April 25, 2007 5:30 PM PDT

Accounting for iPhone, Apple TV's future

Accounting for iPhone, Apple TV's future
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Apple is paving the way for free enhancements to the iPhone and Apple TV by making its accounting methods clear from the start.

The company will gradually recognize a portion of the revenue from each sale of those products as new features are delivered, Chief Financial Officer Peter Oppenheimer said Wednesday. This accounting method prevents Apple from having to endure a repeat of the backlash over its $1.99 fee for activating the 802.11n chip in Macbook Pros earlier this year.

The news came as part of Apple's second-quarter earnings conference call, in which the company reported increases in revenue and profits off strong sales of Macs and iPods. Later in the current quarter, the company plans to introduce the iPhone, which it hopes will create a third product line to complement the current lineup.

Apple plans to roll out "new software features and entirely new applications" for the iPhone over time, Oppenheimer said. But the company wants to keep the early adopters of the iPhone happy, since it's counting on those people to spread the gospel to the rest of the world, he said.

And while it wasn't a lot of money, Apple didn't make its users happy when it revealed in January it would have to charge $1.99 for a software download that unlocked the 802.11n wireless chips inside certain Macbooks and Macbook Pros. Because the famously secretive Apple kept the existence of this 802.11n chip under wraps, and because it recognized all of the revenue from the sale of those notebooks at the time they were sold, accounting experts said Apple had to charge a fee to satisfy accounting regulations that require companies to establish a value for product upgrades.

But by publicly declaring plans to roll out future enhancements to both the iPhone and Apple TV as well as its accounting methods, Apple has established a value for those future upgrades, since people will buy the product knowing they are getting more features over time.

"We hope the result will be to surprise and delight our iPhone customers," Oppenheimer said. As one might expect, he declined to provide specific examples of the features Apple has in the works, but the Apple rumor mill is likely in full swing following this news.

One enhancement that could be arriving soon is the ability to stream an iTunes library to the iPhone, which will soon be possible through a somewhat convoluted process using Sling Media's Slingbox software, as reported by CNET News.com. And Sling Media's CEO recently said that the companies had discussed extending that support directly to the iPhone, although it's not clear how eager Apple is to support third-party applications for its prized iPhone.

AT&T recently said it had received more than 1 million inquires from interested iPhone customers, but Apple has not said when it will start taking preorders for the product. Two versions are expected to be available for AT&T's network, a 4GB version for $499 and an 8GB version for $599.

See more CNET content tagged:
accounting, IEEE 802.11n, Apple TV, Sling Media, Apple Computer

23 comments

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Meh...
...still pissed that there is only one carrier, and a crappy one at
that...
Posted by MCOjerry (111 comments )
Reply Link Flag
What I hope to see on iPhone
With the rumors swirling around about Google coming out with
their own cell phone, I laughed. Google doesn't do hardware. In
fact, their internet software is mostly free.

So, I'd love to see Google take internet phone calling to the next
level -- whatever that is. The iPhone has wireless built in, right?
What if you could choose to make your call through the internet
when connected to a wireless access point INSTEAD of using
your Cingular minutes to do so?

Think about the implications... a true internet phone, that
functions as a standard cell phone when wireless access is
unavailable.

I'd also like to see the internal GPS tied to Google Maps (and
Google Transit), so you can get directions (or bus routes) from
where you are. What's the point of having the GPS and Google
Maps if you don't take advantage of their potential.

Oh, and to be able to get directions from your current location
to an address from your contacts would be tres useful as well.

Dave
Posted by davemartinatx (16 comments )
Reply Link Flag
GPS???
I didn't realize the iPhone would have GPS. I seemed to have
missed that one.

Don't get me wrong. I will be first in line in late June. Just wish it
did have GPS.
Posted by Dr Dude (49 comments )
Link Flag
Sorry, No GPS...
And I doubt VOIP will be available any time soon. But you can expect people to be hacking this thing like CRAZY!!!

We'll see how it works out. Only time will tell.
Posted by coryschulz (326 comments )
Link Flag
What the iPhone and AppleTV really are....
They're stealth Mac OS X machines. Sure, the current revisions may still lack the oomph to run as full fledged Macs, but they do run OS X, and following Moore's Law, we might see the iPhone and Apple TV transformed into:

1) iPhone - A computer in your pocket, add wireless keyboard and wireless display (products already available), and here is your new computer.

2) AppleTV - for all intents and purposes, it's a Mac Mini, albeit a somewhat slower one with a core solo running around 1Ghz. But it will run Mac OS X, and may be the basis for Apple's future enterprise and education Mac...at $299 or even less!
Posted by Maccess (610 comments )
Reply Link Flag
EXACTLY: Desktop, Laptop, Settop, Handheld
Desktop, Laptop, Settop, Handheld

Those are today's most popular personal-computer form factors. Of course, today's handheld personal computers are not usually called that ... they're called cell phones, iPods, PDAs, etc.

That's because the laptop and desktop form factors have already gone through their consolidation. In the 70's there were many different desktop operating systems running on a variety of hardware platforms. Now, there are mainly three operating sytems running on one hardware platform. The technology consolidated for a variety of reasons. It was inevitable.

I predict the same thing will soon happen to hand-held computers.

Most of today's hand-held computers (cell phones, iPods, PDA's) are simple proprietary short-life platforms much like the personal computers of the 70s: the Commodore Vic-20, TRS-80, Apple II, etc. To keep up, handhelds will have to consolidate to a smaller number of more sophisticated platforms that can do many different things via software.

And here comes iPhone ... a very sophisticated handheld personal computer that is generating more buzz than anything else before it. If Apple plays their cards right, they could dominate the handheld computer space of the future. And that will be a HUGE market.

Just like DOS plus Windows became "the PC", the iPod plus iPhone could become "the phone".

That's why iPhone is such a big deal for Apple. That's why AAPL first topped $100 today.
Posted by open-mind (1027 comments )
Link Flag
iPhone already uses wireless
To the best of my knowledge, the iPhone *will* alreadt
automatically detect wi-fi and use it for the call.
Posted by sd1004 (6 comments )
Reply Link Flag
wi-fi for the internet features
I believe it only uses wi-fi for the internet features & not VOIP.

Now if Skype could create software that would sit on the phone...
Apple might have to tread lightly with the Cell phone industry to
allow that.
Posted by jwmoreland (48 comments )
Link Flag
nope
No VOIP service in the iPhone exept maybe via the browser, the
Safari Browser can be used for hundreds of extra services and
games.
Posted by Peter Bonte (316 comments )
Link Flag
beware wifi with cingular
Cingular's 8525 phone is both wifi and wireless. According to a user post, if you opt for wifi, it still accesses your account and charges you minutes.

The only way around this is to remove the sim card if you go wifi.

In other words, even if iphone detects and accesses wifi, under current cingular protocol, you may be billed at your per-minute rate.

So, beware the wifi with cingular, the only vendor for the iPhone.
Posted by tabeles (3 comments )
Link Flag
I was interested in...
the iPhone. But with only 4 or 8GB there is no point. I see no reason why they can't have the same tiny hard drives as the 5th Gen. iPod. iPhone is going to be a tiny worthless toy. I refuse to carry both it and an iPod in order to handle the music and other things I want to take with me. What a joke!

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
iPhone 1.0 : iPod 1.0
Remember the first iPod?
Big, small amont of space, expensive, but cool...
Then came iTunes music store & iTunes software for PCs "BOOM!"
Then the iPod mini, shuffle,nano,video, etc....
HUGE MARKET TODAY.

Remember, the iPhone has not been officially released yet AND it's the iPhone 1.0.

Surprise features not released to public yet?
Mac OSX Leopard 10.5 releases & software updates to iPhone & AppleTV happens?

Nobaody knows all of the story yet with these two items, except for Steve Jobs & he isn't talking (yet).
Remember when the first iPhone & AppleTV?

patience...
Posted by Llib Setag (951 comments )
Reply Link Flag
For the fanboyz
One comment that ring true through everything about apple

"But the company wants to keep the early adopters of the iPhone happy, since it's counting on those people to spread the gospel to the rest of the world,"

This "gospel to the rest of the world" makes me want to never buy an Apple product
Posted by itworker--2008 (130 comments )
Reply Link Flag
Nothing new here... Do the research
Do your research... Pocket PC or Windows Mobile 5 phones are nothing new and they have been doing it successfully for quite some time now..

HTC Shift (Windows Vista UMPC with 3G TRI-BAND/HSDPA)
HTC Advantage X7501 (Windows Mobile 6 palm top with 3G Tri-band/HSPDA)

FlipStart - CDMA Windows Mobile UMPC w/ Vista

If this is Apples foray into ultra mobile computing it has quite a ways to go to catch up.
Posted by jessiethe3rd (1140 comments )
Reply Link Flag
4GB or 8GB??
Seriously... I can take my WM5 or WM6 device and plug in a SD Card with 4GBs. 8MB SDIO cards will be available soon and my Treo 700wv will happily take them... really - what makes this so different?
Posted by jessiethe3rd (1140 comments )
Reply Link Flag
What makes it so special
Duh, the packaging and the marketing.
You know when you buy an Apple product you will be receiving the slickest packaging and hippest marketing available. The intangibles of that privilege alone are worth the asking price. I'm sure you agree.
And it's all proudly designed by Americans in Cupertino California!
Posted by Fireweaver (105 comments )
Link Flag
UI
The hype is in the interface, it's as simple as that. Combine what will undoubtedly be an easy-to-use touchscreen interface with the proven success of the iTunes platform (store, software, media player), and that's what the big deal is. Do I want one? Not until there's a 30GB version on Sprint, but I do see why it's the most popular consumer electronics product pre-release.
Posted by spm82 (59 comments )
Link Flag
Apple may be able to do an end-run around RIM with the IPhone. Companies like Softrend Systems Inc. <a class="jive-link-external" href="http://www.softrend.com" target="_newWindow">http://www.softrend.com</a> are rapidly creating apps for the IPhone that will permit sales persons access to Inventory Item info and pricing, Customer history and the ability to place Sales Orders live in their ERP/Accounting system from an IPhone.

If Steve Jobs is serious about gaining traction in the Enterprise and business market with the IPhone, this is the kind of company he should be supporting with IPhone features that make such development easier.
Posted by Softrend (1 comment )
Reply Link Flag
 

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