Nearly all iPhone users have iPhone 3.0, but only half of iPod touch users have upgraded

Holiday Apple Blowout IV“According to numbers compiled by online advertiser Chitika, only 55 percent of iPod touch users have paid the fee to upgrade their devices to OS 3.0 or higher. Nearly 95 percent of iPhone users have made the free upgrade,” Brian Garner reports for AppleInsider. “These numbers were based on the sampling of traffic across the Chitika advertising network.

“Apple released iPhone Software 3.0 in June, adding MMS, cut/copy/paste, landscape keyboard, and Spotlight Search among others. To upgrade the iPod touch’s OS, one must pay $5 to $10, depending on the time at which they purchased the device,” Garner reports.

Full article here.

MacDailyNews Take: Those 5% of iPhone users who haven’t upgraded are either app developers who need to test their apps for iPod touch users or they own a Gateway.

If you install the iPhone 3.1 Software Update for iPod touch, you’ll get every previous update, including the following features:

• App Store
• Genius
• Contacts search
• Mail improvements
• Podcast downloading from the iTunes Store
• Parental Controls
• Shake to Shuffle
• Safari improvements
• Home screen shortcut
• New languages
• Autocorrect on/off
• Landscape Keyboard
• Multicalendar capability

How to install:
1. Make sure you are using the latest version of iTunes and connect your iPod touch to your computer.
2. When iTunes opens, select your iPod touche under Devices in the Source List on the left.
3. In the Summary pane, click Check for Update.
4. Click Download and Install (US$4.95). Do not disconnect your iPod touch until the update has finished.

[Thanks to MacDailyNews Reader “James W.” for the heads up.]

37 Comments

  1. The way I understand it, it is GAAP, and not SOX, that is causing the charges. It has to do with revenue recognition and how (if software is a major portion of the VALUE of the device) they can recognize full rev from the device upon the sale. If they still have part of the device to deliver later, i.e., updates, then you can’t fully recognize the initial sale revenue immediately. So they charge for an update and recognize that as additional revenue then. It’s a nominal charge, but it has to be SOMEWHAT meaningful, otherwise they’ll get scrutinized for not really following GAAP guidelines.

  2. @lordRobin,
    I’ve looked at the first few of those google results, and they’re incorrect in the way they frame things. Sarbanes-Oxley is about governance, control and risk management. It makes sure that the corporate environment is well controlled so that financial reports are fairly stated. It makes sure that corporations are following a framework of control (usually COSO) to ensure that they follow rules or guidelines (usually GAAP), thereby giving the public markets a fair level of assurance that the financials are accurate.

    Again, this is GAAP, but SOX scrutiny is making sure they follow the rules – it does not define the accounting rule.

  3. @Phytonix
    If they charged too little (free – $0.99 as you suggest), then they would be hit for skirting the spirit of the accounting rule. It has to be somewhat reflective of the value of the (updated service/functionality of the) device.

    They recognize (at least until recently, I believe) the iPhone revenue over 24 months.

  4. Here is my gripe… I bought two ipod touches just after the upgrade to 3.0 was released. the ipods came with 2.0 and there was the $10 charge to update to 3.0 for both ipod touches. I contacted apple regarding the fact that I bought both after the release of the software and that the hardware came with the old software. I was told there was nothing that Apple can do, they must charge for the update for each ipod.

    Personally, I think this stinks. There is no way that a new purchaser should have to pay to upgrade their operating system like this. This is totally unfair and one reason to not upgrade via Apple.

    Again, regardless of accounting rules, this strikes me as very unfair and there was nothing apple would do (even after escalating the case to a supervisor). Maybe I should have emailed Steve Jobs…

  5. @chs227
    totally agree with that. I bought one for my daughter after 3.0 was released also. It still had 2.x installed and Apple wanted the upgrade charge. That does suck and I do think that was a business decision – especially since I bought it directly from Apple and they can’t claim that it was already sold in the “channel”.

    OTOH, there’s no compelling reason for her to have the update, since she won’t use most of the features – she just turned 3 years old!

    And yes, she fully knows how to use it for Movies and YouTube…

  6. How to upgrade your iTouch for free:

    Connect your iPod touch to a Mac that has had the v3 software downloaded for another iPod or iPhone. Let it reformat your device, it also updates the software. Place it back in your original Mac and sync. You have the new software and your files back on.

  7. Sounds like a lot of iPod touch users are SMART enough NOT to upgrade to 3.0 or higher and not get confused by removed functionality and weaker WiFi signals. Is copy/paste really worth this inconvinience AND the $ 10?

  8. “OTOH, there’s no compelling reason for her to have the update, since she won’t use most of the features – she just turned 3 years old!”

    Why would you buy a glass-coated iPod Touch for a three-year-old child?

    There are much better (and cheaper) educational toys for you to spend money on, and much better methods to educate her, I.M.O.

  9. @ @b,
    you’ve got a point, but it was one of those free offers when I bought a mac, so why not? We have no other real use for it, since the rest of us have iPhones. She actually uses it to watch Chitty Chitty Bang Bang or Mary Poppins on long car trips…

    @ HolyMackerel
    How does that work? if you Restore it, it downloads 2.2.1. How do you “let it reformat your device”?

  10. @ HolyMackerel. Great info but I figure most people are that incensed that they ignore your words of wisdom. Oh well, if they do it’s their loss. @ b. Err, do I read right? You have a 3 year old daughter who has a touch and you allow her to log on to YouTube. All I’ll say is there’s some serious shit shown on YouTube that I wouldn’t want my 3year old seeing.

  11. Cubert wrote,

    “iStepChild,
    Because of the Sarbanes-Oxley statute, Apple is forced to charge iPod touch owners due to accounting regulations.”

    I’ll say again, there is a big difference between (1) what governs the price point, if any, for iPod touch software updates, and (2) when and how much of that price point is credited to the income statement (i.e., revenue recognition). (1) is governed by Apple business decisions made by management, (2) is governed by GAAP and to some extent, indirectly by SOX.

    I’m not making a personal attack, I just believe that Cubert’s statement above is incorrect. I would then ask Cubert to site his/her source (site what section of SOX forces Apple to charge iPod touch owners). If Cubert means that Apple is forced to recognize revenue a certain way for iPod touch update sales (which I would then agree with that statement), well that’s a completely different matter than Apple charging for iPod touch updates to customers in the first place. If in Apple’s wisdom, management wanted to charge nothing to iPod touch users for upgrades (just like they decided to provide free updates to iPhone users), then revenue recognition would not apply here.

  12. Macduff, great point. To be clearer, she uses it via the “history” or the bookmarks we’ve set up. I realize she could go into other areas, but she’s really not unsupervised, being only three.

  13. This report seems not take into account the number sold after the release of 3.0
    The number of iPod touch sold continue to increase and thus the number of iPod touch users which have upgraded to 3.0 from an earlier os version is probably much higher.
    If the last 6 month account for 25-30% of all iPod touch sold only one quarter instead of 55% of iPod touch users have upgraded.

  14. @iStepchild
    Yea, I was pretty pissed when I bought an iPod Touch for my kids a couple of months AFTER 2.0 came out and I had to pay extra for the 2.0 upgrade.

    The people at the app store (not Geniuses) told me that the Touch was never meant to be an app device, just an iPod with a touch screen and that the Touch would never come installed with OS 2.0!

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