Thursday, September 17, 2009

Accounting rule change could favour Apple and iPod touch owners

The body responsible for setting US accounting standards is considering a rule change that would allow Apple to report higher earnings during periods of growth. It could also see an end to charging for iPod touch software updates.

Apple's insistence on charging iPod touch owners for software updates that iPhone users get for free has long been a cause of irritation.

The company takes the position that the relevant accounting rules say giving away updates that deliver significant new functionality is incompatible with recognising the revenue from the sale upfront.

(But what about this: if anything delivers significant new functionality to an iPod touch, it's Remote - an application from Apple that turns it into a remote control for iTunes or Apple TV. But Remote is free, whether it is for the iPhone or an iPod touch. Figure that one out!)

Since Apple doesn't want to defer the recognition of that revenue as it makes its financial results look worse, it charges for iPod touch updates. Another example of this rule coming into play occurred when Apple released a software update to enable 802.11n wireless networking on certain Macs that had been advertised as offering 11g Wi-Fi but which actually contained an 11n-capable chip.

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