iLife, iWork and OS X Updates Will Continue to Be Free in the Future

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macrumors bot
Original poster
Apr 12, 2001
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During today's financial results conference call for the third calendar and fourth fiscal quarter of 2013, Apple CFO Peter Oppenheimer indicated Apple will continue to offer iWork, iLife, and OS X for free for the foreseeable future.

When OS X Mavericks was released last Tuesday, Apple announced that for the first time ever, OS X system updates would be available to customers at no charge. At the time, it was unclear whether the upgrade would be a one time affair or if the company would continue to provide OS X updates for free.

In addition to providing Mavericks for free, Apple will also give free copies of its iWork and iLife apps to users who purchase a new Mac or iOS device, and will continue to provide the software free of charge in the future as well.

"We wanted all of our customers to have access to our very latest software so they can get the best features," said Oppenheimer. "We wanted to make it a part of the experience."

Apple's choice to offer Mavericks and its suite of iWork/iLife apps for free will contribute to a $900 million increase in deferred net revenue in the December quarter. Apple defers recognizing small amounts of revenue on Macs and iOS devices to comply with obscure account regulations over feature updates to purchased hardware. Deferrals will be recorded over two years for iOS devices and over four years for Macs.

Article Link: iLife, iWork and OS X Updates Will Continue to Be Free in the Future
 

IJ Reilly

macrumors P6
Jul 16, 2002
17,889
1,478
Palookaville
Wish it was really free. Owners of iLife apps before '11 are still being charged for upgrades, a week after this was supposed to have been fixed.
 

Dulcimer

macrumors 6502a
Nov 20, 2012
790
250
Can someone explain to me what the last paragraph is about? I read the same thing in the financial results conference today. It mentions deferred revenue of $900 million, but what does this mean?

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Wish it was really free. Owners of iLife apps before '11 are still being charged for upgrades, a week after this was supposed to have been fixed.
I thought it was fixed by now. I received a free upgrade (from disk versions) less than two days after it was released.
 

Tankmaze

macrumors 68000
Mar 7, 2012
1,661
275
Great services + hardware + experience and ecosystem. Only Apple could do this currently.
 

bpcookson

macrumors 6502
Apr 6, 2012
483
88
MA
This should be good for the stock price. It basically ensures that everyone pays for Apple's software development.
 

keysofanxiety

macrumors G3
Nov 23, 2011
9,534
25,264
Good on Apple. I'm also really impressed so far with Mavericks. I've encountered a few niggly bugs but overall the performance boost is really noticeable. I really like their mentality when it comes to software; they've never been big on battling piracy because they know if you've pirated a Mac app, you've most likely bought a Mac anyway (and they make the money from the hardware).

Really looking forward to seeing what the future brings.
 

Naaaaak

macrumors 6502a
Mar 26, 2010
634
2,064
Coming in 2014: OS XI
Maybe instead of 10.9 -> 11, they will adopt the absolutely stupid practice of versioning like 10.10. If they do that I'm just going to call it OS Double X, or Dos Equis. That will tie in well with the new Aqua: Stay thirsty my friends.
 

ScottishCaptain

macrumors 6502a
Oct 4, 2008
872
474
Is this really a good thing?

What right do you have to complain about anything now? Less then you did before, because now everything is free. Removed features in iWork? Hey, it's free now. Buggy GM release for OS X? Hey, it didn't cost you anything.

This just seems like it's going to open the flood gates for even more of the same rubbish we've been subjected to recently, but now Apple can point at you and say "It's free, what more do you want?".

-SC
 

Michael Goff

Suspended
Jul 5, 2012
13,329
7,415
Is this really a good thing?

What right do you have to complain about anything now? Less then you did before, because now everything is free. Removed features in iWork? Hey, it's free now. Buggy GM release for OS X? Hey, it didn't cost you anything.

This just seems like it's going to open the flood gates for even more of the same rubbish we've been subjected to recently, but now Apple can point at you and say "It's free, what more do you want?".

-SC
I worry less about Apple saying it and more about people in these forums saying that.
 

Rukaribe

macrumors newbie
Feb 21, 2013
3
0
Can someone explain to me what the last paragraph is about? I read the same thing in the financial results conference today. It mentions deferred revenue of $900 million, but what does this mean?
I am an accountant so let me try and explain.

This is an accounting rule that states that if your price covers more than one product, such as hardware and software, then you have to bifurcate and allocate the revenue generated between the products.

But there is another rule whereby you need to recognize revenue as either current revenue or future revenue. This is determined by when you earn that revenue by delivering the good that is apart of the price paid.

So in this case, Apple would get the cash for the product sold immediately, but could only recognize part of it for the current hardware and software. They need to then estimate the value of their expected future updates and "defer" that revenue until they perform the work to earn it and thus recognize it.

Basically, they are holding a liability that is an Unearned Revenue account that gets relieved into Revenue as they perform to earn that revenue, the principle for this is because there will be expenses incurred to earn that revenue which they must match with the deferred revenue to recognize it.

This is not really an obscure accounting rule at all to a profressional accountant. I was really quite shocked when I saw Apple had to charge for past updates, I actually used it as an example in my accounting seminar courses at school.

A good example of this principle is magazine subscriptions. The magazine gets the money all upfront for the year, but it is considered a liability called Unearned Revenue, and gets turned into Revenue as they deliver magazines. This is intuitive because the company has an obligation to deliver those magazines once they collect the subscription or they would owe the cash back and is the reason they cannot recognize it immediately.

Sorry for the long explanation, but it felt good to finally get to contribute something from my profession! :)
 

BC2009

macrumors 68000
Jul 1, 2009
1,962
316
apple is so generous. but if you buy an expensive computer i guess its the least they could do
Overall, a Mac is cheaper than a Windows machine. If you own a Windows machine for 4 to 5 years then you are likely to upgrade Windows 2 to 3 times. Those upgrade can run $100 each. On top of that, Microsoft is going to ding you for Office 365 at $100 per year. On top of that, you get more in the way of technical support from Apple especially in-person help with Genius Bar appointments at their stores being free. Then you have to think at how much time you will save if you go all-in on the Apple ecosystem with things just working together.

I'm not saying that Microsoft is offering a bad price for their services and software, just that the "expensive" part of Apple is up-front. The "expensive" part of Microsoft is the nickel and dime costs that occur later.

Apple and Microsoft are the only two vendors offering the complete package right now from living room to your desktop to your tablet to your mobile phone (assuming you count third-party PC's with Windows on them which are not really Microsoft). Google's Chrome OS has yet to prove it can fill that gap. Google has a TV solution similar to Apple's while XBOX One is arguably a better solution than either Apple's or Google's TV solution.
 

Nevaborn

macrumors 65816
Aug 30, 2013
1,078
312
Can someone explain to me what the last paragraph is about? I read the same thing in the financial results conference today. It mentions deferred revenue of $900 million, but what does this mean?

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I thought it was fixed by now. I received a free upgrade (from disk versions) less than two days after it was released.
Think it means $900 million is what they think iWork and iLife and Mavericks would have made them but now theyre free they have defered them from financial predictions.

Thats my reckoning on it anyway
 
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