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Apple sets $10 price for iPod touch 3.0 software, free for iPhones

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By Charles Starrett

Contributing Editor
Published: Tuesday, March 17, 2009
News Categories: iPhone, iPod

In keeping with past releases of the iPhone OS software for the iPhone and iPod touch, Apple today announced that the iPhone and iPhone 3G versions of iPhone OS 3.0 will be free for current iPhone users, and that the iPod touch version will be available for $10. Slides at the event, interestingly, depicted the iPhone as receiving a new Voice Memos application previously announced in the presentation, while the iPod touch was shown without the application; it is unclear whether Apple will attempt to charge iPod touch users separately for the voice recording functionality. iPod nano and iPod classic users have a free integrated application for this purpose.

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Comments

21

i have an ipod touch and i am cross with apple for chargeing me for software updates when iphone users get it for free

Posted by Eoin on March 18, 2009 at 12:53 PM (PDT)

22

For all Touch users who are interested and can have a little patience I have a solution.  I to date have the most up to date software on my touch (which is a 1st gen) and have not paid for a single upgrade since I bought it a year and a half ago.  Now there have been two upgrades that each cost 9.99 and I though it was bull that I should have to pay for something that is free to others.  This is what I did.  When 3.0 comes out it will cost money but when they upgrade to 3.0.1 or 3.1 or whatever it will be, you can hook up and the pay feature will be gone.  I have done this on both money upgrades to date and it has worked both times.  This is what I will be trying for a third time and I recommend a little patience to those that do not want to feed Apple pockets any further.  If the next version comes out and it still wants money then you can make your decision then.

Posted by John L on March 18, 2009 at 5:27 PM (PDT)

23

1. iPhone and iPod touch have been developed by apple to be similar to reduce dev costs. The update is for BOTH the iPod AND iPhone.
2. The cost of the iPod already factors in not just parts and past dev but also ongoing dev costs therefore the fact that you get new functionality does not justify the costly update.
3. The Sarbanes Oxley law justifies only a very small token fee such as with the mac book air update.
4. The iPhone revenue model is a bit more complexbut given people already pay ongoing fees (albeit to the network provider for call charges) I presume there is no appetite from the customer or network provider for additional ongoing costs.
5. Charging iPod touch users is a business decision. It is not to pay for the new features, itsto make a greater profit. People should not try to justify it in terms of what is fair, or what is to be expected, or compare it to how iPhone users are treated. Bottom line is apple know users will cough up and they are more than happy to take your money.

Posted by Common Sense on March 18, 2009 at 9:43 PM (PDT)

24

I am not calling anyone whiney here, and I’m not being whiney either…that being said, I don’t like that I have to pay $10 for an update, but hey, I didn’t “like” paying $250 for the actual ipod!  grin  where I’m going with this is - you don’t get something for nothing, and even though we might not like it, that’s just the way it is…  so I look at it this way…If I go out and make a box with some boards and then someone buys the box from me, they are paying me for the work and materials I put in to it…and then if that person says well I’d like to have this and that for my box, and I make whatever it is that they asked for, then shouldn’t I be compensated for the extra work?  I know the iphone users aren’t having to pay for the upgrade, but they pay a monthly service fee to a wireless provider.  That wireless provider has paid apple to be compatible to that specific wireless service.  so yes, touch users may have to pay for the upgrade but we (touch users) do not have to pay a monthly fee—so apple is getting their money from the iphone users, you betcha, one way or another grin  You could talk about this until the NEXT update came out, and there will still be a charge of 10 for this update.

Posted by DKing on March 19, 2009 at 9:29 PM (PDT)

25

Some people’s logic is ridiculous. The 3.0 update adds basic features that should have been available from the start. Stereo bluetooth, cut-and-paste, and a usable landscaped keyboard are not premium updates which a user should have to pay for, whether they are iphone or ipod touch owners. I would consider the most interesting features of this update a software patch. This is not a matter of adding cool new features, but patching software to include features that were inexplicably missing from the start.

If people feel that the other aspects of the update are premium additions rewarded to premium customers because they are generating steady revenue streams from their monthly service with at&t;, then by all means Apple should split the update into two updates: one with the software patches, and another with the neat new features.

I have a feeling those who are trying to justify dumping money into these updates are really trying to convince themselves that they are smart consumers who know the value of their dollar; Subconsciously, they know they’ve been duped. I don’t deny that Apple can charge a premium for their unmatched user-friendly software design, but this is an unfair and unbalanced policy that should negatively impact Apple’s reputation with customers.

Posted by IpodGifter on March 21, 2009 at 1:20 PM (PDT)

26

You’ve hit the nail of the problem on the head, however, as far as SEC regulations are concerned….

In principle, you’re correct that these features should have been there from the beginning, but by Apple adding these features now, you’re getting into the fact that they sold an “unfinished product” back in 2007/2008 and are delivering the rest of the functionality now.  That is exactly what the new accounting laws are intended to prevent….  Apple cannot count their money back in 2007 for a product that was delivered but not “complete” until 2009.  These are new features that add to the value of the product, and the revenue must therefore be recognized when the features and value is added, and not before.  It has to do with the fact that Apple is a publicly-traded company and they must account for their revenue in a certain manner in order to avoid the possibility of defrauding shareholders.

In short, the money made on the iPod touch back in 2007 cannot be based on what the device someday might do but rather on what it did at the time.

For those who would suggest that Apple is doing something differently here, bear in mind that we do not know how companies like Microsoft actually account for their sales—they may very well use a revenue model similar to Apple’s when it comes to devices like the Xbox, or conversely they’re just not being as cautious.  Bear in mind that Palm recently announced that they would be accounting for the Pre in the same “subscription-based” manner to avoid having to charge for updates.

Of course, one could argue that Apple should have accounted for the iPod touch in the same manner as they do the iPhone and the Apple TV, but that’s a completely separate argument (and to be fair, deferred revenue does impact stock prices negatively as well, so that’s also a fair consideration).

Posted by Jesse Hollington in Toronto on March 21, 2009 at 9:07 PM (PDT)

27

A lot of people keep comparing the Touch to the iPhone. They say why should Touch owners have to pay for the update, where iPhone users get it free. The thing I have yet to see said however, iPhone users pay upwards of $40 per month, so why shouldn’t they be entitled to a free upgrade. iPod touch owners ( Yes, I do own a touch) paid a one time fee from $200-$400. iPhone users pay every month and apple earns money from that, as a company it would be downright dumb to offer something that they know people will be willing to pay $10 for. Even if you have a dreamy idea that Apple cares oh so much about it’s consumers, what they really want is our money. They offer a product, we buy it, they offer a new product, i.e. the update, they’re gonna want to be paid for the significant time, resources, and money they spent on building this release. As much as I would like to receive the update free, it is very understandable why they would charge, and they deserve to be compensated for their work.

Posted by Casey on March 22, 2009 at 7:00 PM (PDT)

28

Well, personally, I think 10 dollars for this major update is not very expensive. I own a touch 2nd gen, boight it last Christmas, the touch is a fantastic piece of gadget. You dont have to pay monthly fees for it, Apple offer free update for the phone because the phone is over-priced, it’s just compensation, they can easily make 10 dollars from the phone owners anyways. I would pay the 10 dollars mainly for the bluetooth thing, I own a samsung t10 as well, the bluetooth sharing and calling has been great. Cant imagine what would bluetooth on the touch like.

Posted by David on March 22, 2009 at 7:33 PM (PDT)

29

I am an iPod touch user and I actually agree with the fee for us. It makes sense because the iphone users are already paying a fee to make calls and get data usage. Therefor they should get thisbfor mo extra charge.

Posted by Arthur on March 22, 2009 at 9:52 PM (PDT)

30

I totally agree with the whole $10 thing, I live in England so it’s only like 5 or 6 pounds, but as if we didn’t pay enough to get the device we still have to pay to keep it up to date which should be manufacture discretion, I paid £185 for my iPod touch first gen, and yet I still have to pay to keep it up to date which is totally out of order!!!

Posted by Sean on March 23, 2009 at 7:59 AM (PDT)

31

I don’t agree with the charge for iPod touch owners, especially since the latest update addresses functionality common to both the iPhone and touch. You can also argue the fact that much of this functionality should have been enabled from Day one. As for the fact that iPhone owners have to pay an “Apple/ATT tax”, well, the simple fact is that you knew that you were going to get hit by some of this as part of the “privilege” of owning the device. That’s like buying a Ferrari and complaining that you only get 13 MPG.

We all buy these devices for different, personal reasons, and we also have the option of voting with our wallets. My money alone may not account for much, but I have no interest in paying Apple for incremental product updates and OS updates for existing hardware. I hope that my 2g touch has a long life, because I’m ready to go back to iRiver for my PMP needs.

Posted by ajira99 on March 23, 2009 at 10:42 AM (PDT)

32

I like others have recently purchased an Ipod Touch and feel that if Apple has a warranty for one year it should also include any free software updates for that one year…Apple would tax your dead grandmother in her grave if they found she once used and Ipod…..

Posted by lhdz12 on March 23, 2009 at 12:37 PM (PDT)

33

For the people making the argument that “iPhone users pay $40 a month for that privilege”, there is a reason you pay $40 more for that privilege, it’s a PHONE.  It makes PHONE Calls.  It’s not like the Touch users just didn’t want to pay $40 and decided to forgo that function. So to say that Touch users are whining because they don’t pay $40 a month….well, the reaosn is that they don’t have a phone.  But they do both use apps, and if you have to upgrade to buy from the app store, then you have downgraded the functionality of the Touch. 

If you want to make an argument about how $10 is no big deal for enhanced functionality (which I disagree with, the Zune upgrades all prior Zunes for free to the newest functionalities, no matter how old they are), that’s fine.  But don’t make a spurious argument about something that has little bearing on the situation in hand.  It’s like saying, “oh ho, you didn’t buy a case, so stop your complaining”. That $40 wasn’t to give you unlimited upgrades to firmware, it was to use PHONE services. So it has nothing to do with firmware upgrades at all.

Posted by Jeff on March 23, 2009 at 3:41 PM (PDT)

34

The SOX explanation is a badly disguised lie to obfuscate Apple wanting to use software patching as a new source of revenue. You can’t so blithely dismiss the fact that virtually everybody else does provide these sort of software patches for free, or that Apple is really stretching the definition of a whole number version change justify this revenue stream in the specific example of iPhone OS 3.0.

Sarbanes-Oxley is supposed to be an honesty in accounting measure, not a requirement or excuse to monetize every minor upgrade to a program or product. It’s there to stop a company from reporting they just made 1.5 million dollars this very week if actually what they sold was a product that won’t be installed until next year or a series of services that will actually take place over the next two years. At it’s simplest: if revenue for a transaction is explicitly tied to future upgrades or services, you have to make an estimate of the value of those upgrades or services and not report the income from said upgrades and services until such time as they are delivered. It’s only when the company explicitly ties the value of future upgrades to the purchase value of the product (e.g. “free Rhapsody service for a year!” or “free upgrades through version 6”) that SOX is supposed to kick in. Selling products that may or may not be patched or upgraded except as required by law does not link such possible patches and upgrades to the purchase value and so SOX doesn’t affect in any way a company’s ability to patch or upgrade products without charge.

What is going on here is that Apple has contracts with AT&T;and other carriers that promise upgrades and maintenance of the iPhone OS in exchange for the cut Apple gets from customer contracts. This establishes a “fair market value” for these software updates. Apple is making an argument that since the upgrades to the iPhone have a monetary value as established by their contracts, they must also have a monetary value to the Touch. Further, since free upgrades are considered part of the purchase value of the iPhone (I assume it’s probably there in the small print) but they aren’t mentioned as part of the purchase of the Touch, they have to charge. It is, of course, utter nonsense. Since software updates are neither promised nor explicitly not promised for the Touch, Apple could give them away for free, or Apple could charge $999. It is only if Apple explicitly ties software updates to the service you get with the Touch that SOX would kick in, and then it would still be a simple matter of Apple estimating how many billable software updates they estimate they’ll deliver in the average life of touch and deferring income reporting appropriately.

Perhaps, and it’s a huge stretch, Apple might be able to argue since such iPhone OS software updates are a given due to their contracts fpr the iPhone that it’s not a “maybe yes, maybe no” scenario on future upgrades so it’s implicitly promised that such updates are coming for the iPod Touch as well. If you accept the implicit argument, then crazy corporate lawyers (who not so coincidentally work for Apple) might argue that it’s implicit that giving them away for free would trigger a violation of SOX since consumers may have implicitly assumed their purchase price included these updates but the iPhone contracts suggest a monetary value for the updates. Ergo, to comply with SOX, Apple either needs to charge “fair market value” for the updates or they need to defer reporting income from the updates. Since Apple doesn’t want to defer reporting anything because it makes them look slightly less lucrative in their investor reports, the Touch owner gets stuck paying $9.95 to allegedly cover Apple’s butt from a law that nobody would ever charge them with for violating in the first place.

It’s all a bunch of flim-flam to disguise the real answer: Apple saw a way to generate extra revenue and so long as they keep the price low enough, it essentially creates a subscription fee for Touch users same as iPhone users.

Posted by Code Monkey in Midstate New York on March 23, 2009 at 3:49 PM (PDT)

35

Everybody is bringing up that iPhone users pay extra every month, but they are paying this money to AT&T;, not to Apple. Also, there is an option available for iPhone buyers to buy an unlocked version of their iPhone, and they can use any network they want or simply choose not to use a cellular network and use it over wifi. It is because iPhone users are paying a cheaper upfront cost that they are paying a monthly fee.

Therefore, that argument does not justify us iPod touch users paying $10 for an upgrade while unlocked iPhone users who do not pay a monthly fee get upgrades for free

Posted by axmxwx on March 25, 2009 at 9:30 PM (PDT)

36

If Apple hadn’t hobbled the thing in the first place and allowed for third party apps without Jail breaking no one would care.  They haven’t given us basic features like cut and paste and won’t allow those who paid hansomely for the privilege of owing a touch to fully exploit its capabilities.

If other manufacturers steal this from under their noses they only have themselves to blame. SBO is a crock.  I don’t live in the States why should I pay for a US technicality.  I know, I know…

Posted by Lionel Dieperink on March 26, 2009 at 4:51 AM (PDT)

37

Even though I think it’s silly that apple is charging all ipod touch users 10 bucks for the 3.0 OS upgrade, I for one will pay it gladly. Apple is finally starting to catch up with the jailbroken community on several features. In my opinion, it is definitely worth the 10 dollars for bluetooth enabled, push notifications, global copy and paste, as well as several other handy features. although I already have almost all of the features on my jailbroken touch (bluetooth and push exluded, but bluetooth is coming soon as a jailbroken feature) I will be fine to pay for it. If apple could just allow backgrounding applications as well as push, I would be a happy man (even though i can already run programs in the background via “backgrounder”).

Posted by Lucas on March 26, 2009 at 2:01 PM (PDT)

38

That is so stupid. iPod touch users should not have to pay for firmware updates. Does anyone know when they will start shipping iPod touches with the 3.0 operating system bundled?

Posted by Sonny Chaudhry on April 2, 2009 at 12:45 PM (PDT)

39

lol there is already a jailbreak for the beta version of this. I shall stick to my jailbroke 1G iPod touch 2.2.1 until they release this for the public and release a Mac OS X jailbreak. JAILBREAK FTW!

Posted by Nikolas123456789 on April 4, 2009 at 10:49 AM (PDT)

40

will getting the upgrade enable music to be played out of the speaker on the first generation ipod touch??

Posted by danielle on April 5, 2009 at 11:32 PM (PDT)

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