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Thu, Nov 20, 2008 - 10:38 PM EST  —  AAPL: 80.49 (-5.80, -6.72%)  |  NASDAQ: 1316.12 (-70.30, -5.07%)

$20 for an iPod touch software upgrade?
Wednesday, January 16, 2008 - 11:30 AM EST

"Since my post yesterday about the $20 iPod touch software update several readers have contacted me to explain how Apple had to charge for this update because of generally accepted accounting principles (GAAP). This issue, so I’m told, is much the same as the way Apple had to charge $1.99 the 802.11n enabler for the Intel-based MacBooks and MacBook Pros. Personally, I don’t buy this," Adrian Kingsley-Hughes writes for ZDNet.

"According to experts it is important to note that there’s nothing in the GAAP requirements that forces Apple to charge its customers for a software upgrade. The only requirement imposed by GAAP is that Apple must account for the separate value that the software brings," Kingsley-Hughes writes.

Here are the new apps that have been added to the iPod touch:
• Mail
• Stocks
• Maps
• Weather
• Notes


Kingsley-Hughes writes, "To try to justify that any of this offers a $20 value is hard, especially when you consider the overall value that MacBooks and MacBook Pro customers got from the 802.11n switch on. Over the life of a MacBook that has to represent more than $1.99 worth of value if I’m paying $20 for a few apps, does it not?"

Kingsley-Hughes writes, "And finally, can someone please tell me what the difference is between the iPod touch upgrade which costs money and the Apple TV upgrade with is free and transforms an existing Apple TV device into what PC World is calling a substantially different product?"

More in the full article here.

MacDailyNews Take: One could say that those who purchased iPod touch knew what the device did and thought the price was right for what they were getting. If iPod touch users want to add more functionality for $19.99, then can. If they don't, they don't.

However, with Apple TV getting a massive upgrade for free and iPhone also getting significantly upgraded for no charge, it's almost impossible to explain to consumers why Apple's charging for one, but not the others. (We say "almost impossible to explain" because iPhone and Apple TV are amortized over 24-months, iPod touch is not; therein lies the rub) The better question: Is the update worth $19.99?

For consistency's sake at the very least, Apple should either charge for all upgrades of this type or for none or do a better job of explaining upfront that, unlike iPods and other products, iPhone and Apple TV are special cases that are subject to free upgrades over a certain period.

[UPDATE: 11:58am EST: Fixed incorrect link code that was affecting display of the full MDN Take.]

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Jan 16, 08 - 11:33 am Comment from: deepdish

oh, just pay it already.

bitch and moan, bitch and moan.

that is all people

Jan 16, 08 - 11:36 am Comment from: yomamma

I didn't like paying.. but.. man oh man.. is this worthwhile.. It was well worth the 20 bucks, imho.

It transformed my ipod into a pda.. Just being able to read, send, and store email is a big plus.. especially when I can now read .xls, .doc, and pdf documents on my iPod. Not to mention that the google maps application is freakin awsome!

Call me a fanboy.. but if you have an iPod touch and don't do this.. your a fool.

Jan 16, 08 - 11:37 am Comment from: gow

He's right. I'm an Apple Fan... but this was lame.

Jan 16, 08 - 11:38 am Comment from: Ampar

"Personally, I don’t buy this," Adrian Kingsley-Hughes writes for ZDNet."

Personally, I don't care that you don't buy this, you cheap bastard.

Too many hit whores oozing from stained house trailer carpet.

Jan 16, 08 - 11:38 am Comment from: mike

I think Apple should give away all of its software for free...from here to infinity....those greedy bastards.

Jan 16, 08 - 11:39 am Comment from: Braddy

If you do not want the extra Apps ... then do not buy them ... you bought the iTouch without them .. Apple is giving you something more for a few more bucks!! If everything were free the stock would reflect it ..

Jan 16, 08 - 11:39 am Comment from: @deepdish

How about you pay it for me and I won't bitch and moan...

Jan 16, 08 - 11:43 am Comment from: deepdish

good god, you pay over 40% of your income to taxes (state, fed, sales, property, fica, ect ect ect combined)

you don't complain about that.

Jan 16, 08 - 11:44 am Comment from: Steve516

Really, I think it should be $1.99 per app. And you can pick which ones you want.

What makes no sense is that they are giving it for free on new iPod Touch models.

There must be something to do with licensing for the Maps, Stocks, and Weather apps... That costs Apple something. Because all sorts of software upgrades on the iPhone have cost zero/zilch/nada

Jan 16, 08 - 11:45 am Comment from: poochie

"And finally, can someone please tell me what the difference is between the iPod touch upgrade which costs money and the Apple TV upgrade with is free and transforms an existing Apple TV device into what PC World is calling a substantially different product?"


Because the they are accounting differently for the iphone and the apple tv than they did for the ipod touch.

from CFO Peter Oppenheimer:
"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.

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."

Jan 16, 08 - 11:47 am Comment from: Dave Mac

Twenty bucks to add programs I didn't think would ever be available on my device. Took two seconds to approve that purchase.

Jan 16, 08 - 11:47 am Comment from: dd

For those that complain, why are you ok with a $79 price tag for iLife when buying a new Mac gets you that stuff free?
It's the same thing.

Jan 16, 08 - 11:48 am Comment from: korky

it is greed in my opinion.

also making users who want these apps but iTunes store is not available in their country angry. no way to get the upgrade withou itunes store.

Jan 16, 08 - 11:48 am Comment from: I love glossy

Complaining over $20 is silly, but if it now comes on any new iPod touch now for free, I can understand some grumbling. If Apple continued to make it a $20 updgrade, in a way that would actually be better. It would be like buying additional software.

Jan 16, 08 - 11:49 am Comment from: fenman

Clearly there are aspects of the optional new software that Apple did not author and must pay a license fee to distribute. The terms of the license must already cover new shipping iPod Touch's but require the fee for retro upgrades.

Jan 16, 08 - 11:50 am Comment from: OBill-Wan Kenobi

Maybe I'd be more sympathetic if they charged me $20 for my iPhone update. I don't know. That being said, the improvements made to the iPod are far more substantial than the improvements made to my iPhone. Is it worth $20? Yeah, probably. It's $4 an app, which is peanuts, really.

Jan 16, 08 - 11:53 am Comment from: M.X.N.T.4.1

From the start the Apple TV and iPhone were going to be accounted for over 2 year periods with for the very reason that they were going to develop the product and add extra features. An iPod has always been a fixed product, you buy a particular model based on its specs and which one best suits you. The iPod Touch came with fewer apps than the iPhone to begin with, apps that could have been included but weren't. There should have been no expectation that there would be updates or that if there were they should be free.

Once the iPhone has been out for a couple of years and we get subsequent versions I doubt they'll continue the practise. We'll likely just get new OS versions like with Macs - for a cost.

I'm not saying its worth $20 but that's a different issue.

Jan 16, 08 - 11:57 am Comment from: Ogre

There should be continuity, it really is nonsensical why the Touch users get boned and the iPhone users enjoy a free roll.

I think it's principally because anything relating to the iPhone would garner massive media coverage, presumably vilifying Apple since mainstream media is so eager to exploit any iPhone hype. While the Touch demands far less media scrutiny outside of fanboy worlds such as ours.

Jan 16, 08 - 11:57 am Comment from: MarkC

People are forgetting that this upgrade utilizes SkyHook technology for the maps function. I'm sure that Apple had to pay SkyHook a licensing fee and that the $20 is related to that.

The iPhone doesn't require the SkyHook technology for Google Maps, so the upgrade didn't cost Apple anything.

Jan 16, 08 - 11:58 am Comment from: G Spank

This is probably the only really valid complaint of all the incessant whining we've been hearing.

Jan 16, 08 - 12:00 pm Comment from: Georgy Porgy

The same whiners will buy beer and pay a pemium for pizza and delivery that ingredientwise, costs about $3 to make on Super Bowl Sunday. Not only will they spend $30 to $40 bucks minimum for a one night game, they will tip the delivery guy at least $5.

A $20 UPGRADE IS NOTHING!!! Bunch 'o'Whiners

Jan 16, 08 - 12:01 pm Comment from: tom

If the ZDNet dude doesn't think these apps are worth 20 bucks, then he shouldn't buy them. That's pretty simple. What's his point? If they're that worthless to him, why does he even write about them? He apparently won't be using them anyway.

I will say, however, that I think Apple made a mistake originally when they gimped the iPod touch by omitting these apps. I'm glad they fixed the mistake for future buyers.

Jan 16, 08 - 12:01 pm Comment from: MadMac

If the author did their homework or actually contacted an accountant, they would learn that providing major new funcionality that did not exist (or promised) when the product was sold would require an expense on Apple's P&L;. AppleTV is accounted for like iPhone (subscription) and future funcionality was implied.

Why should a software company give away its main product for free? Remember, this is major new funcionality and not just an upgrade of existing features. If classic commerce is becoming greed, then I think you fools need to look in the mirror for the problem.

____________

Sent from my iPhone (with Mail, Google Maps, etc. included and already paid for)

Jan 16, 08 - 12:01 pm Comment from: REALTORben

Here is my take on it.

There is a fine line between free upgrades and charging for it.

People that purchased iPhones have to commit to spending money on the device for the next 24 months. Also, apple is treating the iPhone like it would a computer. Some upgrades are going to be free. The ability to SMS multiple people is not a "new feature" it was something they probably thought wouldn't be a big deal. However, it turned out to be some of the most commonly regarded disappointments about the iPhone (and trust me, there are not many disappointments, it's a sweet device).

The multiple SMS was a fix. Remember, they are going to Firmware 1.1.3, not 2.0. If they were going to 2.0 with a ton of new apps and features, then they would probably charge for it.

On the iPod touch, just like every other iPod, you get what you pay for. Once you see it, you like it, then you buy it. You don't expect new features to be added to it for free. The iPod touch wasn't designed to be an email client or a mapping companion. It was designed to play music. They only stuck Safari on it so that when you are on public WiFi, you can accept the web page that makes you agree to the terms. That way you can get on WiFi iTunes at places like starbucks and such.

Now they are saying, "Hey, if you want to add more functionality to your iPod touch and turn it more into a PDA type device, then for $20 you can do it". They included it in the new iPod touches because honestly, who would want to buy it without it. For all that matters, they could add $20 to the price and add them and people would still buy them.

I don't think GAAP has anything to do with it.

As for the AppleTV, Steve basically in laments-terms said "the first one was a failure, so we are going to recall them all and replace them with a new one."

You don't see Tivo, or MovieBeam, or any of those other guys recalling their devices or offering a new device in it's place. Apple just did something that really hasn't been done before and it won't cost them really any money to do, but the customer service side is going to be spectacular.

I think they way it was handled was perfect. Good job Apple.

Jan 16, 08 - 12:02 pm Comment from: Glossy causes CVS

$20 for an iPod touch software upgrade?

And the flogging will continue until the moral improves.

"If I were running Apple, I would milk the Macintosh for all it's worth -- and get busy (milking?) on the next great thing... - Steve Jobs

Jan 16, 08 - 12:05 pm Comment from: simmux

Just ignore the updates. Or else buy them if they are worth 20 $.
It's that simple.

Jan 16, 08 - 12:07 pm Comment from: ChrissyOne

Here's the solution:

1. Google "Sarbanes-Oxley".
2. Shut up.

Jan 16, 08 - 12:09 pm Comment from: stormy

Remember the fiasco with the price reduction on the iPhone? Enough users complained and were rewarded!

If enough of you complain and loudly enough SJ will probably give you a credit of $10-20 to use on future purchases at apple.com.

Jan 16, 08 - 12:12 pm Comment from: @ complainers

Buying software for a computing device is a no brainer. If you want the enhanced functionality that the software gives you, buy it. If you don't, don't buy it.

If you want the software but you don't want to pay for it, steal it. But remember, if you do the crime .....

If you can't live with this rationality, STFU.

Jan 16, 08 - 12:14 pm Comment from: dude

$20 too much for a software upgrade that people will use day by day, but $20 for a lap dance that lasts 3 minutes is A-OK.

Jan 16, 08 - 12:15 pm Comment from: macman

iPhone users are being charged for each upgrade. It's build into the AT&T;subscription.

I don't agree with forcing iPod touch users to pay $20 for upgrades though.

Jan 16, 08 - 12:16 pm Comment from: Rutger

Funny thing is, as of yesterday, the iPod touch is 20 euros cheaper here in Holland. So the difference is now about 38 euros. That's too much to justify for what are basically 3 iphone apps and 2 dashboard widgets. They're all useful, but come on!

Why not throw early adapters a bone here and make the upgrade a symbolic 0.99 or 1.99

Jan 16, 08 - 12:16 pm Comment from: eWorldian

The Mail & Maps apps alone are worth $20 to me.
I did try to update my iPod Touch, but through some "glitch" yesterday, Apple ended up double-billing me for $42.18 and the update never downloaded.
I contacted Apple by email and by phone yesterday. I was told it would be taken care of today, but so far I haven't heard anything back from them.
Trying to be patient, but starting to get a little frustrated.

Jan 16, 08 - 12:19 pm Comment from: Deal

1. The Touches should continue to be sold with the apps they originally were shipped with.

2. Apple should have released these 5 apps as an "Expansion Pack" or "Plus Pack" or whatever so it appears to be more equitable across the board.

Jan 16, 08 - 12:21 pm Comment from: Kazman

I downloaded the software package yesterday, and felt like I got a new iPod! Having the mail program alone was worth the $20, just Google Maps is worth the $20! Add the stock tracker and weather info, and that's just more frosting on the cake!

Jan 16, 08 - 12:23 pm Comment from: Macromancer

I look at it this way. iPod Touch users have a choice to pugrade their device, if they want, to add features that us iPhone users already paid for.

Jan 16, 08 - 12:28 pm Comment from: Whatever

iPhone users didn't get their upgrade for "free" by a long shot, especially those that paid $599 for one last June only to see it drop to $399 a mere 60 days later.

We pay AT&T;$60+ per month every month to simply use our iPhones, while no iPod touch user ever has to pay a dime after the original purchase to use their product. So I'm not exactly sympathetic to the whiners out there over this trivial $19.99 fee for a major upgrade.

Jan 16, 08 - 12:29 pm Comment from: Macromancer

"I don't agree with forcing iPod touch users to pay $20 for upgrades though"

Show me where people are being 'forced' to buy this. I'll wait.

Jan 16, 08 - 12:30 pm Comment from: Jay-Z

@ ChrissyOne

Well put.

Jan 16, 08 - 12:30 pm Comment from: jailbreakme

just jailbreak it you ninnies

Jan 16, 08 - 12:30 pm Comment from: spliceguys

Personally, I'm glad Apple even offered it.. Usually, if they come out with new features, you have to give up a perfectly good product to buy a whole new one just to get some extra features.. I'd much rather have the option to pay for new features than be locked out of having them at all. Sure, it's a bit pricey for the upgrade, especially knowing it was already developed, but I'm happy to have it.

Jan 16, 08 - 12:30 pm Comment from: G4Dualie

Could it be that those who are bitching the most are switchers who come from a world where everything was free, if you know what I mean?

Or those who don't even own a Touch and are just haters and would like to make everyone else feel just as miserable as they feel?

The next round of bitching will be when these same people begin whining that the battery in the Airbook can't be swapped out. Yup, that's right, and they will never own one...

Jan 16, 08 - 12:32 pm Comment from: The Dude

"Comment from: deepdish
good god, you pay over 40% of your income to taxes (state, fed, sales, property, fica, ect ect ect combined)

you don't complain about that."

You need to check out Ron Paul... abolish the IRS and income tax. After that we will all have more money in our pockets and hopefully some of the bitching will stop.

The Dude abides.

Jan 16, 08 - 12:34 pm Comment from: Leader

I think that the GAAP was exactly why they charged for it! I would suggest to you all that If you want Apple to keep it's nose clean put up the $20 and shut up or don't update to it! No body is forcing you to update your touch to keep it functional, just to add the new features you probably thought would never come to your touch.

Jan 16, 08 - 12:34 pm Comment from: spliceguys

They should have just made the new apps available for varying prices through iTunes.. a la carte.. Want Mail? $4.99.. weather widgets? $3.99. Just like software you buy for your mac, or Games you buy for the iPod.

Jan 16, 08 - 12:36 pm Comment from: Wallace the Man

Never buy the first of anything!

Jan 16, 08 - 12:36 pm Comment from: pirate

anyone know if the ipod update is available for pirating yet?

torrent anyone?

Jan 16, 08 - 12:38 pm Comment from: Not the Question

A better question is why is the screen resolution on the Touch inferior to the screen resolution on the phone?

Arrogant Steve's answer: if you want the good screen resolution, buy the phone.

That, my friends, is an outrage.

Jan 16, 08 - 12:38 pm Comment from: wings2sky

Got it. Paid $20
Worth every penny.
Love it.
Thank you.

Should it have been there in the first place or have been a free upgrade? Well, that would have been nice. But so is free beer.

Jan 16, 08 - 12:40 pm Comment from: ChrissyOne

@ Wallace the Man
"Never buy the first of anything!"

For once I agree. Even if I really like the MacBook Air, I'm going to wait for storage to go up and the cost to come down a bit on SSD drives. 128GB would be the sweet spot for me.

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