Upgrade fee sees few iPod touch users updating to 3.0 software

[AppleInsider]

Nearly half of all iPhone users have already jumped at the opportunity to enhance the functionality of their handsets by installing the free iPhone Software 3.0 update, but the same can't be said for iPod touch users, who -- deterred by a $10 upgrade charge -- are adopting the new software at a snail's pace.

On Monday, Apple announced that 6 million customers have downloaded iPhone Software 3.0 since its release last week. That means that roughly 15% of the 40 million multi-touch devices sold thus far by the Cupertino-based company are now running the latest software.

However, AdMob, whose ad network has been adopted by a large number of iPhone developers looking to monetize their free apps, recently released a few interesting statistics. Since it's able to see the version of iPhone Software running on iPhones and iPod touches making each ad request, it can quantify to some extent what percentage of those devices are running the various iPhone software distributions to date.

For example, the firm noted in a report a few days ago that it's seen "rapid adoption" of the 3.0 software by iPhones accessing its network. Though there's some margin of error given that not all iPhone users are launching applications with ties to its network, 44 percent of those that are were already running iPhone Software 3.0 by Saturday.

The statistics for iPod touch users paint an entirely different picture, however. AdMob reported that just 1% of iPod touch users accessing its network on Saturday had upgraded to the new software, while a resounding 78% were still running the latest point release of iPhone Software 2.0 introduced last year.

"The additional $10 fee to upgrade is clearly limiting uptake," the firm said, noting that this threatens to put a kink*in Apple's App Store ecosystem. "Developers looking to sell applications utilizing the 3.0 features can’t be happy with Apple’s decision to charge for the upgrade as it limits their available market size for downloads."

Should adoption of iPhone Software 3.0 not pick up in the coming weeks and months, it will be interesting to see whether Apple makes a change to the way it positions and markets the iPod touch when new models hit the market early this fall. That's likely the first time to company would be in a position to offer iPod touches that could receive free software updates like the iPhone over their two-year life expectancy.



The reason iPhone (and Apple TV) customers receive free software updates stems from an announcement Apple made in April 27, 2007, shortly before the original iPhone hit the market. In an effort to make the handset more enticing and somewhat "future proof," the company said it would leverage its proven capability in the area of software development to gradually add new software features and applications to its iPhone (and Apple TV products) free of charge, thereby providing its customers with the "greatest possible experience."

Under GAAP accounting principles, Apple normally fully recognizes the revenue associated with the sale of a product, such as an iPod, once the device has reached the end user; or less commonly, when the device has shipped.* Yet, due to certain idiosyncrasies with Sarbanes-Oxley (SarbOx), Apple, in order to account for the new features it delivers, claims it's forced to use what is called the subscription method of accounting for recognizing revenue from products it plans to improve over time.*

Under this accounting method, Apple literally divides each iPhone sale by 730 -- or the number of days in two years, representing the economic life of the product -- and recognizes the portions from that particular iPhone sale each day for exactly two years or 730 days. Therefore, should Apple be compelled to treat iPod touches like iPhones and Apple TVs, it may need to make a similar disclosure to the one it made for the aforementioned two products back in 2007.

Such an announcement would be unlikely mid-product cycle and would be better made alongside new models.

[ View this article at AppleInsider.com ]

[bigmc6000]

Wait, why the heck have only half the iPhone users upgraded??? It's free and it makes your iPhone do everything noticeably faster - not to mention all the added features.

[crees!]

So users will pay $10 for an app but not to update their device. Makes no sense.

[aplnub]

Originally Posted by AppleInsider

Yet, due to certain idiosyncrasies with Sarbanes-Oxley (SarbOx), Apple, in order to account for the new features it delivers, claims it's forced to use what is called the subscription method of accounting for recognizing revenue from products it plans to improve over time.*

Do they do the same accounting for the computer line like the iPhones? I never understood Apple's or SarbOx's stance on this because it seems contradicting.

[Kasper]

Originally Posted by aplnub

Do they do the same accounting for the computer line like the iPhones? I never understood Apple's or SarbOx's stance on this because it seems contradicting.

This whole matter is very much an open debate, regarding whether Apple really needs to take the subscription accounting route. But no, Mac revenues are not amortized and are recorded in full when they ship.

K

[mcloki]

At the heart of it there's something wrong with having to pay for Touch upgrades. I mean even if you have to pay for it Apple could charge .99 cents and be done with it. It just smacks too much as a money grab conveniently disguised as a "Oh it's the government." This is the Apple tax.

[merdhead]

Originally Posted by mcloki

At the heart of it there's something wrong with having to pay for Touch upgrades. I mean even if you have to pay for it Apple could charge .99 cents and be done with it. It just smacks too much as a money grab conveniently disguised as a "Oh it's the government." This is the Apple tax.

Apple annoys users on purpose, profits, then blames the government, making a point about a law it doesn't like. Dead on.

[JupiterOne]

Originally Posted by bigmc6000

Wait, why the heck have only half the iPhone users upgraded??? It's free and it makes your iPhone do everything noticeably faster - not to mention all the added features.

I upgraded my original iPhone to the 3.0 software and have not noticed anything being faster at all.

[mcloki]

So users will pay $10 for an app but not to update their device. Makes no sense.

So having both a touch and an iPhone, one gets updated for free while the other is a $10 charge to satisfy some accounting rule. With exactly the same software. What if your desktop OS was updated for free but your laptop OS was a $10 charge due to some obscure accounting rule? It's the dual pricing strategy/scam that irks customers.

Why aren't OS or App updates priced the same way, on both platforms?

[gregarious119]

Even if I didn't know how to acquire the $10 for free,

I still would've paid the $10 for an upgrade to the OS. Seriously...updating an app is not comparable to updating a whole OS and I think $10 is pretty reasonable for it.

Seriously....in 2 years, I've had to pay another 10% to keep my ipod running with cool new features and OS updates? Doesn't seem unreasonable to me...especially compared to the lifetime cost of an iphone

[brucep]

Originally Posted by crees!

So users will pay $10 for an app but not to update their device. Makes no sense.

Why should touch pay when iphone does not pay ??

[IndianPwnerDude]

Originally Posted by gregarious119

Even if I didn't know how to acquire the $10 for free,

I still would've paid the $10 for an upgrade to the OS. Seriously...updating an app is not comparable to updating a whole OS and I think $10 is pretty reasonable for it.

Seriously....in 2 years, I've had to pay another 10% to keep my ipod running with cool new features and OS updates? Doesn't seem unreasonable to me...especially compared to the lifetime cost of an iphone

I don't think it is worth it to pay $10 to upgrade your OS. I upgraded for free by going to http://www.felixbruns.de/iPod/firmware/ and downloading the firmware for my iPod, turning it off, holding home for ten seconds and then plugging it in to my computer and continuing to hold home until it went to restore mode. Then I shift clicked the restore button in iTunes and used the firmware I downloaded. I had to change the extention to .ipfw.

I don't pay money to Apple to upgrade but I sure do use the benefits.

[bigmc6000]

Originally Posted by JupiterOne

I upgraded my original iPhone to the 3.0 software and have not noticed anything being faster at all.

Really? My 2G iPhone does tons of things faster - loading the games sped up significantly just from the upgrade.

[caliminius]

Originally Posted by aplnub

Do they do the same accounting for the computer line like the iPhones? I never understood Apple's or SarbOx's stance on this because it seems contradicting.

Anyone not wearing blinders has already realized that Apple has no need to charge for these updates. It was originally an issue with Apple unlocking the Wireless N features in Macs. That, at least made some sense because it was unlocking additional hardware not previously advertised as being present. The Touch updates don't unlock new hardware not already present, they are just software updates. If SarbOx required payment for software updates, the updates to the AppleTV (like the one that was just put out this week), PS3, XBox 360, and numerous other devices would all require similar payments.

[mattwilsoninc]

Originally Posted by bigmc6000

Wait, why the heck have only half the iPhone users upgraded??? It's free and it makes your iPhone do everything noticeably faster - not to mention all the added features.

I am definitely reverting back to 2.2.1. 3.0 is not faster at all. I have had issues with accessing wireless as well as the 3G network on the phone. "Rebooting" the iPhone many times per day sucks. Some of the games/apps do not work as smoothly namely GalaxyOnFire 3D. The "touch" interface response seems "slower".

My $.02,

M

[msantti]

This whole "accounting" thing is just a front for Apple to justify bilking Touch users an extra $10.00.

If there is some "law" requiring them to do so, then give everyone that pays $10, a $10 iTunes card to balance it out. Apple can give a gift card at anytime.

And why $10? How about $1.00? Where does the $10 number come from?

I love Apple but sometimes they try to puch the envelope a bit to much.

I think adoption of the 3.0 software is important.

Maybe not THAT inportant to Apple.

[Virgil-TB2]

Originally Posted by aplnub

Do they do the same accounting for the computer line like the iPhones? I never understood Apple's or SarbOx's stance on this because it seems contradicting.

The issue is that the subscription model of the iPhone is different from the rest of their computer line, so the updates can be free.

While most sites, (this one included), always phrase the issue is "should they charge for the update," in fact charging for OS updates is the norm and the iPhone getting it for free is the abnormality.

If they don't charge the user of an iPod touch *something* for a major update to the OS, not only do they have to roll the price of the updates into the hardware price, it would also eliminate the whole rationale for charging for OS's in the first place.

There is no logical reason why an iMac on your desktop is any different than the iPod touch. If buying an iPod touch gives you free OS updates for the life of the device, it becomes somewhat unethical for them not to give you OS-X updates for life as well. It's a slippery slope and that proverbial "can of worms" as well.

In any case, this update does one very major thing that isn't apparent to iPhone users but will be for iPod touch users, it increases 3D gaming performance by 3 times or more. The first time a game comes out that requires 3.0, we will see massive upgrading going on. All those little teenagers and twenty-somethings that don't blink at dropping a hundred bucks on a video game won't see $10 as a big barrier if there is something they want on the other side.

[Hattig]

Originally Posted by bigmc6000

Wait, why the heck have only half the iPhone users upgraded??? It's free and it makes your iPhone do everything noticeably faster - not to mention all the added features.

Some people don't sync very often. Not everyone reads online forums avidly.

Some people might have got burned with a previous update and are waiting a couple of weeks to make sure it works.

Certainly I think the update is well worth it for iPod Touch users, given the faster browsing at least.

[bigmc6000]

Originally Posted by brucep

Why should touch pay when iphone does not pay ??

We've gone over this a ton of times - blame Enron for making the SEC care so much about GAAP.

[Hattig]

Originally Posted by brucep

Why should touch pay when iphone does not pay ??

Did you read the article in any manner?

[chronster]

Meh. If they don't want to update, it's their loss. Perhaps they simply don't understand what the update does.

I think a lot of people view it as a maintenance type of thing, and they decide since it's working fine as it is, they won't need to shell out $10 for nothing.

[Hattig]

Originally Posted by Virgil-TB2

In any case, this update does one very major thing that isn't apparent to iPhone users but will be for iPod touch users, it increases 3D gaming performance by 3 times or more.

Does it really? How does it do this - I haven't heard anything!

[Virgil-TB2]

Originally Posted by merdhead

Apple annoys users on purpose, profits, then blames the government, ....

Originally Posted by caliminius

Anyone not wearing blinders has already realized that Apple has no need to charge for these updates. ...

Originally Posted by msantti

This whole "accounting" thing is just a front for Apple to justify bilking Touch users an extra $10.00. ...

Looks like the kids have joined the thread.

Isn't there school right about now? But seriously, you guys don't even seem to know what the argument is. It's totally lame to argue strongly against something when you don't even (apparently) know the facts.

[IndianPwnerDude]

Nobody asked you to pay. By the way, I already posted how to upgrade for free. I don't need any funky apps and obviously don't buy them. I will not pay to upgrade to Windows 7 (will pirate) and I don't see why I would pay to upgrade an Apple. You guys have already spent a lot for this device that will probably become obsolete Apple releases the iPhone HD7. You guys already see how snow leopard won't support PowerPC computers that were made only 4 or 5 years ago. Windows 7 Beta, however, runs on my 6 year old PC (albeit crappily, but still, more than I expectt).

I don't pay to upgrade internet explorer to get "faster browsing" so I don't really understand why anyone pays to upgrade thier ipod touch. this is a joke.

[ianx]

Originally Posted by crees!

So users will pay $10 for an app but not to update their device. Makes no sense.

The AdSense service is pretty much only on free applications. So all this really tells us is that people who are unwilling to pay for applications are also unwilling to pay for an OS upgrade.

[rei_vilo]

I paid the USD 10 for the update (well, EUR8) on my iPod touch 2G.

The fact is, the iPhone/iPod touch OS 3.0 brings the lowest minimum on an iPod touch. Landscape keyboard, StreetView, Copy/Paste, search, synced notes: all those features should have been included in the previous release or even on the very first release.

But to-do list is still missing: shall we wait for OS 4.0 and ten more bucks So the Ipod touch is still not a PDA .

Bluetooth is poorly implemented. Exciting new features like the voice command is not featured on the iPod .

My iPod touch seems slower and is going hot now .

My advice? Don't rush on the update and wait for the new generation of iPod touch next September...

[ianx]

Originally Posted by IndianPwnerDude

I don't think it is worth it to pay $10 to upgrade your OS. I upgraded for free by going to http://www.felixbruns.de/iPod/firmware/ and downloading the firmware for my iPod, turning it off, holding home for ten seconds and then plugging it in to my computer and continuing to hold home until it went to restore mode. Then I shift clicked the restore button in iTunes and used the firmware I downloaded. I had to change the extention to .ipfw.

I don't pay money to Apple to upgrade but I sure do use the benefits.

Do you also post about how proud you are when you steal a DVD player, or a loaf of bread?

[chronster]

Originally Posted by IndianPwnerDude

Nobody asked you to pay. By the way, I already posted how to upgrade for free. I don't need any funky apps and obviously don't buy them. I will not pay to upgrade to Windows 7 (will pirate) and I don't see why I would pay to upgrade an Apple. You guys have already spent a lot for this device that will probably become obsolete Apple releases the iPhone HD7. You guys already see how snow leopard won't support PowerPC computers that were made only 4 or 5 years ago. Windows 7 Beta, however, runs on my 6 year old PC (albeit crappily, but still, more than I expectt).

I don't pay to upgrade internet explorer to get "faster browsing" so I don't really understand why anyone pays to upgrade thier ipod touch. this is a joke.

This post made me giggle ;P

Originally Posted by ianx

Do you also post about how proud you are when you steal a DVD player, or a loaf of bread?

Gotta eat to live, gotta steal to eat. Otherwise we'd get along!

[ianx]

Originally Posted by rei_vilo

I paid the USD 10 for the update (well, EUR8) on my iPod touch 2G.

The fact is, the iPhone/iPod touch OS 3.0 brings the lowest minimum on an iPod touch. Landscape keyboard, StreetView, Copy/Paste, search, synced notes: all those features should have been included in the previous release or even on the very first release.

But to-do list is still missing: shall we wait for OS 4.0 and ten more bucks So the Ipod touch is still not a PDA .

Bluetooth is poorly implemented. Exciting new features like the voice command is not featured on the iPod .

My iPod touch seems slower and is going hot now .

My advice? Don't rush on the update and wait for the new generation of iPod touch next September...

You are right. The iPod touch is not a PDA. It isn't meant to be. It's a wide-screen iPod with some addition Internet related features, and gaming.

[hngfr]

i updated my ipod touch as soon as it was available, call me carzy, but i think the 2 extra screens to add more apps is worth the price alone. after i upgraded the software i did a restore, it took nearly 7 hours, 32gb, i really can't tell any speed difference, but i know i have 32 more apps on my ipod,

[GQB]

Originally Posted by msantti

And why $10? How about $1.00? Where does the $10 number come from?

.

YEAH... why not $100?
That's what MS would charge.

I upgraded my touch (yup, broke the bank with $9.95 (not 10) to yet again get feature and performance increases that under other models would require a whole new device.

Right. Cut/paste, performance increases (definately there), global search, new apps, etc etc is worth nothing. Jeez.
And for those claiming that SOX compliance is a ruse, just wait until you've gone through a SOX audit.
Speak when you know when you're talking about.

I swear that the whining makes me want to join the Apple haters.

[chronster]

Originally Posted by GQB

YEAH... why not $100?
That's what MS would charge.

I upgraded my touch (yup, broke the bank with $9.95 (not 10) to yet again get feature and performance increases that under other models would require a whole new device.

Right. Cut/paste, performance increases (definately there), global search, new apps, etc etc is worth nothing. Jeez.
And for those claiming that SOX compliance is a ruse, just wait until you've gone through a SOX audit.
Speak when you know when you're talking about.

I swear that the whining makes me want to join the Apple haters.

Why don't you calm down and stop trying to come up with excuses for Apple's pricing by saying Microshaft would charge more? Lets keep this discussion to facts, not imagination.

The update seems to bring a lot to the table, but 10 dollars to you and I might be a bit more valuable to someone else, know what I mean? To each his own.

[GQB]

Originally Posted by IndianPwnerDude

Nobody asked you to pay. By the way, I already posted how to upgrade for free. I don't need any funky apps and obviously don't buy them. I will not pay to upgrade to Windows 7 (will pirate) and I don't see why I would pay to upgrade an Apple. You guys have already spent a lot for this device that will probably become obsolete Apple releases the iPhone HD7. You guys already see how snow leopard won't support PowerPC computers that were made only 4 or 5 years ago. Windows 7 Beta, however, runs on my 6 year old PC (albeit crappily, but still, more than I expectt).

I don't pay to upgrade internet explorer to get "faster browsing" so I don't really understand why anyone pays to upgrade thier ipod touch. this is a joke.

Ladies and gentlemen, I give you your poster child criminality and idiocy.
Case rested.

[bonklers]

only 44% of iphones upgraded because people were waiting for Ultrasn0w, i bet most have upgraded by now.

today i got an invoice from itunes for 13downloaded free apps, total due $0.00. why? i've never received an email like this before. weird.

[GQB]

Originally Posted by chronster

Why don't you calm down and stop trying to come up with excuses for Apple's pricing by saying Microshaft would charge more? Lets keep this discussion to facts, not imagination.

The update seems to bring a lot to the table, but 10 dollars to you and I might be a bit more valuable to someone else, know what I mean? To each his own.

I'm perfectly calm, particularly since I got good value.
The whiners are the ones peeing their pants and throwing tantrums because they want everything for free.

[IndianPwnerDude]

Originally Posted by ianx

Do you also post about how proud you are when you steal a DVD player, or a loaf of bread?

Actually, I don't steal physical things. I bought my iPod touch for $230 just like I buy my DVD players and my bread and my computers. I buy my software too, just not updates because I have already helped out the company.

Originally Posted by rei_vilo

I paid the USD 10 for the update (well, EUR8) on my iPod touch 2G.

The fact is, the iPhone/iPod touch OS 3.0 brings the lowest minimum on an iPod touch. Landscape keyboard, StreetView, Copy/Paste, search, synced notes: all those features should have been included in the previous release or even on the very first release.

But to-do list is still missing: shall we wait for OS 4.0 and ten more bucks So the Ipod touch is still not a PDA .

Bluetooth is poorly implemented. Exciting new features like the voice command is not featured on the iPod .

My iPod touch seems slower and is going hot now .

My advice? Don't rush on the update and wait for the new generation of iPod touch next September...

I think the iPod is actually an excellent PDA. If you are a PDA purist (and just want a good PDA), the $20 sharp organizers are actually pretty decent. These days, nobody buys a standalone PDA. They are all integrated with internet, phone, mp3, blah, blah. The iPod touch can download images, manage e-mail, surf the net, and sync with calendar, etc. It is more than most PDA's do, although there are still a few things that my old palm pilot does better. But it is much better than that Windows Mobile nonsense... not to trash Microsoft, I use Windows on my Desktop.

I agree that waiting until the new iPod touch with similar chipset to the iPhone should come out because it is a lot faster. The processor itself handles 2 instructions at once and is 1.5x the frequency with more L1 cache and an L2 cache as well as more RAM. Three months is a fair wait for a superior device.

Oh wait, the ZUNE HD will be coming out at the same time and will also offer HDMI connection to the television with 720p or 1080p (not sure, but will have a slower ARM11 processor). I have to wait and see the performance benchmarks to decide whether I will be buying anything. My 1G ipod touch, however, probably does more than enough for me.

[RichL]

Originally Posted by Virgil-TB2

While most sites, (this one included), always phrase the issue is "should they charge for the update," in fact charging for OS updates is the norm and the iPhone getting it for free is the abnormality.

Charging for OS updates is not the norm for consumer devices.

Let's take a look:

Cell phones - always free
PDAs - always free
Consoles - always free
Apple TV - always free
iPod classic - always free
iPod touch - $10 a time

It's the iPod touch and not the iPhone that's the abnormaility.

I paid for the v2.0 because it added a feature (the app store) that, to me, was worth the money. However, most of the v3.0 features are really only useful to iPhone users. I won't be upgrading.

[sartor]

Making us pay $10 for a very capable, stable, and significant upgrade is one thing, but to make us pay for an upgrade that should have been free/included in a basic upgrade, and one that is simply very flawed is another.

My ipod touch 2g (with 8 gig free), is constantly telling me, no wifi signal available, when before the upgrade, it could easily / solidly see my in home wifi. I am regularly having to turn off/on my wifi setting to reset the connection. I open up any of: app store, itunes, or the valuable wiki app, it's telling me no wifi available, OR esp in App store, or itunes, it's immediately asking me to LOG IN/Verify my password! WTF!!! Didn't they test this damn thing before release, and charging us $$ for this weak upgrade!?? Geesh!

Originally Posted by rei_vilo

I paid the USD 10 for the update (well, EUR8) on my iPod touch 2G.

The fact is, the iPhone/iPod touch OS 3.0 brings the lowest minimum on an iPod touch. Landscape keyboard, StreetView, Copy/Paste, search, synced notes: all those features should have been included in the previous release or even on the very first release.

But to-do list is still missing: shall we wait for OS 4.0 and ten more bucks So the Ipod touch is still not a PDA .

Bluetooth is poorly implemented. Exciting new features like the voice command is not featured on the iPod .

My iPod touch seems slower and is going hot now .

My advice? Don't rush on the update and wait for the new generation of iPod touch next September...

[JupiterOne]

Originally Posted by mattwilsoninc

I am definitely reverting back to 2.2.1. 3.0 is not faster at all. I have had issues with accessing wireless as well as the 3G network on the phone. "Rebooting" the iPhone many times per day sucks. Some of the games/apps do not work as smoothly namely GalaxyOnFire 3D. The "touch" interface response seems "slower".

My $.02,

M

When you reboot your phone, do you notice a difference? Before 3.0, the apple logo would come up and then it would show the home screen icons coming into view. But since 3.0, the apple logo comes up and then the screen goes blank. If I hit the Home button, it shows me the locked screen.

[Mazda 3s]

Originally Posted by RichL

Charging for OS updates is not the norm for consumer devices.

Let's take a look:

Cell phones - always free
PDAs - always free
Consoles - always free
Apple TV - always free
iPod classic - always free
iPod touch - $10 a time

It's the iPod touch and not the iPhone that's the abnormaility.

I paid for the v2.0 because it added a feature (the app store) that, to me, was worth the money. However, most of the v3.0 features are really only useful to iPhone users. I won't be upgrading.

A simple and well reasoned post. I agree 100%.