Inside Apple's iPhone subscription accounting changes

Oct 21st, 2009 - AppleInsider

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Inside Apple's iPhone subscription accounting changes

Apple's April 2007 Q2 earnings call announced that the company planned to book revenue for its new iPhone and Apple TV using the "subscription method of accounting," a decision that startled analysts and left many users confused. Here's what resulted and why the company is working to reverse the decision.

At the time, Apple's Chief Financial Officer Peter Oppenheimer explained that the reason for subscription accounting was that the company had big plans to aggressively deliver a series of rapid software updates for the upcoming new iPhone. However, rather than planning to make money on these updates, the company wanted to deliver them to users for free to help ensure that users would actually install and use the latest updates rather than balk at upgrade fees.

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