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Changes in accounting for Apple TV, iPhone

updated 06:55 pm EDT, Wed April 25, 2007

iPhone Recurring Revenue

The introduction of the Apple TV in March and the future release of the iPhone will bring about a change in the way Apple tracks its revenues, CFO Peter Oppenheimer said during his company's conference call for its second fiscal quarter results. The executive said that it will report revenues attributed to both devices on a subscription-like basis, rather than count only the one-time costs associated with each device as they occur. AT&T payments to Apple would be factored into the iPhone's quarterly numbers.

When justifying the decision, Oppenheimer pointed to the radically different business model for both products. Both the phone and media hub will receive a relatively steady amount of software features for free over their respective lifespans, meaning that the income from each sale in effect amortizes the software development costs after the product is released. The financial chief touted this as playing on Apple's strength with software..

"We are taking this bold step to leverage what we do best," he said.

Oppenheimer declined to predict how much money each iPhone would bring in per month when prompted by one analyst's line of questioning. There are multiple factors at work that could affect the actual income, the CFO said, ranging from the cost of a particular model to variances with income from AT&T. All Apple-made iPhone accessories will be counted solely as one-time events.

An explanation of which features would be added, and how frequently, was beyond the scope of the results phone call.




by MacNN Staff

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Comments

  1. elroth

    Joined: Dec 1969

    0

    new software features

    To all those analysts (including Microsoft spokesmen)saying the iPhone will be worthless to business because it won't allow third-party software: Just wait and see what Apple comes up with. Get out of the way - the train is coming.

  1. testudo

    Joined: Dec 1969

    0

    hmmm

    Nice off-topic rant, elroth, but, yes, let's wait to see what apple does do, and doesn't do.

    However, the change for AppleTV seems to indicate that they may be working on a subscription service for the iTMS and movies. Otherwise, how can they claim it as a product with a long lifespan?

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