iPod touch Touch, $20 and SOX

mainstreetmark said:

This thread is started for an intelligent discussion on the whole $20 thing that everyone here is bitching to no end about. If you reply to this thread, don't use the term 'sux'.

You want it for free. Perhaps Apple could give it away but here are some possible reasons why they won't.

A) Profitability. The iPod Touch was marketed as a lightweight version of the iPhone, and everyone knew it. Now, they're selling for the same price and the compelling difference is a cellphone inside. Apple makes more money on iPhones (due to contracts) than on iPod Touches, so Apple puts more value into the iPhone. That value has evaporated, and it must be compensated.

B) Sarbanes-Oxley Act of 2002. The "enron thing". As I understand it, based on my readings last year, this act attempted to put some rational constraints on large corporations to protect the users. One of the main points in this is you cannot change the description of what you are selling, without accounting for the change.

This means that if new features come along to, say, the iPod Touch, they must be accounted for, because the iPod Touch was advertised with a FIXED SET of features. It was never advertised as being expandable. Just like the iPod Classic -- new features necessitated new hardware. Remember when the 'n' was enabled for some of the 802.11 computers? Apple was required to charge $5 for that update, because the hardware got new capabilities.

The Mac is a platform who's function, by definition, is to run various unspecified, user-specific software applications. It's not hardware, with a fixed set of attributes, as far as software goes.

C) You guys willingly paid $300 to $400 for a under-20gig iPod, that did NOT have maps, emails, notes, weather or stocks, and no one told you differently. If you feel compelled to blow steam that you now are charged and extra FIVE PERCENT for extra apps that you didn't need in the first place, then perhaps put yourself on a track to take over Apple and control things. If you think this is unfair, wait until you meet the real world. Try to start a business, or buy a house.

Click to expand...

I agree with you! I bought the apps are are VERY happy with them. to me they are worth it (anymore than 20 bucks though, i wouldn't have gotten them).. However, the one thing that kinda irritates me is that the new iPod touch is coming with the apps already loaded for the same price in which i purchased mine. If they too had to pay, would be much more fair. But, its business.

They also needed a test on how to distribute applications, and I believe they may have used this as a test. A lot of people including myself had problems installing, which got me even more irritated. But luckily, with the help of some other people on here, most of us were able to figure it out.

I love the new apps!

mainstreetmark said:

This thread is started for an intelligent discussion on the whole $20 thing that everyone here is bitching to no end about. If you reply to this thread, don't use the term 'sux'.

You want it for free. Perhaps Apple could give it away but here are some possible reasons why they won't.

A) Profitability. The iPod Touch was marketed as a lightweight version of the iPhone, and everyone knew it. Now, they're selling for the same price and the compelling difference is a cellphone inside. Apple makes more money on iPhones (due to contracts) than on iPod Touches, so Apple puts more value into the iPhone. That value has evaporated, and it must be compensated.

B) Sarbanes-Oxley Act of 2002. The "enron thing". As I understand it, based on my readings last year, this act attempted to put some rational constraints on large corporations to protect the users. One of the main points in this is you cannot change the description of what you are selling, without accounting for the change.

This means that if new features come along to, say, the iPod Touch, they must be accounted for, because the iPod Touch was advertised with a FIXED SET of features. It was never advertised as being expandable. Just like the iPod Classic -- new features necessitated new hardware. Remember when the 'n' was enabled for some of the 802.11 computers? Apple was required to charge $5 for that update, because the hardware got new capabilities.

The Mac is a platform who's function, by definition, is to run various unspecified, user-specific software applications. It's not hardware, with a fixed set of attributes, as far as software goes.

C) You guys willingly paid $300 to $400 for a under-20gig iPod, that did NOT have maps, emails, notes, weather or stocks, and no one told you differently. If you feel compelled to blow steam that you now are charged and extra FIVE PERCENT for extra apps that you didn't need in the first place, then perhaps put yourself on a track to take over Apple and control things. If you think this is unfair, wait until you meet the real world. Try to start a business, or buy a house.

Click to expand...

I agree w/ your points very well said, but I'd like to add one more comment to Point C above.

"C) You guys willingly paid $300 to $400 for a under-20gig iPod, that did NOT have maps, emails, notes, weather or stocks, and no one told you differently. If you feel compelled to blow steam that you now are charged and extra FIVE PERCENT for extra apps that you didn't need in the first place - then don't purchase the applications. It is not mandatory. You purchased your iPod Touch knowing the functionality it came with. If you do not need these applications than save your $20 or feel free to continue with the alternative methods for getting these features."

D) According to the front page of MacRumors, existing iPT stock without the apps installed are being sold for a $20.00 off. Would you have been upset if Apple just decided to drop the price and not offer the option to purchase the apps legitimately?

E) If you're upset please stop comparing the updates to the iPhone and Apple TV updates from yesterday. There are differences - mainly being the iPhone and ATV updates were just that - updates to existing applications/functionality. The apps for the ipod are brand new applications. Its different. You purchase software for your computer and then the manufacturer (typically) offers free updates. (as well as the whole Subscription based concept mentioned in another post).

F) Yahoo mail did not work with a jailbroken iPT unless you paid $19.99 a year to Yahoo for thier premium Mail Plus service. With the $20 one time fee Yahoo Mail now works. To me, that makes it worthwhile. (I know that doesn't apply to everyone, but for some people who do use Yahoo mail its is a big help!).


Just throwing in my 2 cents. I had no problem paying for these apps. I think $4.00 an application is worthwhile - and I'm hoping that when the SDK is out other companies follow this lead in determining thier pricing.

macwannabe77 said:

I agree with you! I bought the apps are are VERY happy with them. to me they are worth it (anymore than 20 bucks though, i wouldn't have gotten them).. However, the one thing that kinda irritates me is that the new iPod touch is coming with the apps already loaded for the same price in which i purchased mine. If they too had to pay, would be much more fair. But, its business.

They also needed a test on how to distribute applications, and I believe they may have used this as a test. A lot of people including myself had problems installing, which got me even more irritated. But luckily, with the help of some other people on here, most of us were able to figure it out.

I love the new apps!

Click to expand...

Look at it like new features in an operating system. When you ran tiger, you expected to pay to get the new features in leopard. You paid $129 to get Time Machine, spaces, and all the other junk that was new to leopard. When leopard got released, apple included it in all of their machines being distributed. Any person who bought a macbook on Oct 26 got a free leopard upgrade (much like the new touches get the free upgrade), while old users had to pay to get the new features.

No one complained about that at all because it was the way it was expected to be done. Why should it be any different for an iPod?

Luveno said:

Look at it like new features in an operating system. When you ran tiger, you expected to pay to get the new features in leopard. You paid $129 to get Time Machine, spaces, and all the other junk that was new to leopard. When leopard got released, apple included it in all of their machines being distributed. Any person who bought a macbook on Oct 26 got a free leopard upgrade (much like the new touches get the free upgrade), while old users had to pay to get the new features.

No one complained about that at all because it was the way it was expected to be done. Why should it be any different for an iPod?

Click to expand...

You're right! its just irritating because I am kicking myself for not waiting (so basically im more irritated in myself then with apple). I didn't mind paying for the apps, again to me, they are worth the $20 bucks!

This reasoning holds no water.

1) They are including the new apps "free" with new purchases. Clearly they feel the price of the touch includes the value of these features.
2) The AppleTV was advertised with a certain set of fixed features. They added several new features to it without cost. They added new features to the iPhone as well, including at least one feature (Springboard icon rearranging) that id only being made available to touch owners with additional purchase. I'm not sure if Webclips are available on the 1.1.3 touch firmware without paying for the new apps, but that could be an additional example.
3) I don't think that any thinks that Apple is OBLIGATED to give away this update. I do think, however, that most people agree that it was a terrible decision not to, and the good will they will lose over this is worth far more than any profit they will realize.

The iPod, while clearly the market leader and probably the best product in it's class, is facing competition from people who ARE giving away updates that enhance functionality to their customers. The "enemy" is one who is willing and able to dump money into their product until it is the dominant player.

They could have easily sidestepped a lot of this by simply not giving away the update to new touch purchasers. It would still have been a bit "cheap" by Apple, but as you said the touch wasn't advertised to have these features and offering them as an additional option would have been a little frustrating but made sense. Want a cool PMP? Buy a touch. What a decent PDA to go along with that PMP? Buy the 'touch PDA suite' for $20. Giving it away to new buyers really feels like punishing the old ones.

And to head off the argument of "all products get updated and reduced in price over time", this is much different from a hardware upgrade in that it adds no cost to Apple to do this. The software was a sunk cost with the iPhone already, it would have cost Apple nothing to offer it for free.

They probably could have paid $20 for every current touch owner (call it 2m, so $40m) out of an advertising budget calling it "promotion for customer good will" and not missed it at if they HAD to please the accountants.

Hls811 said:

D) According to the front page of MacRumors, existing iPT stock without the apps installed are being sold for $179. Would you have been upset if Apple just decided to drop the price and not offer the option to purchase the apps legitimately?

Click to expand...

I don't see any mention of discounted iPod touches in that post? I can't find any mention of this anywhere. Care to elaborate?

Initially thought the point of your post was to discuss the "why" of Apple's decision to charge for the new apps. But then your point C is just another argument for people to quit bitchin, so I don't think this thread is ultimately any different than the many others.

mrgreen4242 said:

I don't see any mention of discounted iPod touches in that post? I can't find any mention of this anywhere. Care to elaborate?

Click to expand...

iPod Touch Paid UpgradeThe $20 upgrade for the iPod touch software was met with a cool reception both by the keynote crowd and by MacRumors readers. While we have not received an official reason for the move, we remind users that only the iPhone and Apple TV are currently using Apple's "subscription revenue" accounting model. As such, Apple has explained that it can give software updates for those devices, when possible, for free. The iPod touch does not fall under this model, and therefore under Apple's reasoning, a major feature upgrade must incur a charge.

We have heard that all current iPod touch models already in the distribution channel without the new software have been immediately discounted by $20 to accommodate for the upgrade fee.

Its right there on the link I supplied.

Well put!

I would've bought the Touch if it had the iPhone Apps on it - then I wouldn't have to do all the hacking to stay on T-Mobile.

If something happens to my iPhone, I would seriously consider a Touch as a PDA and a cheap phone (I still miss the real buttons when using the phone )

We should all celebrate the fact that Apple has outdone all those Windoz Mobile PDA's with an iPod!!!

Hls811 said:

iPod Touch Paid UpgradeThe $20 upgrade for the iPod touch software was met with a cool reception both by the keynote crowd and by MacRumors readers. While we have not received an official reason for the move, we remind users that only the iPhone and Apple TV are currently using Apple's "subscription revenue" accounting model. As such, Apple has explained that it can give software updates for those devices, when possible, for free. The iPod touch does not fall under this model, and therefore under Apple's reasoning, a major feature upgrade must incur a charge.

We have heard that all current iPod touch models already in the distribution channel without the new software have been immediately discounted by $20 to accommodate for the upgrade fee.

Its right there on the link I supplied.

Click to expand...

Ah, you typo'd your original post... You said "$179" which I found a bit suspect. You meant, I assume, $279 and/or $379. They aren't really discounting them, they are merely making it simple for them to offer new buyers a consistent price.

mainstreetmark said:

This thread is started for an intelligent discussion on the whole $20 thing that everyone here is bitching to no end about. If you reply to this thread, don't use the term 'sux'.

You want it for free. Perhaps Apple could give it away but here are some possible reasons why they won't.

A) Profitability. The iPod Touch was marketed as a lightweight version of the iPhone, and everyone knew it. Now, they're selling for the same price and the compelling difference is a cellphone inside. Apple makes more money on iPhones (due to contracts) than on iPod Touches, so Apple puts more value into the iPhone. That value has evaporated, and it must be compensated.

Click to expand...

I fully agree that it is in Apple's best interests as a corporation to seek compensation for its additional development work, and that ultimately it is up to them to assign a value to everything they release. Sometimes they may decide that a new release justifies charging extra money, and sometimes, they may decide that a change is minor enough (or reliability- or security-critical enough) that it should be released to the general public at no charge.

However, I think that it is misleading to pass off the whole thing (or even any significant portion thereof) as a regulatory issue...

B) Sarbanes-Oxley Act of 2002. The "enron thing". As I understand it, based on my readings last year, this act attempted to put some rational constraints on large corporations to protect the users. One of the main points in this is you cannot change the description of what you are selling, without accounting for the change.

This means that if new features come along to, say, the iPod Touch, they must be accounted for, because the iPod Touch was advertised with a FIXED SET of features. It was never advertised as being expandable. Just like the iPod Classic -- new features necessitated new hardware. Remember when the 'n' was enabled for some of the 802.11 computers? Apple was required to charge $5 for that update, because the hardware got new capabilities.

The Mac is a platform who's function, by definition, is to run various unspecified, user-specific software applications. It's not hardware, with a fixed set of attributes, as far as software goes.

iTunes has always been free, therefore, upgrades are free.

Click to expand...

There are counterexamples, in the exact same industry, in which substantial new features have been provided for an existing product by means of a firmware upgrade without the manufacturer being compelled to charge a fee, and no punitive action has been taken against them. The Zune comes to mind.

In the spirit of intelligent discussion, I would appreciate it if nobody responds with a comment about how that example is irrelevant simply because the Zune "sux".

I am also curious exactly where the line ought to be drawn between a minor release or bug-fix, and a significant new-feature upgrade. We've seen cases where volume limits have been added to iPods via firmware upgrades at no charge. When the 5G iPod was first released in 2005, the stock firmware was incapable of playing anything other than the 2 built-in games - the "feature" of running 3rd party software simply didn't exist. However, in 2006, a free upgrade was released which opened up the potential to install 3rd-party games. Ditto for gapless playback.

C) You guys willingly paid $300 to $400 for a under-20gig iPod, that did NOT have maps, emails, notes, weather or stocks, and no one told you differently. If you feel compelled to blow steam that you now are charged and extra FIVE PERCENT for extra apps that you didn't need in the first place, then perhaps put yourself on a track to take over Apple and control things. If you think this is unfair, wait until you meet the real world. Try to start a business, or buy a house.

Click to expand...

At the end of the day, I totally agree that it's Apple's choice, and that it's now our choice to decide whether or not we want to buy it.

It is simply my opinion that in this case, the extra price may not be fully justified by the set of features on offer.

mrgreen4242 said:

Ah, you typo'd your original post... You said "$179" which I found a bit suspect. You meant, I assume, $279 and/or $379. They aren't really discounting them, they are merely making it simple for them to offer new buyers a consistent price.

Click to expand...

Good catch.. I don't know why I had in my head that it was originally $199.. Wishful thinking I guess! I editted my original post as to not confuse others.

goosnarrggh said:

There are counterexamples, in the exact same industry, in which substantial new features have been provided for an existing product by means of a firmware upgrade without the manufacturer being compelled to charge a fee, and no punitive action has been taken against them. The Zune comes to mind.

In the spirit of intelligent discussion, I would appreciate it if nobody responds with a comment about how that example is irrelevant simply because the Zune "sux".

Click to expand...

The Zune? What new features were added to the old Zune? I though it was just a UI update to match the new Zunes. No new features were added...

Apple added features to the iPod Touch to make it a functional PDA...

I paid the $20 and downloaded the apps; I think they are well worth it, particularly Notes, Maps and Mail. I think though that if they were priced higher, I probably wouldn't get 'em. It's a good price point, hardly going to break the bank.

Now my Touch feels like a real PDA, which is essentially what I use it for. (internet, calendar, maps, email, etc). I listen to music on my Shuffle.

mainstreetmark said:

That is a very, very good point. I'll edit it out.

Click to expand...

Thanks, because I do think it's interesting to think about the why of it.

I think the real reason for the charge is that Apple is trying to set a precedent for paying for apps on the Touch---perhaps the iPhone, too. Think about it: once third party apps start to come out, how are we going to get them? It's got to be through iTunes, and I can't believe that any of them are going to be free. I am moving to the Touch after being a long-time Palm user, and the Palm system of apps is a crazy-quilt of freeware, shareware, and just plain weirdware. I think Apple is trying to think ahead, to when there is a whole range of apps that start coming out for these devices, and trying to have more control (and profit) over the new system.

I think this explanation makes more sense than some of the other ones, because Apple already has added functions to the Touch for free---they added the ability to add/edit Calendar items, right? Might seem like a small thing, but it would have been a deal-breaker for me not to have that. So why didn't they have to charge for that?

Just some ideas as I wait for UPS to deliver my new Touch today!

I agree with the point and opinion that Apple is using this as an opportunity to test how distributing new apps will work with the impending SDK. And in the process they just increased the functionality and awesomeness of the Touch.

peletrane said:

I paid the $20 and downloaded the apps; I think they are well worth it, particularly Notes, Maps and Mail. I think though that if they were priced higher, I probably wouldn't get 'em. It's a good price point, hardly going to break the bank.

Now my Touch feels like a real PDA, which is essentially what I use it for. (internet, calendar, maps, email, etc). I listen to music on my Shuffle.

Click to expand...

i agree with you, for 10 dollars more i wouldn't have gotten them! $20 to me isn't that bad for what you get!

goosnarrggh said:

I fully agree that it is in Apple's best interests as a corporation to seek compensation for its additional development work, and that ultimately it is up to them to assign a value to everything they release. Sometimes they may decide that a new release justifies charging extra money, and sometimes, they may decide that a change is minor enough (or reliability- or security-critical enough) that it should be released to the general public at no charge.

However, I think that it is misleading to pass off the whole thing (or even any significant portion thereof) as a regulatory issue...


There are counterexamples, in the exact same industry, in which substantial new features have been provided for an existing product by means of a firmware upgrade without the manufacturer being compelled to charge a fee, and no punitive action has been taken against them. The Zune comes to mind.

In the spirit of intelligent discussion, I would appreciate it if nobody responds with a comment about how that example is irrelevant simply because the Zune "sux".

I am also curious exactly where the line ought to be drawn between a minor release or bug-fix, and a significant new-feature upgrade. We've seen cases where volume limits have been added to iPods via firmware upgrades at no charge. When the 5G iPod was first released in 2005, the stock firmware was incapable of playing anything other than the 2 built-in games - the "feature" of running 3rd party software simply didn't exist. However, in 2006, a free upgrade was released which opened up the potential to install 3rd-party games. Ditto for gapless playback.


At the end of the day, I totally agree that it's Apple's choice, and that it's now our choice to decide whether or not we want to buy it.

It is simply my opinion that in this case, the extra price may not be fully justified by the set of features on offer.

Click to expand...

This is exactly my point. I think that the real underlying issue is that new features are added to products free IF they have the potential to generate revenue for Apple down the line (iPhone owners get new functionality to keep them subscribing to a cell plan, ATV gets new features so they will rent/buy content from iTMS).

If there's no money in it for Apple they charge (iPod touch, .11n updates). It's pretty greedy, and I think it hurts them far more than the profit from the upgrade sales would pay for.

Hls811 said:

Good catch.. I don't know why I had in my head that it was originally $199.. Wishful thinking I guess! I editted my original post as to not confuse others.

Click to expand...

No trouble, I was just confused about what you were saying originally as a result.

gkarris said:

The Zune? What new features were added to the old Zune? I though it was just a UI update to match the new Zunes. No new features were added...

Apple added features to the iPod Touch to make it a functional PDA...

Click to expand...

"Not only is the old 30GB getting the new Wi-Fi syncing, it's getting the updated sharing features, the new codecs, the podcasts, and the new Windows Media Center TV on the go. It's essentially the new Zune, except thicker and with less storage space...which makes us ask why Microsoft would be so generous as to kill half the reasons why you'd ever upgrade to a new Zune. But as buyers, we'll just say thanks."

http://gizmodo.com/gadgets/zune/fir...is-is-how-you-treat-your-customers-306422.php
http://www.digg.com/microsoft/Old_Z...Features_This_is_How_You_Treat_Your_Customers

This is what Apple is going to be up against. I'm no fan of the Zune, or MS for that matter (even their best product, the 360 has been pissing me off with it's horrid media streaming setup) but they will throw money at this market until they are a significant player. Apple's king of the hill right now, but they will lose users if they don't at least pretend like they are competing.

mrgreen4242 said:

2) The AppleTV was advertised with a certain set of fixed features. They added several new features to it without cost. They added new features to the iPhone as well

Click to expand...

Apple specifically accrues revenue for the exact two products you mention in such a way that it allows them to do that. When you buy either of the products, the total you pay Apple doesn't hit their books all at once. They take 1/24th of the revenue of that sale for each of the next 24 months, which allegedly allows them to provide free updates.

goosnarrggh said:

There are counterexamples, in the exact same industry, in which substantial new features have been provided for an existing product by means of a firmware upgrade without the manufacturer being compelled to charge a fee, and no punitive action has been taken against them. The Zune comes to mind.

Click to expand...

Be interesting to know how Microsoft accounts for the Zune. Do they do it in a similar fashion as Apple does the AppleTV and iPhone? It's not like Microsoft has the best track record of doing things in a way that doesn't come back and bite them in court later, so I wouldn't necessarily look at something they're doing now as a precedent.

My guess is that Apple had no initial intentions of making these apps available on the touch and thus chose not to accrue the touch sales in the same manner as they did the AppleTV and iPhone.

Who knows.

Other companies have provided brand new features to their products and have not been compelled to charge their customers for the features. I have had routers that have added major features, as well as many other firmware upgradeable devices.

At the end of the day this is Apple wanting to make a tidy little profit on something that costs them zero to develop. These features already exist, there is no "cost" involved in developing them.

The entire argument Apple is throwing out there about being legally required to charge for an update that puts a few new features on the device is a weak one at best. It seems that it was more of a smokescreen so that Apple Fanboys could justify to themselves why the mighty Apple felt the need to charge for something that should have shipped free in the first place.

I don't expect this is the last "pay me" update we'll see from Apple. They are starting to exploit their dominant position in the market. When they release the SDK update for the Touch, they will probably charge for that too. SIP VoIP client? $25 please.

Etc, etc.

The sad thing is that future versions of the devices will include all of this functionality in the box at no added charge.

gkarris said:

The Zune? What new features were added to the old Zune? I though it was just a UI update to match the new Zunes. No new features were added...

Click to expand...

It added native support for a lossless audio format, as well as native h.264 and MPEG-4 codecs. (With the previous firmware, the lossless audio WMA format was silently transcoded to a lossy WMA format on-the-fly by the desktop software before being sent to the Zune. On the video front, only WMA video was supported; the user had to manually transcode any videos coming from other formats.)

It also added PC-to-Zune synchronization via WiFi, and removed the 3-day limit on "squirted" music. (The 3-play limit remains.)

Apple added features to the iPod Touch to make it a functional PDA...

Click to expand...

The Mail, Stocks, Weather, and Notes applications probably required more effort on Apple's part to remove from the stock iPhone firmware while it was being ported to the iPod Touch during initial development than it took to re-introduce them with this update.

I've tried to be careful to reserve my opinion, to some extent, until I see what policy Apple adopts regarding the ability of the iPod Touches with the "free" edition of firmware (vs those with the equivalent "premium" edition) to run software developed with the SDK.

Do I think $20 is too much for the apps? No. Would I like to have them? Yes. Will I buy them? No.

I just think it's bad form on Apple's part to wait until right after the holiday season, until after they have ALL these new Touch owners, to then spring this.

If they had announced it before hand, said "Hey, we're going to allow you to add some new features to this thing. And it'll only cost you $20.", then I think everyone would be fine with it. If they're going to start charging people for apps, then it should be an across the board fee, for everyone, for all apps.

It's left such a bad taste in my mouth, that I won't be paying for the apps, and I'll no longer be using iTunes for music purchases. I'm in the design industry, so I pretty much have to use Apple products. But they will no longer be getting any money from me that I absolutely don't have to spend.

kshott said:

It's left such a bad taste in my mouth, that I won't be paying for the apps, and I'll no longer be using iTunes for music purchases. I'm in the design industry, so I pretty much have to use Apple products. But they will no longer be getting any money from me that I absolutely don't have to spend.

Click to expand...

This precisely demonstrates my position: Apple was under no obligation to ever add these features to the touch, nor give them away for free if they did. However, giving them away would have been "the right thing" to do and the long term cost of not doing the right thing will far, far out weight the profit they make on upgrade sales.