We talked in an article a few days ago about Apple's strengths and the things that changed the concept of technology in that it made system updates free - see this link-. Apple invented something called a subscription account. Our previous article did not explain in detail what this account is and why did Apple think about it in the first place? So what happened and pushed Apple to do the unfamiliar at the time? It's the story of the old 802.11n update.

What's the story of the 802.11n incident that prompted Apple to make iPhone updates free?

The story began in 2006, when Apple released Mac computers and included an advanced connection chip. At that time the standard was 802.11b / g, but Apple secretly added the latest chip, which also supports 802.11n, but has not announced this matter; Why! Simply because the standards for using and dealing with N have not been completed and agreed upon yet, but this happened several months later, these standards were issued, and here was the surprise from Apple.

Apple revealed that the latest Mac devices already support this new standard and its own speed, but this is not for free. At this time, Apple was selling devices at a not small price, where the price of the MacBook Pro 15, for example, starts at $ 2000, and the 17-inch starts from $ 2800, and even the cheapest MacBook with a 13-inch screen was priced at $ 1100. Apple decided at the time that whoever wanted N benefits would have to pay $ 5 money.

The amount was very small by all standards until our time, as you pay several thousand dollars in Mac and Apple devices in general, meaning that you demand to pay 5 dollars is not a big deal, but there was a violent attack on Apple and an outright accusation of greed by journalists as well as its users, as they said that the company gets 2000 dollars For the device, then you ask them to pay an additional 5 to activate their feature! Initially, as usual, Apple resisted and said that activating the feature requires the work of employees, so it is separate from the current operating system, but after a while, Steve Jobs began to back down and decided to reduce the cost to become only $ 2 instead of $ 5 to work as 802.11n instead of 802.11g.

Meanwhile, Apple had begun the era of the iPhone "it had not been released" and here is the opinion of Steve Jobs and Apple's leaders that one of the defects of competitors such as Blackberry, Palm, Microsoft and others is that these companies make the new operating system exclusive to the new device. And they thought that if Apple provided updates to the iPhone, it would be a fatal advantage for competitors. But updating an old device means that a team will be devoted to developing it, and therefore it must be issued at a price. But the current attack "at the time" because of 802.11n taught them that no one would buy an iPhone and then demanded that he pay an annual subscription, even if a small one, in exchange for updates. Except that Peter Oppenheimer came up with the magic solution.

Peter Oppenheimer is Apple's chief financial officer who was in charge of the apple’s funds and accounts between 1996 and 2014. Peter said at the time that the solution would be like magazines and newspapers do, where they charge an annual subscription, but they enter it into the accounts on a monthly basis because if they enter it immediately upon payment Subscription, this means that in the month of subscriptions and their renewal, the institution will have strong financial returns, but throughout the year there will be no return. Rather, if a customer wants to cancel a subscription and refund the remaining period, this will be entered as losses. But if the return comes and is divided monthly, it will be better.

So Peter decided to apply this to the iPhone. Apple will get the price of the phone now, but its full price will not be immediately reported in the reports, but part of the price will be divided over the 24 months following the purchase. Suppose, for example, that the price of the iPhone is $ 720 (this is an illustrative example only). Apple calculates in the financial report that it reached $ 600, for example, and then divides the remaining $ 120 by 24 months, as if the customer pays $ 5 per month for a subscription. This subscription covers the costs of the updates for two years. That is, for two years, you get updates for your phone, not a favor from Apple, but because you are already paying for this update through the subscription method. The price of the iPhone in our example is $ 600, but you paid $ 720 because this additional 120 is for a guarantee of updates for two years in the future.

Initially, Apple's shareholders rejected this idea and said that it would lead to the sale now taking place, but not fully appearing in the financial quarter report, and therefore these reports will not reflect the actual size of the sale. But Steve Jobs and his assistant Peter Oppenheimer insisted on this method, and it was and has become among the iPhone's killer advantages is that it gets regular updates while its competitors may or may not be updated. Because the competitor simply costs money to update the device, most often he only updates high-priced devices because he makes a lot of it from them, so he can bear the cost of updating, while low-end devices may not see any final update; While Apple does not cost anything with the updates, but rather gets the money "with the subscription" mentioned.

Of course, the method of Apple accounts has evolved over time, but we tell you the old story that happened in 2007 and how it started.

Did you know anything about the 802.11n crisis that occurred with Apple? What do you think of the company’s contribution calculation philosophy?

Source:

AI

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