“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.
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.]
With all respect I think you’re missing the point.
Programing costs money. Every software upgrade(excluding bug fixing) is paid for, either upfront, or in other revenue streams.
Apple TV is receiving a free upgrade so apple can make money through movie rentals.
Apple upgrades the iphone to add value to the phone and their relationship with their mobile partners. For this they receive monthly revenue from every phone bill.
Apple is adding value to the ipod touch and $20 is about right(in my humble opinion).
Also remember if Apple can’t charge for software how all these new developers going to make money programming for the iphone and ipod touch.
The 1.99 802.11n upgrade was not a upgrade. It was always there, and planned for in the sale cost of the computer, but could not be activated for standards issues.
@Homie
Upgrade of the Zune for free for what? Ahahaha You guys call that an upgrade? All they did was enable the hobbled device with a firmware update. Because the original coding was crap, they needed time to fix it. Ahahaha.. Listen iPod touch users got real HTM eMail, Google Maps with location enabled, directions. Its practically the entire US Nation Phone/Address directory in the palm of your hands. Notes, Stocks and awesome Weather status from anywhere you go. C’mon comparing that crappy Zune Update to the iPod Touch is like comparing your go cart to our Ferrari! You trolls are funny as hell.
To rickokid: Nice work on the blog.
Umm, maybe they have different screens because they are TWO DIFFERENT DEVICES?! Ever though about that? Wow…
Damn expensive bananas.
Not only do you have to pay if you want the upgrade but it also makes your screen glossier.
Thats Insanity, It’s a good update but it’s not worth $20. maybe $2.99 if Apple wanted to profit. But this should of been something free.
I paid the $20 and it was worth it. Apple is free to charge what they want for any product, including this upgrade. Nothing in GAAP or Sarbands-Oxley requires them to charge for any additional features that they add to a device during the initial warranty period and this would not prevent them from writing off the entire income at once. They could also bundle updates into the extended warranty if they wanted to. There is no magic to adding additional features. Lots of businesses have to make the economic decision whether to charge for upgrading their users to the latest version. That is purely a business decision. There is nothing, absolutely nothing, in GAAP or Sarbanes Oxley that compels a business to charge or not charge.
“Should of”?
I think you mean “should have” or the contraction, “should’ve”.
How do you know it’s not worth $20? Compared to what? Your empty wallet?
Petition for free upgrade !
http://www.PetitionOnline.com/freeappi/petition.html
Greatgodamighty, it is so painful reading the stupid comments made by people who simply refuse to listen to the explanation for the pricing differential.
The iPhone’s income has been spread out over 4 year’s for accounting purposes. So, for example, if Apple made $100 profit on the iPhone, instead of indicating a $100 profit in the year the iPhone was sold, Apple would take a $25 dollar profit in year 1 and a $25 dollar profit in years 2, 3 and 4. The only reason they use this convoluted form of accounting is so that Apple can provide free upgrades without having to restate earnings as required by the hideous new accounting laws.
Apple choose not to use this accounting procedure with the iTouch. So they have to – by law – either charge for upgrades or restate earnings each year.
I’m sorry that some people, like the author of the original article “aren’t buying this”. But ignoring reality does not make Apple wrong – it only makes you look foolish and uninformed.
Apple
I wouldn’t have been bothered if these 5 apps would be an extra for _any_ iPod touch. But the ones now in store (the same model like the one that I bought) come with the apps preinstalled, because they come with firmware 1.1.3.
Discrimination between early adopters and current buyers is what’s bothering me.
“Discrimination between early adopters and current buyers is what’s bothering me.”
So, start a classless action lawsuit. Better?
I made the purchase and was DOUBLE CHARGED.
If the itunes store can warn me if I am downloading a free song a second time, why could they not warn me that I was paying twice?
And there is no easy way to communicate to Big Apple that they have done me wrong and need to refund the second charge. There is a button to report a problem. Clicking that seems to get no attention.
not good
“I made the purchase and was DOUBLE CHARGED.”
Tell your credit card company. There’s a free 800 number. They will remove the second charge.
Apple is essentially introducing a new version of the iPod touch – it costs 20 bucks more. If you want to upgrade your existing one – you can.
Makes sense to me.
To all the people whinging: would you have preferred if Apple released an updated iPod touch with the new apps that obsoleted your current purchase?
I think people are confusing “update” with “upgrade”. Updates to existing software are, and should be, free. Upgrades introduce new functionality and often come with a cost. How often, if ever, has anyone got somethin’ for nothin’?
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RE: Randal via iPodDailyNews
Call Apple and let them know you were double-billed.
Here’s the number: 1-800-275-2273
You’re not the only one that this happened to.
This isn’t a major upgrade folks, it’s too little too late. I remember when i got my first ipod and breakout was an easter egg, the update that gave me that as an approved game was free, so was the ability to play gapless albums on later iPods.
Fact is, they had better software on the iPhone, that took time and effort to cripple to put on iPod touch, and iPod touch buyers like myself actually paid for the work that went into that… now we have to pay again if we want to have something undone that we didn’t even ask to have done yet paid for, so we pay twice to get once.
There’s no way in hell you can talk me out of my personal opinion that this is a pretty low move for a company like Apple, whatever their reasoning may be. but really who cares. put some effort into solving world hunger or something, all this bitching isn’t gonna help anyone and ya’ll know it!
What about us, the ones who are willing to pay the upgrade —happily or not— but don’t have access to the iTunes Store? This, believe me, is really outrageous. Why is this the absolutely best option to distribute the upgrade? Is Apple really thinking to own the distribution of the iPhone – iPod Touch Apps through its iTunes Store? That is so absurd. I am really, really pissed off.
Does iPod touch support Yahoo! push e-mail like the iPhone?
Complaining about prices! That’s all former PC users know how to do! Expect more of the same whining as more of them switch to Mac.
I guess it’s a good thing?!
Explain why apple is putting the new software on new iPod touches at no extra charge for them. We end up payin $420, the new buyers pat 400 and get the same
The fact of the matter is that they are punishing early adopters who already paid a permium to get a new device. In other words, they spat on some of their biggest fans.
I don’t care if it saved them a few thousand bucks in immediate benefits – it was a PR move that said “we don’t want to thank you for your loyalty, we want to gut you for it.” I agree that the software is probably worth the 20 bucks, and at first I was going to just click “upgrade now” right away but then I thought about it… I paid $400 for this thing. $400! I knew it was overpriced when I bought it. This is the same $400 that others are paying who get the software for free.
So go ahead and say i’m bitching, say i’m moaning, but it doesn’t change the fact that it was a dick move;)
Anyway, to say thank you right back, I now have no problem just installing cracked versions of the software. I’ll wait a few more weeks to see if the company changes it’s mind.
Oddly enough, 5 years ago when I visited apple’s HQ I remember being told how the company was proud that it could care about and listen to its customers. Sure I don’t expect them to be able to continue this now that they are 20x larger than they were at the time, but at the same time its interesting to see how the nerdy kid can become such a a jerk once he gets a little fame.
– Dan
don’t complain. if you don’t like it, don’t get them. I thought that I needed them. so I just bought that. now I am happy. $20 spending for software upgrade is not waste your money. if you feel not, go and grab burger King. then your belly will be happy too. but that’s all.