box to come in the mail / run to the store ) so they can go to the website and enter their account upgrade code to "unlock" said already installed content.

       

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      Dak, Jan 18th, 2007 @ 10:48am

      Re: The real important thing.

      parts of the expansion.

       

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    Amy Alkon, Jan 16th, 2007 @ 7:14am

    More Work! Less Money!

    My wife works in SOX compliance at a large corporation and she spends a good her day approving work requests for other supervisers and submitting work requests to other supervisers. Job must be pre-approved by a few people before it can go on.

    Great, let's make business more like government...because government is so great at getting things done.

    (Of course, the prudent thing is to make government more like business.)

     

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      chris (profile), Jan 16th, 2007 @ 7:28am

      Re: More Work! Less Money!

      (Of course, the prudent thing is to make government more like business.)

      no thanks, the government is greedy and corrupt enough as it is... without the need to turn a profit.

      having a stock price or a profit margin to maintain would only make the government greedier and more incompetant.

       

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    Mike, Jan 16th, 2007 @ 7:21am

    who wants a Mac anyway....haha

     

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    Mike, Jan 16th, 2007 @ 7:22am

    who wants a Mac anyway....haha

     

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    Bryce, Jan 16th, 2007 @ 7:25am

    Great

    Next they'll be telling us that SOX prevents them from providing free OS updates...

     

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    Paul (profile), Jan 16th, 2007 @ 7:56am

    Apple

    How is this different than a firmware update on anything offering a new feature?

    I'll file this in the category of "Another reason that if Apple had control of the PC Market they would be a bigger monopoly than Microsoft is."

     

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    Kris Krishnan, Jan 16th, 2007 @ 8:33am

    US GAAP for revenue recognition

    The accounting rules that make Apple charge the extra fee are found in SEC's SAB 104 and AICPA's SOP 97-2 etc., collectively known as Revenue Recognition GAAP, and have nothing to do with SOX.

     

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      Bumbling old fool, Jan 16th, 2007 @ 9:01am

      Re: US GAAP for revenue recognition

      uh, no.

      I don't care what the regulations say. If Microsoft can provide patches that enhance the functionality of the system on existing hardware for free, so can Apple.

      Their reluctance to do so is an indication that they would rather have 5$ than not have 5$.

      It's nothing more than a money grab. The price they will pay for their 5$/head is measured in backlash.

       

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    another, Jan 16th, 2007 @ 9:08am

    Well, I guess this gets people talking about something besides the stock backdating issue.

     

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    Anonymous Coward, Jan 16th, 2007 @ 9:13am

    I fail to see how the product was incomplete before being shipped. If I desoldered that wireless controller from the motherboard and put it in my own circuit, I could put it into a new circuit and demonstrate its draft-n capabilities.

    If you bought a computer, the silicon is complete and already has draft-n capabilities. Period. No revenue was unfairly recognized.

     

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    misanthropic humanist, Jan 16th, 2007 @ 9:29am

    collective punishment

    I didn't realise you could stack bullshit this high. Sarbanes-Oxley is perfectly sensible stuff for the mostpart. It forces companies to be accountable, something that's long overdue.

    In turn the companies behave like hostage takers who mete out collective punishment against their customers. Their attitude and strategy is simple, if it hurts us we will hurt our customers. By hurting our customers, blaming it on legislation designed to stop us behaving corruptly, and then pretending we are just passing on costs, that will create a groundswell against SOX.

    No it wont. We see right though you Apple. This is just a lame excuse for an extra squeeze on your customers, so sod you your already overpriced products. Without SOX you'd be cooking your books and burrying the evidence.

     

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    Jack Sombra, Jan 16th, 2007 @ 9:34am

    "First we have blizzard charging me to "unlock" content I already have installed, that I already paid them to develop, "
    No you paid them to provide a service not impliment new features (which is what the expansion is)
    The only reason it is already installed on your pc is so bliz don't have to maintain multiple versions of the same client/OS. Which is you think about it is the sensible thing to do, remember a few years ago Ultima Online had about 4 different live clients for the windows system (one from each expansion) which basiclly meant every single change had to be done 4 times

     

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      Bumbling old fool, Jan 16th, 2007 @ 11:09am

      Re: Blizzard Past Practices

      No you paid them to provide a service not impliment new features

      Actually, that would be a matter of opinion. There was never a promise of new features, however...

      Historically, blizzard has delivered more new content in incremental FREE patches then they have delivered in the expansion. So yeah, alot of gamers feel betrayed by blizzards decision to charge 3x monthly fee for what was historically free.

      Also, I know many former WoWers that quit when they heard the price was announced. (yes, I have been playing that long) So this opinion is shared by others. Some of whom voted with their wallets.

       

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    Anonymous Coward, Jan 16th, 2007 @ 9:40am

    SOX is the perfect excuse for either a.) screwing your customer b.) sitting on your ass c.) both.

     

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    shimon, Jan 16th, 2007 @ 9:47am

    cap count ?

    looks more like apple is trying a cap count of willing payers on free load...

    but wait... that firmware will be free given a few days on share networks.... whoops.. you don't know this from me :)

    anyway, u need not go to Harvard to do a firmware upgrade manually


    rest just SOX for 5$

    :D

     

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    Justin, Jan 16th, 2007 @ 10:05am

    Sounds like Apple...

    How many upgrades (*cough* patches/updates *cough*) have OS X folks bought?

    Apple likes your money to be their money always has always will.

    Enjoy your new Mac ... ooops... that'll be 5 more dollars.

     

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    koz, Jan 16th, 2007 @ 10:11am

    clearly nothing to do with SOX

    Interesting story. Unfortunately techdirt seems to be suspending normal practice of only expressing opinions on subjects they understand in order to bash SOX.

     

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    Robert K, Jan 16th, 2007 @ 10:28am

    Is Sarbanes-Oxley Forcing Apple To Charge You To U

    The fact that regulation (like Sarbanes-Oxley ) causes unpredictable negative effects is indisputable, but one has to ask "How much collateral damage are we willing to accept?" Apple’s puerile fudging with upgrade prices is probably more innocuous than

     

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    Pro, Jan 16th, 2007 @ 10:49am

    Duh?

    Don't we all already have it figured out that SOX is nonsense manufactured to create inefficiency within the private sector - which in turn creates taxable jobs? What better way to increase commerce than to create insane reasons to make it necessary? I bet data storage companies are happy.

    Get over it and figure out how to make money off it like all the other smart people.

     

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    UniBoy, Jan 16th, 2007 @ 10:54am

    Watch out...

    Apple is just leading the pack of technology companies (as usual).

    In the near future, ALL patches/updates/etc. will cost money. Either as a one-time cost for the update, or as an ongoing subscription cost that gets you all the updates as they become available. This is the direction the software industry WANTS to go anyway. SOX will be one little extra annoyance to help push it there.

    Oh, and in case you were wondering, you do not actually OWN any of the software you purchased anyway. You simply bought a LICENSE.

     

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    Agent Smith, Jan 16th, 2007 @ 11:08am

    The government isn't and shouldn't be a business -

    (Of course, the prudent thing is to make government more like business.)
    no thanks, the government is greedy and corrupt enough as it is... without the need to turn a profit.
    having a stock price or a profit margin to maintain would only make the government greedier and more incompetant.

    You've got to be stupid - make them turn a profit, cut costs and all of the sudden they are *efficient* (i.e. lower taxes!)

     

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    Dave, Jan 16th, 2007 @ 11:08am

    SOX: the bane of IT

    I work in IT. SOX may have very good intentions, but in practice it's awful. IT staffs are already stretched thin, as companies try to compete as cheaply as possible, and now SOX gives IT people even more work to do.

    And the benefit derived in comparison to the amount of mind-numbing paperwork involved has got to be negligible.

    Every time I fill out yet another SOX form, I just want to kick the Enron and WorldCom guys in the face. Yes, I know there are others to blame besides them.

    SOX is a key reason why I'm working on getting out of the IT field, or at least parts of it that require accounting.

     

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      Anonymous Coward, Jan 16th, 2007 @ 11:58am

      Re: SOX: the bane of IT

      Don't you get it though? SOX has actually "Created Jobs" in IT.

      This is how government uses terms and stats to make themselves look good - when in reality they are destroying the future - both Democrats and Republicans.

       

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        Dave, Jan 16th, 2007 @ 2:44pm

        Re: Re: SOX: the bane of IT

        Oh, yes. Jobs were created, all right. I will take your point with the apparent irony it seems to imply. I agree with you in the sense that politicians could try to make s**ty legislation go down easier by implying that it will create jobs.

        Example: in the IT shop where I work with several hundred employees, guess how many jobs were created? A net gain of Zero. They took one person already working there, took her off the team she was on, and made her do SOX. One official SOX job, one job lost. Oh, and the unofficial SOX jobs: everyone in the shop has to waste their time filling in SOX forms every time they turn around.

        Gee, I guess in one sense, it does create jobs. Each person is already overworked, so let's say each person has between one and two workloads. Now with SOX "tasks", each person has even more work, so there are actually more jobs, and each person gets several of them, all with no extra pay! Jobs created! Unsightly pounds lost!

        I would bet that everybody who blithely says that SOX is just wonderful has never had to keep SOX records for every work product they create, and has never been through a SOX audit.

        Potential merits of SOX aside, the SOX lovers would also be dumbfounded at the sucky implementation - it's laughable the list of things you currently need to do for SOX paperwork. I guess the government is at least trying to fix that now, so maybe SOX will suck less in the future.

         

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      Russ Stebbins, Jan 16th, 2007 @ 2:59pm

      Re: SOX: the bane of IT

      I agree that it is a PITQ for IT. But I still contend that Apple is using it as an excuse to get more revenue.

      I admire Techdirt for blowing away the smoke and mirrors that companies use to justify questionable practices, but in this case, they seem to have bought into the horse manure without determining if there was a pony in there.

      Yes, SOX is bad but using it as the causation for Apples upgrade charge seems tenuous

       

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    who pays?, Jan 16th, 2007 @ 11:11am

    charging for patches?

    Wait, if patches are charged to users who buy the SW, how do users charge companies for defects, bugs, and SW vulnerabilities in their software? If so, that will surely pay for my OS upgrades?

    Where do we go if a patch fixes a vulnerability and at the same time makes the system work better or turns on other SW or HW?

    This is a slippery slope.

     

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    Anonymous Coward, Jan 16th, 2007 @ 12:13pm

    Sox...

    Well, at my work we do monthly auditing of responders to credit card solicitations we send out. Before SOX we didn't take the auditing very seriously, but post-SOX compliance made us crack down. As a result we found out we were being quite unfair (i.e. pulling people credit credit reports, which lowers their scores, when we would never approve them for a card and giving people lower credit limits then our solicitations said) to some tens of thousands of customers a year. So, if not for SOX we wouldn't have found that. I dunno. You could make the argument that we should have been more rigorous in the first place, but we had no reason to.

     

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    MyNameIsMatt, Jan 16th, 2007 @ 12:22pm

    I'm with Misanthropic

    SOX is very good legislation that has a few problems, but in total it's a gain for us. What people are complaining about who work in IT, and I've experienced this too, is the extra overhead one has to do because of how a company perceives the SOX rules. However, it's the company's fault for that extra layer of crap because so many companies are overreacting and frankly scared of breaking the newish law that they don't fully understand.

    Then, the big high paid executives bitch and moan that, "OMG," they have to sign the financial statements and are directly accountable now for what they sign, and they're being hindered in their job. God forbid we have some accountability in business. There are things that could be reworked and improved, but it's silly to blame the pains of new procedures that companies have put in place as an overreact to SOX on SOX because most companies are doing it to themselves.

    Oh, and Apple is full of shit on this $5 thing.

     

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    b0b, Jan 16th, 2007 @ 12:33pm

    It's true

    Sarbanes-Oxley is a HUGE deal at Apple. People are whining about it on that dslreports thread. It's a whopping FIVE BUCKS, and Apple is very right about the SOx implications. It's a huge pain in the ass.

     

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    koz, Jan 16th, 2007 @ 1:42pm

    I wonder if this is a real story anyway - perhaps it's just a way for Apple to get more publicity for (eventually) being generous to loyal fans and not charging them the "true cost" and getting to bash SOX at the same time.
    If Apple give a thought lead to the faithfull it seems a lot of them then have great difficulty to think different.

     

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    a, Jan 16th, 2007 @ 2:40pm

    SOX would only ever come into play in this case if Apple would have ever had to give back the $ after reporting the income after incorrectly accounting for the revenue. If they would never give the money back (which they never would) there is no issue.

    This is all just PR.

     

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    SOXblows, Jan 16th, 2007 @ 4:19pm

    Auditors are like the RIAA

    However, it's the company's fault for that extra layer of crap because so many companies are overreacting and frankly scared of breaking the newish law that they don't fully understand. Actually in our case, and I'm sure many others', its the auditors. Since there are no set standards, the auditors just keep making stuff up. Things that we passed on last year are suddenly too loose this year. The bastards are in a win/win situation. To paraphrase Shakespeare - kill all auditors. Torture them first, though. I'm sure that Worldcom and Enron were corrupt because some IT person didn't sign 12 forms and get 5 VP signatures before reloading the paper in a printer.

     

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    |333173|3|_||3, Jan 16th, 2007 @ 11:23pm

    If they must charge for legal reasons, make the charge $0.01 p.a. for rolling updates.

     

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    John Lockburn, Jan 17th, 2007 @ 1:49am

    More, not less, is needed.

    Now that the republicans have been voted out we hopefully should see less of this whining. The IT industry has sold the public one snake oil remedy after another. The industry needs far more regulation, not less in order to protect the public. Even if this story were true, $5 would be a cheap price to pay for the protction of millions.

     

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    Amy Alkon, Jan 17th, 2007 @ 1:53am

    Why Mac Anyway?

    who wants a Mac anyway....haha

    I don't know about you, but I've had Macs since 1984 when I got a student discount on one at the University of Michigan, and since I played that first "here's how it works" disk that came with my Macintosh, I've never needed directions.

    Can you say the same about your P.C.?

     

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    Healthy Skeptic, Jan 17th, 2007 @ 6:17am

    SOX, Lies and Deception

    Jobs & crew manage to once again fleece the faithful sheep & get to place the blame elsewhere. Steve apparently paid attention in economics class when they described the two types of monopolies- horizontal & vertical. Horizontal monopolies get antitrust action- vertical monopolies get to abuse their customers. If MS & Dollar Bill tried this approach, the DOJ would haul them into court pronto. The Apple line on this is a bunch of hooey. Using this reasoning you couldn't make any changes to an operating system that provided any new functionality once it shipped.

     

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    NASA, Jan 17th, 2007 @ 8:31am

    SOX

    I'd be willing to bet that NASA couldn't do what they did in 1969 and go to the moon.

    Back then you took the best and brightest people and had them innovate and engineer.

    Today you bury them in process and paperwork so that lawyers and politicians can indirectly make more money. The best and brightest get reduced to the level of your average idiot.

     

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    Robert K, Jan 17th, 2007 @ 12:11pm

    Is Sarbanes-Oxley Forcing Apple To Charge You To U

    Is Sarbanes-Oxley Forcing Apple To Charge You To Upgrade Your WiFi?
    The fact that regulation (like Sarbanes-Oxley ) causes unpredictable negative effects is indisputable, but one has to ask "How much collateral damage are we willing to accept?" Apple'ss puerile fudging with upgrade prices is probably more innocuous than Enron'ss fudging with grandpa's retirement. There are a lot more complaints about SOX from naive enthusiasts and from charlatans, than from people who really have a new product that can meet a market test. SOX has indeed scared away some offerings but many of them deserve to be scared. Apple, for example, spent time and money to design in locks (as is done by virtually every telco). Is that what progress is all about? The crucial point is illuminated in an old economic classic by Gordon Tulloch concerning tariffs, monopoly and thefts. We want more effort devoted to progress, not to locks and subsequently to lock-pickers. Further, SOX is preventing Apple, Shutterfly, and others from pre-booking the entrepreneur's dreamy-eyed projection of revenues. In the tech world we have been drowned by naive forecasts of revenue streams, never mind those spectacular projections from scam artists. If SOX has been a net loss to the economy, the proof will not come from complainants who want to pre-book unverified revenues, nor will it be from agents wasting time and resources designing locks to slow down innovation.

     

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    PPN (profile), Jan 16th, 2008 @ 8:18am

    remember...

    A $0 update is STILL worth $0 in any accounting books anywhere.

    Should be entered as such IF they are so worried that (offering) patches to their products will violate Sarbanes-Oxley.

    Sarbanes-Oxley is for their mgmt to keep accurate records and so forth.. it should rarely effect any end-user process.

     

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