Mac OS X 10.6 - Snow Leopard

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Post: #31
arekkusu Wrote:Because companies get in trouble for giving away features for free.

As I understand it, the whole point of the SOX act is to clamp down on accounting practices and hold corporate executives legally responsible for some aspects of the companies financial outcome. It's supposed to help prevent Enrons. How that ties into what a company charges or doesn't charge for products and services is a mystery to me.

I suppose I could imagine some bureaucratic accounting funkiness which states that no product can be $0.00 on a ledger line or something, without some sort of rebate or something to match it. Kind of like how the IRS can't deal with private loans that don't charge any interest. Still, I totally don't get the connection. Of course, there are a *lot* of things about US bureaucracy that I don't get.
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Sage
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Post: #32
Here's a simple example (IANAL):

1) BigCorp announces ProSoft5, which has amazing new 4D graphics.
2) BigCorp's customers currently using ProSoft4 are very excited, and pre-order a million copies.
3) BigCorp ships ProSoft5 at the end of their second financial quarter. They claim $1B in revenue.
4) Unfortunately, the 4D graphics don't work in ProSoft5.0, and the customers can't use that feature.
5) A month later, BigCorp ships a free update, ProSoft5.1, which fixes the 4D graphics.

Do you see a problem? Accounting claimed revenue for a feature which wasn't actually shipped until later. Legally, some portion of the revenue should have been deferred. But since the update was free, they can't account for it.

Most of the time, this is no big deal. But suppose that BigCorp is actually EvilCorp, and they make a habit of doing this-- shipping an early, incomplete version of their product to collect revenue in a particular quarter to make their financial reports look good. SOX targets this fraudulent accounting.

To avoid any possible problems, a conservative policy is that no "features" should be shipped in free updates, only "bug fixes".
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Post: #33
Thanks for taking the time to type that up, arekkusu....very interesting Smile

Worlds at War (Current Project) - http://www.awkward-games.com/forum/
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Post: #34
Aha, that makes some sense now arekkusu, thanks!

I want to say that kind of sucks, but OTOH, it is certainly not unheard of for public corporations to do anything to meet quarterly expectations. Unfortunately, if one looks at it like that, it can theoretically be difficult to change any pricing of any product at any time because the SOX auditors could claim that any change in pricing structure for any product was the result of a motivation to meet quarterly goals, rather than doing right by the consumer or any other legitimate reason.
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Apprentice
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Post: #35
I didn't know of any such law, so that indeed was an interesting read.
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Post: #36
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Post: #37
ferum Wrote:News Article Talking About This Exact Subject

Timely Smile
Interesting indeed!

One thing that the article totally misses though, is that the side-effects of the current form of the rules dramatically affects potentially thousands of other companies related to iPod Touch, not just Apple. Really, the users benefit, of course, but iPod Touch *developers* benefit as well, since if users actually updated to 3.x then there would be a lot less hassle and a lot more features. Plus there may be extra revenue streams from the added store features in 3.x.

Lately, I've been reading some about how US government intrusion into citizen's lives and also into economics has been screwing things up in subtle and complicated ways -- often to the benefit of "the bad guys" (i.e. EvilCorp). This looks like another example of a well-meaning law totally trampling on well-meaning business. This stuff is really hard to call though. Would it be worth the potential of another Enron for the government to stop meddling in trade like this? The crooks got away with billions. But now because of them, little guys like us are being directly affected. I never imagined corporate accounting rules could reach this far down the ladder...
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Post: #38
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