“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.]
This just proves that MS service packs are worthless.
For all of those who think the iPhone owners received its upgrades because they are paying monthly cell phone and data charges to AT&T;, you are wrong. The iPhone users are paying AT&T;, and the other foreign service providers, for services not upgrades.
When you bought your iPhone, you paid, in advance, for all future upgrades. Apple booked a portion of all iPhone sales as unearned revenue with the intent to earn that revenue in the future with upgrades to the product. They hold that revenue in a quasi liability account. As they earn that revenue by issuing upgrades to the hardware’s software, they can reduce that liability and increase actual revenues.
In this instance, when an iPhone user downloads the iPhone 1.1.3 upgrade, Apple will charge the SALE of the 1.1.3 upgrade against that unearned revenue account, the advance payment made when the iPhone was purchased… and increase earned revenues. iPhone users have ALREADY PAID for this and future upgrades.
iPod Touch owners bought their iPod outright… there are no unearned revenues associated with that sale. Under GAAP (Generally Accepted Accounting Principles), a company like Apple cannot GIVE away assets because that would be depriving their stockholders of value. The iPod Touch upgrade software is an asset with value… and to properly transfer it to the iPod Touch owners, it MUST be sold for an adequate return on Apple’s investment. If they merely give it away, stockholders would be justified in suing management for decreasing the value of the company. Ergo, it must be sold… and it must be sold for a profit.
Pay the $20 and be happy.
Remember that with the iPhone Apple has a monthly income flow to offset its costs. Not so with the Touch. In my mind the Touch is a great product. I have a contract with another company for my cell phone (better service and price than ATT in my case), but the Touch gives me what my cell phone can’t. It’s a great combo.
i literally just got the ipod touch the day before the upgrade was announced. at the very least it should give people who bought the device within say 1 week a free upgrade.
power of monopoly.
You bought your touch ONE day before the keynote? Well, live & learn my friend……You’ll know better next year,,,,,lol
The fact is that Apple has betrayed customers once more, and for some perhaps for the last time. They are in the process of trying to bring iPod Touch customers back to their palm and away from jailbreaks before they release the SDK in February and third party apps run rampant. However, by charging for apps that jailbroken iPods can get for free Apple is providing no incentive to return. Everyone in the iPod Touch community has been excited about the SDK release for some time, but with this blow from Apple, there is a chance that most users could continue to turn to Installer (through the jailbreak) for their applications and leave Apple out of the mix entirely. Smart move Jobs!
GAAP or whatever, learn the way of Apple. This is not just moaning or bitchin… This is about how apple sees its customers as long term milking cows! If MS should also obey the rules of GAAP, but for some reason they release all their updates for free… Whatever the software you can count, not to mention that they are software company and hence they should charge every bit of updates…
This is one of the reasons apple will stay under shadows, and continue to convince people they reinvent something… All they did is a user interface, which SJ already said in one program on tv. They didnt invent anything but just ease of use UIs… and huge amount of marketing…
Lets get back to the issue of charging as little as $20 for update… If GAAP is an excuse, how do you explain $20 asset, with new devices you get it for free for the same device u bought today, $20 liability? In my opinion nothing to do with GAAP or anything, it is plain BS that apple is using as an excuse and continue to milk people… Something that is invented already 1 year ago, can not have value! it can only have profit! these apps are already programmed a year or so ago, they are just ported?? (in my opinion just copy and paste to ipod and hey new invention) to something that is already proved working… (google jailbreak hackint0sh) u will get them already free… if you feel obliged to pay apple, no one can stop u fanboys, if u believe the bullshit of asset or whatever, you already gave them 300% asset when you purchased the device! so wtf is $20 asset BS? oh yeah it is apple M$ is evil, apple is good, pay all money you have to them…
Here’s the problem.
I purchased the touch after hearing about all the wonderful updates and new apps Apple implied they would come out with.
Nobody, not a soul, even hinted that these updates would cost anything.
And to add insult to injury, Apple is not charging a dime for anyone buying the touch from here on.
That’s crap.
As a consumer, I’m entitled to let large corporations know when I feel I’ve been wronged.
In the past, I’ve done this through emails and phone calls to said companies.
However, since the instant obsolescence of HdDVD, the change in memory configuration on MacBooks from last September, and now this touch upgrade, I’m done purchasing new.
From here on out, I go to Craig’s list and Ebay for my tech needs.
I feel slighted. I feel like I’ve been duped. I keep backing the wrong horse.
That’s just how I feel (and apparently tens of thousands of others…).
Call it complaining, call it bitching, call it whining.
What do I care?
I’m pissed.
hey angryshortguy, i am sure you are not alone being angry… apple has not done this for the first time, and there are enough damn fanboys of apple to tell u how apple should charge u… hey fanboys, u might be damn rich and might have tons of money to give to apple, why dont u just donate all your money to apple? saying things like maps is worth $20, mail worths more… just show how much blind apple fanboys are… maps is google, and all they do is UI to use it, mail is also an interface if u are luck ur mail provider has support for it, not that apple invented anytg, just UI to access it… u can do this already from safari for free anytime… stocks? is also another scam to add to… notes? a basic text editor with nice background… if u still think u should pay for it,dont wait just pay/donate to SJ or wait for the jailbreak
” width=”19″ height=”19″ alt=”smile” style=”border:0;” /> fanboys are just blind lovers… what u pay for may be uniqe design doesnt mean u should support it all the way while it is being priced over 300% of its original…also u should expect some respect if u pay 300% profit to apple, and get damn apps free… u should not be a victim for waiting 1 day to buy something.
“…also making users who want these apps but iTunes store is not available in their country angry. no way to get the upgrade without itunes store.”
Yes. Not to be able to get the upgrade is worst. The upgrade should be on Apple Online Stores…
Exactly: outside of the iTMS universe it gets worse. Angry? You bet we are angry…
And certainly using the Online Stores would help, but not much. There are five or six countries where Apple has an Online Store but not an iTMS (mine included). Even if that could resolve my personal issue, what about those customers in countries without iTMS or Online Store? That is why we are angry with Apple.
This is the new mentality … Why should I pay for anything …
I’ve got friends at work making 60 thousand a year who have downloaded whole libraries of recording companies and haven’t paid for an operating system or application their whole lives …
They scam it off the internet ..
They’ll be the ones crying when they lose their jobs because their employer can find someone in China to do what they do for next to nothing …. What goes around comes around …
Happy freeloading you scum!
@ Nick d
ACTUALLY.
The current iPod models in Apple Retail Stores without the newest update have been marked down $20 to compensate for the upgrade. When the iPods with the new apps come in, they will be $299 and $399.
Stop complaining. Check your receipt, if you are still within your return period you can contact a retail store and get a price adjustment.
@eric : it is not the mentality, it s a fact and you probably will not understand anyway as you are a deep fanboy no need to argue…
@anon: that proves the theory of nothing to do with GAAP or anything… it is a pure fact that apple is trying to milk the original owners who bought the device. Never seen in my life that you buy a pda and updates that should be there is not there and being offered as an pay-if-you-want-to-update way… i think it has been always the same mentality with apple and its fanboys. and fanboys so used to it that they even insist they should be charged for something they should get for free. It would be well understood if apple said ok u have updates but we also have extension pack or plus pack that you can have, well-stated! however gaap or whatever bs reasoning is not an excuse… it s just stupid. bcoz if it was an asset really new ipods should have it as and extension pack like people who dont have it ,well, or people who paid 299 for their device should get a $20 rebate (like they re reducing the price for old models in stock) or apple credit so that they can be compansated as well…
i know u fanboys will argue still, for any reason, until world becomes flat again for you guys as the early days of apple…
Come on! It’s 20 bucks for 5 apps, 2 of which are a pretty big deal (maps and email). It differentiated the touch from the iPhone, and now customers have more choice.
The whinger who wrote this article would be happy if they had not altered the iPod touch offering.
And it’s not strictly an “upgrade” since these apps existed on the iPhone when the touch was initially offered. It is just a software package, sort of like Office or iWork that you can buy if you want it. And for a damn good price.
Apple is stepping up and saying no to intentionally crippling a product.
Plus some of these updates make a bit more sense with iPhone’s edge network capabilities. But if you want to use them on WiFi get the upgrade.
“Never buy the first of anything!”
Yeah – sit around for half a year waiting to save 20 bucks. Then you can retire! That’s the attitude.
If you want to be cheap and play it ultra safe, go get a walkman (just not a new model) and save hundreds of $$.
sparrow, it s not about the money really, it s little already, but little or big the excuse apple giving is unforgiveable, and the way it treats its customers is unacceptable.
i dont udnerstand why people dont see the future, if u dont resist being milked for these kind of little things u will be always milked. remember price cut for iphone? 1/3 off of the price just after 2 months? if it doesnt tickle your ears. nothing will…. you can argue that apple is in its all rights to do whatever they want, true cant argue that, but doesnt mean i cant resist either…
it is a software package yeah, but if you are going to do it the right way, do it same for everyone, not just milk the early adapters who helped them gain their revenues… it is becoming more obvious with apple and getting more agressive milking with every new product coming… i hope they dont forget where they were before? because people are waking up now and see the real face of apple… bullshitting pc in your advertising is ok but howabout bullshitting your customers? think about it?
you are right with first adapters
” width=”19″ height=”19″ alt=”smile” style=”border:0;” /> though it s even more right than right for apple rock solid proven!
My Jailbroken iTouch can do even more of this stuff. I’ll stick with it.
Sparrow, Sparrow, Sparrow…
I don’t understand the “sit around for half a year waiting to save 20 bucks” comment. Are you saying that I’d only save the $20 on the update if I’d waited to purchase it used?
You seriously think people are getting full price on a used Touch?
That wasn’t even the reason I’m purchasing used.
It’s my way of feel better that I didn’t add to the coffers of these corporations.
Sony, Apple, Warner Bros, Toshiba, the list goes on.
Plus it forces me to actually have patience before making a large purchase on something I’ll regret not waiting for.
It was wrong for Apple to charge early adopters $20 for this upgrade while including it on newly purchased models.
I don’t have a problem with dropping the price on a product, especially a technology product. But this was an opportunity for Apple to really look good in the eyes of it’s customers.
It failed miserably and now has to deal with the backlash.
It was their choice. Now, as a consumer, I’m making choices based on their decision.
It’s how things work in a free society.
@Swordmaker
Apple gets some portion of every monthly payment to att. They wouldn’t dare charge iPhone customers more for for anything. Touch customers… well, you pay more to get more. On your computer you pay for new software programs, don’t you? Seriously, people, come on. It’s software. These programs are neither required nor necessary. If you want these new programs, buy them! If you don’t want these new software programs, then don’t buy them and be happy with what you’ve got!
For those of you who are outraged over Apples greedy slap in the face to its early adopters of first generation products, and there are many of you, let them know. This is is about principle. It is outrageous that those who purchased early have to pay for something that others will get for free from now on. We’re not talking about a new piece of hardware – we’re talking about a download that should be free for anyone who owns an iPod touch.
You can leave Apple direct feedback here:
http://www.apple.com/feedback/ipodtouch.html
You can also sign this petition:
http://www.thepetitionsite.com/1/ipod-touch-update-fee
If enough people make noise they might just go into damage control mode and do the right thing. Let others know…post the links everywhere you can think to.
@fanboys: can u guys please shut up and try to see the big picture, u guys are becoming apple’s number one whores…. u suck apple “sj”‘s |)ick and pay for sucking his |)ick… u guys are hilarious… all u do is accept everything apple hands out with blindfolded… u guys are really happy sucking… u guys are happy sucking big or small no matter the size is, but hey dont expect everyone is like u… because u like to suck, doesnt mean we have to suck as well… period…