its the other way around actually
because of the way its reported in their books, and due to some law, they HAVE to charge for iPod touch updates, and, one would assume, original iPhone updates now. They could charge for iPhone updates if they wanted, but don't have to because the revnue is reported over 2 years.
at least thats my understanding of it
This has been thrown around time and again ever since the 802.11n enabler fiasco. There is no consensus.
One camp (myself included) has generally settled on the interpretation that any software update which delivers new "features" to a device, rather than simply fixing bugs or flaws in features that were already there, constitute the device having been originally delivered in an "incomplete" state.
Apple's interpretation of generally accepted accounting procedures, allegedly in combination with the United States Sarbanes-Oxley Act, tell them that their annual regulatory filings cannot include recognition of revenue from the percentage of the device's total value associated with the "incomplete" features in the device. They can only recognize that revenue after the features that "complete" the device have actually been delivered to the customer. In effect, the new features have to be "paid for" somehow.
Apple has considerable leverage in deciding how to "pay for" the features. One common strategy, which it uses with major new versions of iPod touch software, is to charge for the new software. (Minor new versions of iPod touch software are not charged, because they do not add new features, but simply fix bugs in features that were already there.)
Another strategy, which they use in the iPhone and the Apple TV, is to hold back some of the up-front money they received when the device was first sold, and recognize the held back money gradually over the course of 2 years -- and this gradual recognition of income is meant to represent the gradual addition of new features into the previously incomplete device.
The fact that Apple does, indeed, hold back some of their up-front revenue from the sales of iPhones and Apple TVs, to be gradually recognized over the course of 2 years has been repeatedly and objectively confirmed by Apple executives in their annual reports.
By this interpretation, it would be very easy to justify the position that the first generation iPhone, having been off the market for more than 2 years by the time OS 4.0 is likely to be released, may not receive OS 4.0 at all, or else it may be a paid upgrade for users of the original iPhone.
On the other hand, if Apple does proceed to make OS 4.0 available to first generation iPhone owners for free, and if OS 4.0 is released on or after the 2nd anniversary of the original iPhone's discontinuation, then it would act as fairly strong evidence to refute this interpretation.
Moe UK said:
I have never understood that about the updates either, even if it was law that law would only apply in teh US and not the rest of the world.
The revenue from that sale is eventually going to make it back into Apple's general operating funds regardless of the country in which the sale takes place. And Apple is headquartered on US soil and registered as a US company, so ultimately, the way in which it reports that revenue will fall under US jurisdiction.
I am planning on buying the new iPhone in a few months as my 3G is pretty slow compared to even my iPod Touch, which I bought 5 or 6 months ago.
