The 802.11n ‘standard’ is still developing. Building software features on unsettled standards is akin to building in shifting sands; one change to the developing standard and features fail. My understanding is that current 802.11n solutions from different vendors don’t interoperate. As such, if Apple had activated and advertised 802.11n compatibility months ago when these systems shipped, it would have had bigger problems on its hands when a now advertised feature inevitably failed to work with the 802.11n at Starbucks. A quick glance shows none of the major computer manufacturers touting 802.11n, probably for this reason.

In my experience, Apple enjoys being on the cutting (ney, bleeding) edge of technology and would be quick to tout a major advantage such as 802.11n if the balancing act of marketing advantage versus liabilities cut in their favor. Clearly it did not six months ago but Apple must have been reasonably certain that changes to the 802.11n standard in the interim could be bridged through software and firmware since they included the improved hardware.

It is truly a shame that an accounting law would act to tie the hands of a company in its attempts to serve its customers rather than merely reflect the true state of a company. The Sarbanes-Oxley act needs to be changed. It will continue to have major unintended effects on American corporations.

It’s possible I missed something; but was there a reason why Apple put the encryption on the 802.11n in the first place? You said, “The Sarbanes-Oxley Act made changes to GAPP that changed the playing field for recording software revenues.” You also stated that this was not a bug fix, yet, rather an addition of a substantial feature.

This feature was already partially/completely in the cost of the original system. When it comes down to it, your paying for the software; software which would not have been required had there not been a lock on the Wi-Fi’s extra speed in the first place.

If Apple wouldn’t be loosing any revenue from unauthorized distribution, why do they charge for this download? It’s more of an opportunity cost to them; I don’t know why they did this in the first place, and that troubles me.

Now Apple offers these customers significantly improved network speeds beyond those advertised for the paltry and nominal fee of $1.99. Customers are not required to make the upgrade and their systems will continue to operate at the advertised specs without it, but those who choose to will gain the benefit of substantially faster throughput that would have cost at least $100 otherwise… quite a bargain.

Your analysis above misses the point. Apple sold the vast majority of affected systems last fiscal quarter (Q107), which they have already recorded revenue for. The Sarbanes-Oxley Act made changes to GAPP that changed the playing field for recording software revenues. Under these changes, free software releases that add substantial features (as opposed to bug fixes) to previously sold software packages can be interpreted as a partial delayed delivery of the original sale.

If the previous sale is deemed to have only been partially delivered, Apple is required to have only recorded a portion of the sales as revenue for that quarter and carry the liability over to the next quarter. We already know that they have not done this, so this would require a restatement of Q107 revenue and would leave all software revenue uncertain subject to future updates throughout the lifespan of a software release.

The easiest way around this headache is to set and charge a nominal fee for the software update which GAPP deems as a second sale and which is accounted for in Q2 rather than a delayed delivery of a sale from Q1. As several have noted, the nominal fee Apple set for this update barely covers its overhead expenses in delivering the update so it is unlikely that Apple is realizing any revenue from this release. Furthermore it is likely that Apple will do little to nothing to prevent the patch from being freely distributed since it wouldn’t be losing any revenue from unauthorized distribution. So if you truly object to this nominal fee, feel free to source it otherwise.

In today’s litigious society, good corporate governance includes avoiding unnecessary litigation and as an Apple stockholder, I applaud them for their foresight.

If you are truly upset by Apple’s predicament in this case, appeal to your legislators to ammend or repeal the Sarbanes-Oxley Act. This won’t be the last unequitable outcome that this poorly written and executed law produces.

Now let’s assume that no one in the world pays the $1.99 for the software to unlock the full capabilities of the Wi-Fi Card. If this be the case, who would be paying the extra costs that it took Apple to include this technology in their Macbooks?

Now this is where we will probably differ. Most will say apple is eating the costs; yet, I will tell you that you and Apple are paying for it. It’s simple economics; I can’t explain it too much in detail, but the costs are divided among you and apple based on the elastisity of the product. That is determined by the necessity of the product. I’m trailing off… In short, you are paying a good portion of the technology when you purchase the Macbook. This is an unfair practice.

Jonny, It does cost Microsoft extra money to develop XP Pro instead of Home. Therefore, it would cost them to give Pro in place of Home. Lets put it this way: There are 2 different operating systems, Pro and Home (I know there are more, but we’ll say 2 for this example) Why does XP Pro cost more than Home? The Answer – Microsoft does not want to charge basic users of their O.S. for technology that they don’t know how to use or even need for that matter. They have XP Pro for a premium price so the more advanced users that would like the extra features can pay for it themselves; otherwise, assuming there was just one version of an operating system, it would cost the same for all. But for the users who don’t need the technology (the XP Home users), they would have to fork out additional bucks to buy a computer with the ONE operating system.

Thanks for bringing that up, it’s a decent example. Apple could learn from Microsoft.

But I think that’s the point – those who purchased iMac’s or MacBookPros with latent N equipment *didn’t* realize it had been rendered – and certainly can’t make use of it. And it can’t be utilized until you buy further enabling technology, but certainly increases the material value of that device when you do. And given Apple’s recent issues with the SEC, I seriously doubt they want to wait for someone to later interpret it as required.

(I think everyone is quoting Sarbanes Oxley here specifically)