Remember when you had to pay to update iOS on some devices?
We are used to software updates being free, but there was a time when updating iOS on some devices had a cost.
In January 2008, Apple released an update to its iPhone software, which was free of charge for iPhone owners, but required an outlay of $19.99 for iPod touch users.
Later, in mid-2008, Apple released iPhoneOS2 (not yet called iOS at the time), its second major version of the mobile operating system. It was the first version to support third-party apps through the App Store.
At the launch event, Steve Jobs announced that this update was free for iPhones, but again, it cost $9.95 for iPod touch owners. The same thing happened with some later versions of iPhone OS, which carried a cost for iPod touch owners.
Why did Apple charge to update iOS?
As strange as it seems, Apple had no choice but to charge for the iPod touch software update, according to current accounting rules.
“It is an accounting requirement that if you update a device that is not on a subscription, you have to charge”, explained then Needham and Company financial analyst Charles Wolf. “Apple can choose what to charge, but it has to charge.”
At the time, Apple recognized revenue from the iPhone (and Apple TV) on a subscription basis.
According to the company’s February 1, 2008 quarterly filing with the Securities Market Commission, “for both Apple TV and iPhone, [Apple] indicated that it may from time to time provide future unspecified features and additional software products free of charge to customers.”
Therefore, the sales of the Apple TV and the iPhone were recognized in accounting under a subscription modality, but that was not the case with the iPod touch and, therefore, it had to charge for updating.
