Somewhere along the way, Apple mentioned that iPhone sales are accounted for on a subscription basis. Apparently, their lawyers believe that they have to charge for new features if something is not sold on a subscription basis. Besides, Apple reportedly makes $18 per month per iPhone (that’s up to $72 million per month… not a bad little revenue stream!)
OK, so that explains why Apple continues and will continue to push out new features for the iPhone for free.
That’s also the rationale presented for the $20 upgrade charge for the new iPod touch software. In my opinion, the iPod touch should have been closer to parity with the iPhone from day one, so it’s nice to see them fill in the gaps. But, the $20 charge seems like a cash extraction ploy rather than something being done for legal/accounting reasons.
This seems especially true given the free update to the “Take 2” release of AppleTV. From the whole legal/accounting perspective (IANALOCPA), the only difference I can see between the iPod touch upgrade and the AppleTV upgrade is that the AppleTV upgrade can result in new, direct revenue based on movie rentals and music sales. Arguably, the new iPod touch software also can help lead to more revenue because it supports the rented movies.
From a business perspective, charging $20 to previously happy iPod touch owners seems like a way to bring in some cash. The AppleTV move is happening to bolster a product that is performing below expectations.
Personally, I don’t mind paying for software updates that bring new features and all that, but usually such updates come after a reasonable amount of time and bring features that go beyond what you would’ve expected from the product in the first place. I don’t think the iPod touch update warrants a $20 price tag.
Update: I must’ve been tired or something last night when I posted this. A quick Google search reveals many sites talking about how AppleTV is indeed accounted for on a subscription basis. CNet has some background about the accounting nonsense.
This would seem to have implications for anyone that creates software and provides a free update that includes new features. Something to keep an eye on.