Why iPod Touch Users Have to Pay For Their New Apps.

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In today’s Macworld keynote Steve Jobs announced that the iPod Touch will now be getting five applications from the iPhone that it previously did not have:

  • Mail
  • Maps
  • Stocks
  • Weather
  • Notes

This is great news for touch owners.

What’s the catch? Well, for existing touch owners it’ll cost $19.99. As I read the live blogging on the event, a few sites grumbled about this, and I could see them getting their fingers ready to (unthinkingly) blog about the “outrage”.

Well, cool it, guys, and let’s think this through. Consider that Apple’s providing free updates to the iPhone. And Apple’s new Apple TV software is also free to existing owners. And the new touch apps are included on all new iPod touches starting today (with no price increase).

Given all that, can you think of maybe another reason why Apple is charging for the new apps other than being stupid, greedy, etc.? C’mon, think. Think, dammit!

This is speculation on my part, but I believe it’s because of the iPod’s revenue recognition. Unlike the iPhone and Apple TV — whose revenue is recognized over a period of time — iPod revenue is recognized at the time of sale. According to Apple, extending revenue recognition allows them to offer new features to the iPhone and Apple TV without having to charge for them. So in iPod’s case, from an accounting perspective they couldn’t just “give away” the features to existing owners.

In my view, $20 for these apps is a steal, but certainly no one’s forcing any one to buy them. Still, I’m sure we’ll hear lots of whining from a Mac blogging and user community that’s getting more and more whiny, knee-jerk, and filled with a sense of entitlement at each new Apple announcement.

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25 thoughts on “Why iPod Touch Users Have to Pay For Their New Apps.

  1. If the whole point of creating the app store is to stop people from jailbreaking their ipod, then making people pay for the app store is going to make more people jailbreak there ipods…

    My ipod is jailbroken and I intend to keep it that way.

    I might do both but, I don’t want to support something that is wrong.

  2. “In my view, $20 for these apps is a steal, but certainly no one’s forcing any one to buy them.”
    WRONG. Plug in an 1.1.3 touch in iTunes, and you’ll get every time a nice page on how to buy the apps. You can either “Buy” or “Remind me later” that thing. By now i have clicked the remind me later button at least 30-40 times, so it’s not like iWork, that after 2 “Remind me later” to register, it turns into a “Never Register”.
    To hell with this stuff, they are forcing users to buy it. And if you jailbreak it, a tiny update of a few kb will unlock them. So, the stuff it’s already in the 1.1.3 firmware, it’s just locked. The only thing that really pisses me off is the blackmail they do “Buy it or get prompted to do so every time you try to plug in your iPod in iTunes”. It’s plain wrong.

  3. Apple want to cut prices for iphone and ipod touch soon, to sell more of this devices, At the same time get more officially profit by add-on applications with chargable fees.

  4. Pingback: More stuff to see on my iPod « Content Negotiable

  5. A point everyone has overlooked is that Apple has to pay Skyhook royalties for the use of the wifi triangulation info used by Google Maps. Someone has to pay for that, surely?

  6. There has been some debate over whether Apple NEEDS to comply with S-OX or not in this manner. I’m with you Tom on this, it was necessary to charge, but Apple chose not to make revenue from the Touch on a subscription basis

    A) So they could account for all of the VERY HIGH profit from each touch – that’s selling like crazy = possibly in greater numbers than iPhones

    B) Subscription accounting costs money – there has been some analysis that the iPhone may be $20-$40 more just because of this. This may mean this is the only “update we get” or it could mean we get another. Rest assured that Apple will charge $20 or so when iPhone 2.0 comes out.

  7. The iPhone was introduced as a iPod/phone/internet communication device. Apple accounts for revenue from this on an accrual basis

    The iPod touch was introduced as a iPod, a media player, not a phone nor Internet communicator Revenue is accounted for at point-of-sale. Just like when you buy a computer you expect to buy software to extend the functionality of the device. This is how I see the Application Pack for the iPod touch; it is getting new functionally to extend the device’s usefulness.

    Ergo, if Apple accounted for Mac purchases on an accrual basis major new versions of the OS, iLife or iWork could be sent out for “free” to users.

  8. Darren,

    I don’t think the apps have been there all along at all. There is a 1.1.3 update for the touch, but it doesn’t include the apps, which must be purchased and downloaded separately.

    I believe they deliberately kept them off to draw a larger distinction between the iPod and iPhone lines — despite the same interface in the touch.

    I suspect there was a lot of debate at Apple and that the feeling is that the more multi-touch devices they get out there, the more popular the SDK will be in February. I think they made a wise choice, but I also don’t think it’s unreasonable at all to charge, and that $20 is not bad.

  9. john gruber reports that the Touch update is only 9KB and that the apps have been on the Touch all along (am i reading that right?)

    well if that was the case then they are not really new features, particularly given that they have been shipping in the same form factor of the iphone.

    i know SOX requires them to charge for the update as they were “unadvertised features” at time of purchase, but i still rest on my original contention that they should have charged something nominal like $5 or just included the features in the first place.

    tom, normally you and I agree – i guess this time we will have to agree to disagree.

  10. DaveD,

    (1) If the $2 Apple charged for the 802.11n update sets a precedent for updates, it’s only for updates similar in nature. I don’t see how you can suggest it should set a precedent for all upgrade prices going forward, as if all updates are the same.

    (2) The ease with which an update is made is not relevant to its worth. Heck, one could argue that even MAKING the iPod touch was a lot easier after the iPhone. Should that have significantly decreased its worth?

    (3) So you don’t mind paying as long as everyone else pays, too? Prices come down, value goes up. What’s wrong with that? What you have that a new buyer doesn’t is the use of the device for however long you had it that someone buying today did not.

    Daniel,

    The iPod touch was NEVER “crippled”. It was NEVER touted as a “breakthrough internet communications” device as the iPhone was. People who bought it KNEW this and bought it anyway. There was no crippling. Period.

    Another Dan,

    This article kisses no Apple butt, unless by explaining their actions (which aren’t hard to figure out and other posts on the net have confimed) that’s enough to get you to take it as such.

    Who said the iPod brings in no revebnue? And what does that have to do with my article?

    “This is another moment of Steve Jobs arrogance to users.”

    Riiiiiight. No, this is just another example of Apple-bashing at anything that isn’t free.

    “They didn’t want Touch users to have these features but we demanded it.”

    Yes, and then when you got them you cried like babies.

    Al,

    I agree that for Intl users it’s a completely different thing.

    Daniel (again),

    You are incorrect. The iTunes WiFi store DEBUTED with the iPod touch. That’s when it was announced. It was most certainly there from the beginning. It was brought to the iPhone for free, but that all gets back to the iPhone and Apple TV getting “freebies” due to revenue recognitions that the touch does not.

  11. dorwbot: Greedy is Apple who crippled the iPod touch in the first place.

    I gladly pay for new versions of iWork.
    I probably will order a MacBook Air soon and am quite interested in the Time Capsule.
    The heavy update for the Apple TV is free.

    Funny enough: the software update to buy stuff from the iTunes Store was free (this wasn’t in the initial release of the iPod touch)…lucky for them, I find this feature impressive and ordered a few things through the iTunes store.
    Existing customers should be treated nicely, ripping off early adopters is not a good way to go.

    You’re right: I could poop on 20$.
    But when I was angry about the arrogant behaviour of Apple, I might instead spend 40$ in the amazon mp3 shop!

  12. I have no problem buying new software for my computing devices if that new software is functional and enhances my computing life. I renew my iLife apps when new versions come out even though those apps are free with a new Mac.

    I have a feeling that most of these new iPod touch apps will be useless for users who do not live in the USA. I think will be saving my $20 for Apple TV movie rentals.

    Oh wait, that’s not functional outside the USA either.

  13. Holy cow this article just goes out of the way to kiss Apple butt.

    I don’t debate that $20 isn’t much, but I still don’t plan on paying it.
    To say that the iPod generates no revenue stream is retarded. I buy shows and songs to listen on my iPod. If that doesn’t generate revenue then the iTunes/iPod business model is broke.

    I am going to jailbreak mine and then wait for the SDK.

    This is another moment of Steve Jobs arrogance to users. They didn’t want Touch users to have these features but we demanded it. Because we had been vocal he is going to make sure to still find a way to screw us over for not going along with his grand vision.

    Bite me Steve and all you Apple butt kissers. I may be an Apple fan, but I refuse to drink the Kool-Aid Steve is handing out.

  14. Daniel…you are a greedy person. I poop on 20 dollars and then buy iPod Touch apps with it. 😀

  15. I am not happy, that I have to pay 20$ for software, that exists on the iPhone since the beginning.
    Apple crippled the iPod touch in the beginning: The hardware is very similar to the iPhone, there is no reason to have left the apps out in the beginning.

    I don’t need an iPhone, but I am waiting for an Apple PDA (the successor to the Newton).
    The iPod touch hardware is already fairly close to my dream, modification of data must get easier.

    I won’t pay the 20$ and Apple will feel the heat of the user and hopefully re-consider their attitude.

  16. I agree that it’s due to SOX, but my gripe is the amount.

    (1) To turn on 802.11n in a MacBook cost $2. That sets a precident.

    (2) While the iPod Touch is not an iPhone, an argument could be made that Apple did no new development on the new features, but that – like 802.11n – they merely needed to copy the already polished app bundles onto the device.

    (3) I would have absolutely no problem charging me $20 – if today’s iPod Touch that has these apps on them retailed for $15 more than the one I bought at Best Buy last month.

    Speaking of point #3… what about those in inventory at Best Buy? They haven’t been sold yet, and dobviously don’t have these apps on them yet. Hmph.

  17. I also have no problems about Apple charging for the update.

    One question though : Is this update available to iPod Touch users outside the US? If I have an iPod Touch and I live outside the US, can I still have it if I am willing to pay?

  18. How poor are iPod touch users? Nominal? I can spend $20 almost without thought. That makes it pretty nominal as far as I’m concerned. Does paying $5 rather than $20 really matter to people?

  19. Darren,

    The iPod touch is NOT an iPhone. Period. Therefore these ARE brand new features.

    Further, they’re features no one who bought a touch had any reason to ever expect they would get at any price, let alone just $20.

    Asking why they didn’t offer them sooner is pointless. They didn’t need to offer them at ALL (and in the case of Email I’m surprised they are).

    When has Apple charged for a touch update until today? That’s right. Never. To act as if they’ll be charging for everything from now on requires a leap of thinking that is not consistent with what Apple has shown.

  20. But these aren’t really “new features” – they have been mostly available on the iPhone since June 07.

    As the iPhone & Touch are such similar hardware/software products why didn’t they just include these features on product launch and avoid the hassle now?

    I understand SOX and think this update should have been nominal, i.e. $5.

    Does this mean that over the next 12 months each Touch update is going to cost existing owners. I think that concept is going to wear thin pretty quickly if existing owners need to pay for 4 or 5 upgrades over a 2 year product life.

  21. I would pay the $20 for the ability to have email alone. What’s the gripe? Like Luis says above, it’s like getting five apps for $5 a piece. I wouldn’t have a problem with it. I think it’s a great deal.

  22. I also think you are right with the reasons.
    As for the price, games (a.k.a. additional applications) for the iPod are around $5 (I cannot check)… so 5 apps x $5 = $25.
    You got a 20% discount on quantity buying!
    Also, this can be setting the price for apps in the iPhone/iPod touch apps’ store.

  23. I think you’re absolutely right in everything you say. Of course, Apple could have charged a lower figure and still complied with Sarbanes-Oxley (viz. the airport update to n). But I reckon the $20 figure deliberately equates to $4 per app, and that that will be the fixed price for future apps sold via the iTunes store come February and the release of the iPhone/iPod Touch SDK.

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