The $20 iPod touch upgrade: really for legal reasons or no?
By Nilay Patel 
posted Jan 21st 2008 2:40PM
posted Jan 21st 2008 2:40PM
So the rising discontent with Apple's new habit of selective feature enabling got us thinking -- while we're not experts on the subject, the generally accepted reasoning for the $20 iPod touch upgrade fee is the accounting requirements of the Sarbanes-Oxley Act: iPhone and Apple TV updates are free since revenue from those products is realized as a subscription over a period of time, but iPod touch updates can't be free since Apple just records that revenue directly. That certainly makes sense to us when applied to things like the 802.11n Enabler, which was trivially cheap and turned on unadvertised hardware features, but it strikes us as being a pretty big stretch when applied to a $20 package of new software applications. iPod name or no, the iPod touch is essentially a little computer, and the whole purpose of software is to enable "significant unadvertised new features" on a computer. For Apple (or anyone) to say that a mail app is a "significant new feature" for a computer is pushing the line just a bit far, and it makes us wonder how the company accounts for new versions of iTunes, QuickTime, and Safari, each of which add new features to already-sold Macs -- and how things are going to play out when the iPhone / iPod touch SDK is released next month. We've got a call into Apple to get to the bottom of it all, we'll let you know what (if anything) we find out.Disclaimer: Although this post was written by an attorney, it is not meant as legal advice or analysis and should not be taken as such.
Good point. We'll wait for Apple to respond to Engadget's question then, because otherwise they'd be in deep shit. Apple usually takes their time with replies =(
A couple of comments:
1) All of my iPods have a notepad. The fact that the Touch doesn't have a notepad was a complete surprise to me, and deserves to be remedied for free. The lack of the notepad is the ONLY reason I would need the upgrade, because I have no plans to use the email and the maps feature probably won't even work in my area anyways!
If I pay my $20 and the maps feature doesn't work, do I get a refund? What is Apple's return policy anyways?
2) If it was just an accounting thing, that Apple doesn't want to have to implement, then there would have been no reason they couldn't have charged 99 cents for the upgrade. Why $20?
3) If they are attributing it to "revenue over time" and comparing it to the Apple TV, then their argument is baseless. The AppleTV is not based on a subscription model any more than the Touch is. I can "optionally" order content on either of those devices, and neither of them requires that I pay Apple a dime after I buy the machine.
Oh, and one more point:
4) Apple didn't have to put much effort into developing these features for the iPod Touch. They were already developed for the iPhone.
If charging for update was to make money than it might be a loss making decision. iPod Touch was released near September, 2007 so who ever bought it in 4 months till December are required to pay for the update.
Most of the people would not care about update, even many iPhone users might not update phone at all even though it is free. Few people would buy and most people left who wants to buy would just wait that might be in February they come up with SDK and another software update and again charge.
I can go to individual email websites like GMail, Yahoo etc. and check email. But then I have 2-3 accounts on GMail, so you have to logout and login etc. Only for email application, so that all emails are at one place and updates automatically I went to buy update, but somehow it gave error that problem in iTunes with some error code and to try after some time.
So now I would wait till SDK release to see if any new update is coming or not. If not than I might buy update just for ease of use.
Now 8 GB model old model is available for $42.00 less than list price on Amazon.com. So all dealers/retailers has to get rid of old models for a discount. So instead of making $20/- iPod eco-system is losing $20/-.
Also now retailers has to promote two iPods. One with update and one without update. Any new users would not buy old model unless it has more than $20/- difference.
For Apple, they might have insider trading to get rid of all old models from factory store etc. and sell to dealers before announcement and then sell new models from website. Or they might be opening old models stock and updating firmware and then selling as new models. But due to this they are causing more concerns for retailers who are selling the product.
There are four main consumers of 'iPod touch-screen' updates - iPhone owner, iPhone new owner, iPod Touch owner, iPod Touch new owner.
To be 'fairer' (though still not), Apple should instead charge $5 for each of the above four customers equally.
Still, it is not right for Apple to charge this. When it comes to technology & technical stuff, this kind of definition becomes fuzzy.
But in principle, everyone knows, new significant upgrade comes every few years like XP to Vista, Tiger to Leopard, iLife 06 to iLife 08.
This is not a new leap of software upgrade. It is only a firmware.
Additional unrelated comments :)
#Steve Job, you ain't doing a good job! You're doing STIFF JOBS!
What's the big deal with iPod Touch? As the old ones, one still need to touch them to keep going. :)
Why did you ditch the camera connector compatibility with new iPod models?
I bought an ipod touch yesterday (1/31/08) at the Rockaway Apple Store and was charged the full 399 despite it coming with the outdated software so apparently Apple is not being as progressive about this as Amazon is. I have an email into them asking for the free upgrade, if they don't come through I'll return it and buy one from Amazon.
I for one have no real need for these new apps, however mail would be a nice rarely used feature for me to have.
My beef is that Apple Inc installs these apps on the ipod touch and the user cannot use them unless they pay the $20USD to activate these features. I do not want the precious little space I have hogged up with stuff I cannot use.
I am outraged that Apple is charging early buyers of the iPod Touch $20 for a system update that ought to be free.
While I understand Apple's decision to charge money for the new applications the new $20 "application pack" also includes a SYSTEM UPDATE in the form of the home page editing, web clips, and lyrics features. All of these are updates to the currently existing iPod Touch software and NOT new applications, which means that they ought to be free to all users of the iPod Touch.
Adding insult to injury these applications are all hidden in the 1.1.3 system update, a whopping 104.4mb file that all users must download if they want to fix bugs in the system. These applications can only be used when you pay Apple $20 to "unlock" them, but even if you decide not to buy them they stay on your iPod taking up precious space that could be used for songs, videos, or photos.
Apple is normally wonderful when it comes to providing system support and updates, but having them shaft early adopters and loyal fans like this is offensive and shows that Apple has absolutely no regard for the iPod Touch community.
You can leave Apple direct feedback here:
http://www.apple.com/feedback/ipodtouch.html
You can also sign this petition:
http://www.petitiononline.com/freeappi/petition.html
No A2DP Bluetooth no iphone no touch
I look forward to what they say.
I highly doubt it's for legal reasons. If they're right, then many companies (Sony's PSP) which offer major software upgrades are all in trouble with the government!
But are the updates being offered by Sony America or Sony Japan? And does that matter?
any revenues that flow through Sony America would be affected by SOx. From this interpretation, Sony doesn't regard the new features as increased value of underlying product, and thus doesn't book them as revenue / profit.
(In summary: Apple are being arseholes.)
Regardless of the reason they are charging for this, they really should offer some sort of explanation why current iPod touch owners need to pay $20 for the additional apps and why new purchasers get them for free. I understand the technical reasons why, but not the logical reasons.
@Cameron Campbell
What about Microsoft and the Xbox 360/Zune then? How about every single PDA/cellphone manufacturer ever?
If this $20 is due to accounting, Apple must have some pretty dumb accountants.
"...[Apple] really should offer some sort of explanation why current iPod touch owners need to pay $20 for the additional apps and why new purchasers get them for free."
And tomorrow, they must explain why new Mac purchasers get iLife '08 and Leopard for free, when if I bought a Mac a year ago I'm stuck with '06 and Tiger.
Software costs money to develop. The return on that investment is realised through selling the software, or selling devices containing the software. You paid $300 for a device with a particular set of features, why should you expect it to magically have more features tomorrow?
In some rare cases it makes good economic sense to provide free upgrades: for example you already receive ongoing revenue from the device (iPhone), or you want as many people as possible to have access to the new features so you can make money on other services (Apple TV), or you're into releasing updates often enough that your market won't bear that frequent an upgrade charge (many small ISVs).
@Charles Miller
Here's the gig, Charles. Should I expect new software for free? No. Should Apple release this software for free? Absolutely. While this may sound like a contradiction the thing is that this announcement has only generated bad press for the company because a) new users get the software, b) other companies don't seem to charge for minor updates like this, c) the iPhone and Apple TV get updates for free, and d) Apple invested money to remove this software in the first place to differentiate that iPhone from the Touch. This is an unbelievably dumb move and, from a PR perspective, Apple would have done better to have done nothing.
I don't own a Touch but I would be pissed off with Apple if I did and that's never good. Again, it seems as though the early adopters don't get any love while other companies give this stuff away for free (what price is there on good will and loyalty these days?) despite having paid money for what we all accept is a premium device.
More to the point (as far as I'm concerned) if this is to do with US legislation, why should I, sat here in the UK, have to pay £12.99 for the additional software? As far as I am aware (caution - not in any way an attorney,) there is no significant legislation on this side of the pond to require this.
Another question: If I'm buying the iPod touch upgrade through the Canadian iTunes Store, am I not paying money to Apple Canada? If so, does Sarbanes-Oxley Act apply?
Yeah it applies, since Apple Canda is part of Apple Inc. which is based in the US, for accounting purposes, all the transactions need to comply with US accounting regulations.
Thank you BS
ridiculous. they're charging it because people (idiots) will pay for it.
Apple do get away with plenty of feature penalties, it makes you wonder why.
No removable battery from new Macbook, 1 USB port, no DVD drive, $20 software upgrade for something that should have been there in the first place, no MMS/copy & paste/video recording/native apps in Iphone etc. etc.
If other companies adopt the same policies you will be sure that there would be far more complaints, but I find people here more willing to being screwed. But I guess they can afford it seeing that many seems to upgrade their Macbook/Ipod every few months...
Jon, all your nit picking just proves that you hold Apple to a higher level than other PC companies.
Other companies do the same thing Apple does and worse. No device is without its frustrations - I have to say that Apple devices get more things right than most, which is why they are so popular.
The MacBook Air battery can be removed by taking off a few screws, it was designed with an internal battery so that they could get it that slim. Really not a big deal. I rather have the 5hr battery tucked into the Mac Air than having a huge extended life battery pack sticking out like on ultra-portable PCs.
copy and paste is probably coming to the iPhone, remember this is Apples first cell phone ever and it has only been out for 6 months!! I would say this has been a pretty remarkable launch of a new hardware and software. How long has Windows Mobile been around and there are still frustrated users?
The $20 upgrade is probably for a reason, (Skyhook triangulation service in Google maps?) Even if its just for the upgrade thats a pretty good package for $20 - not to mention you dont have to buy it if you dont need it.
No I don't. If a company do screw up I will complain. I just notice many Apple fans attempt to justify some of the very same design constraint that Apple applies to their products.
All companies create constraints on their products - when Apple does it its usually because of some outside force and they get blasted for it in public because people dont understand the full situation.
The Music and Film industry has put massive pressure on Apple to include DRM, the TV-out authentication chip on new iPods with video out, Apple TV not able to sync rented movies back to your PC etc.
With the MacBook Air I think the battery is a non-issue - they made it easy to replace and its already a long lasting 5hr battery.
This whole iTouch thing is bogus too - Apple is clearly giving a lot on functionality to the Touch for just $20. Just because this software was available to the iPhone doesnt mean that it was free - Apple has to pay its software engineers, google for google maps and Skyhook for the triangulation service. If you stop to think of all the work and polish that has gone into getting the iPhone and Touch to market that $20 doesn't seem like such a bad deal.
@Jon
http://www.engadget.com/2008/01/21/toshiba-adds-3g-to-the-featherweight-portege-r500/
I'm sure you've read it but frankly I see nearly nobody complaining about the lack of the optical drive in the upper end model. Why it costs 3k and 3.6k respectively.
There is obviously more people out to snipe Apple then they would admit.
That's right, we'll pay, just like people pay for the rising cost of milk, transit fare, gasoline, fuel oil, etc. In a month the $20 will be forgotten due to a crapload of other price gouging. You probably think everyone's a fool for paying taxes, too. It's $20, dude. A few hot dogs at a major league baseball park cost that much. I suppose you hide franks in your pant's pocket and snicker at the people that buy them at the park. Cheapo tool.
The Dell m1330 owns the Apple Air in just about every aspect. If you want a featureless, overpriced notebook that is very thin, then the Air is for you.
way to exercise your critical thinking skills. how the hell do you compare an ADDITIONAL cost to something to the RISING cost of something?
it's more like having bought a quart of milk, and then having to pay for the carton, while everyone that buys the milk today already gets their carton for free.
Thanks Engadget, I completely agree with the whole post. I'll wait for Apple's answer.
I'm on the other side of the fence. This interpretation is absolutely wrong. SOX was created in the wake of Enron & MCI to ensure the accuracy of financial statements (ex. that data flows through from the point of sale to billing to financial systems). SOX doesn't care what you charge for or not. All SOX cares about is if Apples charges for it, that every penny of that $20 makes it to Apple's financial statements.
Hmm... Microsoft didn't charge me anything to upgrade my Zune 30GB to the newest firmware/features to make it equivalent to their latest Zune players. I just don't see the legal *or* marketing logic here from Apple's point of view.
p.s. I own both an iPhone and MacBook, so don't bash me as a hater ;p
Does Microsoft realize income of the Zune on a subscription basis like the iPhone? That would account for it.
@Whiners, No, well, not necessarily. I believe that Microsoft does offer some sort of a subscription music service, but it is not required. Really you could use the same justification for the touch in that you can buy songs from iTunes and play them on the touch.
What? I'm talking about deferred revenue reporting, on a subscription basis, like Apple is doing with AppleTV and iPhone. Thats what the whole issue is about. Its not about "subscribing" to music. Its about how they report income. If Microsoft is accounting for Zune sales on a deferred revenue basis (over 18-24 months) then they could add features without having to account for them separately.
This is utter crap. One can write the value of this off as the intangible value of persisting the user expectation that Apple has capitalized on.
Users expect new features, so they buy a feature-limited iPod knowing that they will receive additional capabilities in the future.
Apple should be forced to kiss that sales technique goodbye, but I'm sure that the Apple faithful will still eat it up.
Are you saying that since I bought my iPod Photo, knowing that a video version was likely in the works, that I should receive a firmware update to my iPod to play movies?
As far as I know, iPhones did what you wanted your iPod touch to do. You are crying that these features should be free, yet you saved yourself $100 and a cell subscription. Why are you complaining of spending $20 to have your iPod become more like the iPhone...? Sell your iPod touch and buy an iPhone.
You don't 'save' yourself a subscription...You don't pay the subscription, so you dont get features like EDGE or SMS or calls. It costs apple nothing (in the grand scheme of things) to port the iPhone apps to the iPod, because its the same hardware and software platform, so that $20 is pretty much all profit. If it had just been $10 it wouldn't have been so bad. And the apps are being included on all new touches now, for the same price as previous touches. So that goes to show that apple doesn't really need your $20.
Look at it this way, all us none ipod touch owners can now go score one at Amazon.com for only $358 since the $20 price cut and already $20 Amazon price cut. This is the best thing that has happened to those of us in rural America that don't have WiFi access in a long time. I have mail and google maps streaming into my BB all the time via Verizon so why would I want it on my iPod.
Thanks Apple!
Apple did that - they dropped the price of all current stock which doesn't have the new firmware so new buyers could go home and buy the update for the same price as a new one that does have new firmware.
@ Karan
And you made that up.
@ Kazorblade,
No, Steve Jobs announced that in his keynote. All current Touches will be dropped $20 to make them equivalent to the ones with newer software when you buy the update.
Actually I didn't make it up, check out the $358.99 price tag at Amazon, well worth getting the 16gb touch now if someone isn't interested in the newest features, after all you still get the update that allows you to customize your screen.
It seems to me that Safari, QuickTime, etc., updates always include bug-fixes to software that was *already* on the Mac - vs these new iPod touch apps which were not. Note that Apple is protecting the perceived value of their IP much like the music labels used to try to protect digital downloads -- tho that might not buy this argument much chase with your readers. No one gave the modders permission to distribute the iPhone mail app, and just cause someone posts it on a peer-sharing network doesn't make a a public domain property. If this "January Update" was post-SDK, and a third party created it -- with mail, maps, notes, custom screen -- would you pay $20?
Yeah no kidding... explain to me how HP is allowed to provide free upgrades to their Windows Mobile handhelds? Or why Firmware for appliances such as routers can contain new features... sounds like hog wash.
This has nothing to do w/ Sarbanes Oxley. This is a SAB 104 (Revenue Recognition) and EITF 00-21 (multiple deliverables) issue. You cannot recognize revenue until delivery of the service/goods. They have already recognized the revenue from these ipod sales. If they were to give this update out for free, this would imply that they had not finished delivery and could not have recognized the revenue in previous period. This would require a restatement of prior periods' financial statements... which all of you apple stockholders would not be too happy about.
Maybe you should have a CPA write articles, too. Lawyers don't know everything.
This really has nothing to do with Sarbanes-Oxley Act. It has to due with people are willing to pay the $15 becasue they have no other choice. Apple is good at one thing, and that is making money. Why do you think they sell their mp3 players for 2x the price of any other company?
Heh, trust me, as a copyright attorney I deal with SOX once in a blue moon -- I'm more than willing to defer to someone more knowledgeable about it. However, Apple has stated numerous times that it defers revenue in this way specifically because of SOX, so I'm going to give them the benefit of the doubt until they say something otherwise.
Oh, I hope you know I didn't mean any offense. There's just a tendency to "overblame" SOX for things that are just standard accounting issues. The way SOX would enter into this is that a company could be foudn to have ineffective controls if they have a large restatement. The core of the issue is the basic accounting, though, I'd say.
I'm a fan of your writeups.
But how does that explain how numerous other electronic devices get software/firmware upgrades that add new features without a charge to customers?
I am neither an attorney nor an accountant.
That said, I am confused as to how any law, SOX, SAB, EITF, or otherwise would affect the iPod Touch. How come Microsoft isn't charging for Zune or Xbox 360 updates? How come Sony isn't charging for PSP or PS3 updates? How come Apple doesn't charge for OS X updates in between major releases? [i.e., 10.4.11 or 10.5.1 for example]
It's the concept of materiality. I'm pretty sure that ipods are much more material to Apple's revenue than Zunes are to MS's revenue.
Another explanation could be that this upgrade does include Google maps with Skyhook triangulation for locating your approx location on a map.
Since Skyhook is a third party service I bet some if not all of the $20 goes to paying for this service.
Just for a comparison Navizon charges $25 for cell tower triangulation. Hacked iPhone users paid for this service a few months back just to get this feature on their hacked iPhone before the 1.1.3 release.
The bigger question is why is everyone getting pissed off about paying just $20 for all these new features. Mail, Google maps with triangulation, stocks and weather is a pretty good deal for a paid software upgrade. Is it that people now expect things for free if they complain about it enough? $20 seems nominal when you consider that Incase cover you bought for your touch was $30.
Why not charge $20 for the triangulation feature rather than everything then?
Does Microsoft, the king of capitalism, charge for dashboard updates for the xbox 360?
Do they charge for Service pack upgrades, that add completely new features such as the windows firewall (ok, the firewall sucks, but it is still free)
What about Sony and updates for the PS3? Games that you buy that get patches that add lots of new features?
Not only does Apple suddenly say, hey, this new software that we made for the touch, that should have been there in the first place, well, yeah.... I am going to need like $20 from all you early adopters. But you know what? Anyone who buys a brand new touch gets these programs free!
I think there would be less bitching if Apple charged $20 more for new touches, but they aren't. So if the Touch still costs the same for Apply to make with the new software included, why do they need $20 from all the people who just got the touch for christmas?
This is like that one friend you have who says that for all his new friends he is going to give free ice cream to, you say, hey! I want some ice cream, he says, Sure, brings you the cone, then just before he hands it to you he says, "Yeah.... and I am going to need $20 for this ice cream..."
Paul - did you not read my post?
Apple is providing Skyhook triangulation service that finds out where you are within Google maps based on the WiFi hot spots around you.
This service is not free to Apple - Google maps may not even be free to Apple.
The Software you described does not include any 3rd party elements that would cost MS money.
Actually, the 360 dashboard updates might include third-party elements that cost Microsoft money (such as H.264 which they would need to get a license for). Well, maybe they were available as a free download. Still free, though.
Simple example here, which I believe will be quite illuminating. I am disregarding the iPhone, which really IS on a subscription plan, and focusing on the AppleTV, which is not. Buy an AppleTV and nothing requires you to keep paying Apple over time - not a subscription plan, QED. I don't care what Apple has to say about this, there is no way the AppleTV can be considered a subscription service if the iPod Touch is left out of that classification.
Why? Begin comparison.
AppleTV: Free update enables many new features, including the ability to play back video rented from iTunes. Also, AppleTV may now rent HD content directly, without the need for a PC.
iPod Touch: Free update (1.1.3, minus the apps) enables multiple pages of applications, webclips, rearrangement of icons, and the ability to play back video rented from iTunes. Previous free update enabled purchase of songs via WiFi without the need for a PC.
THESE REVENUE PLANS ARE EXACTLY THE SAME. Apple cannot have this both ways; if they actually have the guts to respond on the record saying this is Sarbanes-Oxley's fault they need to be sued (either for offering the AppleTV update for free, or for charging for the iPod's if they claim the AppleTV is in fact subscription based and doggedly stick to saying the iPod Touch is not). They almost certainly realize this hypocrisy by now. I don't expect an official comment, because it can only make things worse for them - exposing the whole endeavor as a petty grab for cash.
Yes AppleTV is on a subscription accounting plan. This doesnt
necessary mean consumers pay on an ongoing basis - it just means that
Apple doesnt account for the full price of the AppleTV sale at the
time its sold but rather over time. With iPods including the Touch
the full purchase price is accounted for at the time its purchased.
No one is saying for sure that this is a SarbanesOxley issue, it could
be that Apple has to pay for the 3rd party service from Skyhook or Google.
I really doubt Skyhook gives out a service for free - either Black
Berry is paying for it or Google is - either way the service Skyhook
is providing has to be paid for in someway.
I really think that the $20 is going to pay for this Skyhook service
thats part of Google maps. Also who knows maybe Apple has to pay
something to Google for using their map service.
What it really comes down to is $20 for a really good package of
software. e-mail, google maps, stocks and weather and really if you
dont want to you dont have to pay for it.
Yeah...that's not all...you don't get the webclips or moving icons w/o the $20. But to make another point, isn't apple missing out on upgrade hold outs using their rental service since that was enabled with the update? This move makes no sense...
"Another explanation could be that this upgrade does include Google maps with Skyhook triangulation for locating your approx location on a map."
Nope, thats free on blackberries when you download Google Maps for BBs from Google.
No. Skyhook uses Wi-Fi to locate itself based on which access points are near and then matching that data against its database of Wi-Fi access points. Google maps uses cell tower triangulation.
Different technology -- and no doubt Skyhook is getting a licensing fee.
Also -- accounting as a reason for a $20 charge is crap. If Apple wanted to give the service away, it would.
Bottom line: AppleTV upgrade is free since it opens the door to a revenue stream from rentals. iPod Touch costs money since Apple doesn't otherwise generate revenue from the apps and has to support them on the back-end.
Point still appeals as were saying how its like Navizon charging for their cell triangulation service...
Thank you, Engadget.
While I completely agree that Apple should've given these pieces of software out for free, the people who are saying shit like "it should be free cuz these should've been in the iPod touch from the beginning" are pathetic.
Well, duh. Why did you buy it, then? Did Apple promise you they'll later bundle these software (and for free to boot)?
Nope. For all you knew, when you originally bought the iPod touch, these software were never going to be added, at least officially, to the iPod touch. And you still went and bought it, because you thought it was worth it. So, either stick with you original conviction, accept that you got what you paid for, and live without the new additional software, or pony up the Jackson, and get a really decent set of software to complement your already fantastic machine. Sheesh.
Again, from that perspective you are completely correct but in reality this is a total gaffe. Sure, this software was never promised in much the same way as updates to other products (be they from Apple or anyone else) aren't promised but frequently they are free. Add to this that the software definitely should have been there in the first place but Apple pulled it to stop the Touch cannibalizing iPhone sales and you've got a problem waiting to happen. There was no "investment" here as the software was existing technology (sans the Locate Me function) so I think Touch owners are legitimate in expecting this update for free.
I honestly wonder what this means for the potential of open source applications on the iPhone/Touch once the SDK is released. While developers may wish to write applications for free, will Apple allow their distribution without a fee or are they using this as an experiment to see if customers will pay for "new" applications?
Another Sarbanes-Oxley accounting problem:
If they persist in claiming the iPod Touch is NOT on a subscription model, they are in violation because they have provided new software features to the Touch for free in past updates (see my post above for some, including - most significantly - the mobile iTunes store, among others). Clearly the iPod Touch will provide revenue over time; how their accounting department could have missed that boggles the mind.
This seems like more of a problem created by Apple's accounting department than anything else. Microsoft rolls out service packs with huge new functionality years past the ship date of their products, and I've never seen a surcharge appended. Sony constantly updates the firmware of the PSP and PS3, and the PSP cannot (in and of itself) purchase anything new, so its revenue should be recorded directly.
Clearly the other big players deal with this transparently, at least to us consumers. Apple is claiming a technicality (through initial mis-categorization of the revenue stream of the iPod Touch). Don't accept this as normal.
Bullshit.
That artical confused me. What exactly are they trying to say?
your spelling confused me.
Anyone who thinks they know the legal implications of Sarbanes-Oxley better than Apple's attorneys claim to know them, feel free to take on the financial responsibility/risk of interpretation. Form a group similar to a class action lawsuit, write Apple a letter promising to take care of any legal fees Apple may incur by offering this for free instead of charging. Do something besides whine about how Apple is "ripping you off".
Your post makes no sense. You start off by saying you think these updates should be free, but then go on to bash other people who are saying they should be free. W.T.F?
It appears my post doesn't make much sense either... I meant to replay to rawhead above.
@Vidikron
Heh, since you fucked up, I'll clean up your mess and reply to you here.
Sorry, my choice of words weren't optimal.
I meant to say, "I completely agree that it would have been nice for Apple to provide these software for free.... but I think people demanding Apple do so because these software should've been on the Touch from the beginning are pathetic".
I hope that makes it clearer.
They can continue to update iTunes, Quicktime, and Safari because they are offered for free. You can download these for free and you didn't pay for them nor does Apple recognize revenue from the software itself.
Exactly -- the new version of iTunes, available for free, enables already-sold Macs to rent movies from the iTunes Store. That seems like a significant unadvertised feature -- so why isn't it an accounting problem on par with a free email application for an already-sold iPod Touch?
@ Niley
It wasn't unadvertised. Movie rentals just weren't there in 7.5
You're all wrong.
SkyNet insisted that homage be paid to our future machine masters, and sent a Terminator back to threaten Jobs' family.
What? You say that doesn't make any sense? Well, it makes about as much sense as the $20 Apple is charging OR the way this story is written. Totally illogical and incomprehensible!
The $20 pricetag on those extremely simple apps is ridiculous. The fact that they are free for new Touches just adds insult to injury.
used to consult for SOX compliance, and blaming a $20 upgrade fee on a law is gross misinterpretation of Sarbanes Oxley. Apple wants to recognize revenue on the iPod Touch upgrades, and in order to do it, they have to charge for it. That's all there is to it. Why Apple wants to recognize revenue on iPod Touch upgrades is not hard to infer:
1. they want more money (they are after all for-profit with share holders)
2. they developed these applications with upgrade revenue recognition in mind to help cover the cost of development (but really how much could these apps have cost to develop?)
3. oh I don't know... to see how munch of a sucker they can make of consumers? oh wait, that's #1...
Drink the Apple flavoured Koolaid fanboys
Just another case of Steve Jobs being the biggest D-Bag in the world.
Yes, I'm on my third iPod, so I'm not a hater. He just sucks.
If they didn't make such cool stuff, he would be flogged in the streets.
Dear Josh,
"I don't care what Apple has to say about this, there is no way the AppleTV can be considered a subscription service if the iPod Touch is left out of that classification."
You clearly don't know much about business if you think so. Subscription-based accounting is not inherently linked to subscription-based selling. In other words, a company has every right to accrue revenue over 24 months from a one-time sale; it may not make sense to you, but it can make sense to the company doing so and in the case of Apple, it clearly does.
Also, the iPod Touch never had an upgrade to get the iTunes WiFi Music Store; it was released together with it. Only the iPhone had the WiFi Music Store become available as an upgrade (the Touch wasn't sold until the WiFi Music Store was released).
As for the whole "how will this go with the SDK in February" thing, my guess would be that the SDK release changes the definition of both iPod Touch and iPhone from "closed product" to "open product" — open being just like any personal computer where you have full legal control over what applications you do and don't put on there, and closed being exactly what the iPod Touch is right now: a product you own, but have no legal control over per the features/applications running on it.
The idea or assumption that the ipod touch is "essentially" a tiny computer is only an opinion. It is basically an MP3 player with extended functionality.
If you don't know, then don't post.
CPU: 412 MHz ARM
RAM: 128 MB
Operating system: OS X
Sounds like a tiny computer to me, oh wait...it is!
Your post makes no sense. You start off by saying you think these updates should be free, but then go on to bash other people who are saying they should be free. W.T.F?
Microsoft and Sony both updated their gaming consoles regularly as someone mentioned. They both recently had major functionality add with divx/xvid playback support. Neither of the consoles have revenue booked as a subscription.
I say Apple is full of BS if they claim it's for SOX. I don't know of an example of any other company doing this. I know plenty of examples of companies offering new firmware that enables new features without charging, but not anyone doing what Apple does.
"Neither of the consoles have revenue booked as a subscription."
Really? Do you have a link for that claim? Because as a Microsoft stockholder, I track their earnings reports every quarter. And as far as I can tell, Xbox360 earnings are not reported separately from the rest of the Entertainment division.
Most independant media editors stopped using Apple equipment after being screwed post the dual G4s ($500 to enable multi CPU support for 1st party software listing it on the box, no thanks). Now it is time for everyone else to see how little respect Apple has for its customers.
I won't touch another Apple product after that scam and I grew up with Macs. Parents have had Macs since the 128k steady through to a G4 iBook. They don't use Apple any longer either.
Off topic much?
Yes, please tell us how "most" of them don't use "Apple equipment" now. Feel free to back it up with facts besides "A friend of a friend isn't buying Apple equipment, and neither am I. That's most of them!"
"Another explanation could be that this upgrade does include Google maps with Skyhook triangulation for locating your approx location on a map."
"Nope, thats free on blackberries when you download Google Maps for BBs from Google."
I really doubt Skyhook gives out a service for free - either Black Berry is paying for it or Google is - either way the service Skyhook is providing has to be paid for in someway.
I really think that the $20 is going to pay for this Skyhook service thats part of Google maps. Also who knows maybe Apple has to pay something to Google for using their map service.
What it really comes down to is $20 for a really good package of software. e-mail, google maps, stocks and weather and really if you dont want to you dont have to pay for it.
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Yes AppleTV is on a subscription accounting plan. This doesnt necessary mean consumers pay on an ongoing basis - it just means that Apple doesnt account for the full price of the AppleTV sale at the time its sold but rather over time. With iPods including the Touch the full purchase price is accounted for at the time its purchased.
@ Josh Warner
"see my post above for some, including - most significantly - the mobile iTunes store, among others"
Incorrect. The iPod Touch SHIPPED with the mobile iTunes music store
"Clearly the iPod Touch will provide revenue over time; how their accounting department could have missed that boggles the mind."
How did they miss that? Miss what? The fact that I don't have to buy a song from the mobile iTunes music store? Not everyone buys from iTunes
And at Syadasti: Google is only for the cellular part of the positioning system. This is on the iPhone. Skyhook also triangulates your location via wireless, this is also on the iPhone and iPod touch. Google has nothing to do with the iPod touch's triangulation =)
Zune 1 users got the Zune 2 firmware for free.
...well that just makes Microsoft look good.
... which might mean Microsoft accounted for Zune 1s in accordance with the rules Apple is supposedly 'accounting for' here.
I do think $20 is steep for the upgrade. That said, I think there are still some misunderstandings floating around in the comments that various folks have posted.
Sarbanes-Oxley was passed in 2002, in large part in response to the Enron and other accounting scandals. One of the things it is intended to prohibit is for someone to release a "product", not delivering immediately or underdeliver initially, but put the entire revenue for the product on the books.
Apple seemed to have taken quite a strict interpretation of Sarbanes-Oxley, compared to other companies, even to the point of charging original customers of the MacBook Pro $1 to enable the 802.11n wireless support. Some have speculated that Apple has done that in part due to the accounting scandals (wrt backdating) that Apple has gone through.
With respect to the subscription, this is not subscription fees from the point of view of the user. The subscription model is for accounting purposes. Apple TV, even though the user does not pay subscription fees, is treated for accounting purposes as a subscription item, meaning the $200+ for purchasing is not recognized as revenue immediately, but is spread over time. Same thing with the iPhone (again this is not the phone bill we are talking about, but rather that the $400+ is recognized over time).
This explains why there are no legal issues with Apple updating Apple TV with new features.
So there is a legitimate argument that Apple can't give feature upgrade for free to iPod. Whether that is the reason they did it or whether that is a cover ($20 seems steep) is anybody's guess.
Well, Apple has to rip you off somehow. It's only fair to them.
Because they're special...
hey! getting ripped off by apple makes us apple fanboys cool and special =D