foresmac108":1lgtzvgs said:
Uh... no. I expressly wrote this because numerous sites have been reporting that this language is definitive proof that future OS updates for the iPad will cost money. I'm arguing that we shouldn't be extrapolating anything from the language. The bit about a major version and its associated updates being free is straight from the language itself. I haven't extrapolated anything.
That's exactly my point (except that you *did* extrapolate something - you are speculating the counterpoint to the DT/all others articles on iPad update charging). The article is silly for just the reasons you pointed out - it's something that's going to happen a year from now! For all we know the iPad could be discontinued by then!
I disagree entirely that Apple is selling the iPad "as 'software as a service,'" and you've failed to make any logical connection to why that would even be relevant to the current discussion. Of all the appliances I've ever owned, only two have gotten free firmware updates: an Airport Extreme base station and a Roku HD. I'm not sure how or why that some appliances get free firmware updates while most don't qualifies as some compelling argument that all OS updates for the iPad should be free.
I can't think of a single electronic device I own that doesn't get free firmware updates. My PC gets free firmware updates from EVGA. My Panasonic TV gets free firmware updates (such as they are) from Panasonic. My PS3 and Xbox 360 get free firmware updates. My old cell phone (HTC Exbalibur branded by Deutsche Telekom) got a free firmware update that included Win Mo 6.1. My Blu-Ray player receives free updates from Sony on a regular basis. My freaking Prius got a free ECU update from Toyota.
I'm really stretching, but as I said, I can't think of anything I own that doesn't get free firmware updates.
With respect to the 'selling software as a service' - I thought the "iPad as a connectivity device" was pretty well understood. (note also that I put it in quotes, because it doesn't adhere completely to this model - but that nuance seems to have escaped you in your crusade to prove me wrong). They've negotiated a special rate with a network partner to provide access to the device (at your cost no less - unsurprising for a typical device, but surprising when you consider one of the core uses for the device will be buying things from Apple). They have blocked all other entrants out of the 'iPad software application market' (creating a natural monopoly for themselves is usually the first and best way to sell software as a service - for instance, I can't buy Google Apps from anywhere but Google). The device does not support (and will not support) several de-facto standards for online content (which significantly limits the ability of the device to display content as it is currently understood), something which reinforces Apples' control over the platform and the application environment. All things typical in a software as a service deployment. (And atypical for a compute device).
foresmac108":1lgtzvgs said:
But then you end up doing the exact thing you just called me ridiculous for: extrapolating. You're extrapolation that Apple included such information so it can "have its cake and eat it too," and assuming that a possible future paid OS update would make the device "less useful." Like all major OS updates, however, one can opt out of any paid upgrade, and the device will remain just as useful as it always was.
Yes, I guess I kind of counted on you to realize that was a counterexample to your post. You claim by sticking a graph about "extrapolation" you're not simply making a shrill contrast to the articles posted on DT/all that's designed to save Apple from losing a few iPad pre-orders, after spending the entire article saying how it doesn't mean we have to be charged (which doesn't make any rational sense - if you wanted to make that case you should've simply said: the lawyers made them do it). By including my own rant, I served you the counterexample to the cyclical bitch fest. If there's no way to know what's going to happen a year from now, and there's nothing useful to speculate on, what's the point in this article? (Hence the "this article is ridiculous" comment). What's more, you AGREE with me on that point! Continued conversation is just hurt feelings over my extrapolations on charging for updates on iPads.
I don't know what would happen, but iPhone OS updates aren't sold on the App Store. Still, if you want to count it under iTunes Store revenues, which I believe is where iPod touch updates are paid for, then it would increase assuming at least one person pays for an update at some unknown future point.
Let's not be pedantic. If you grant the premise (which you are by responding), then you also have to grant that adding an application that might conceivably be sold even once would have to increase revenues. That's not debateable.
Still, let's assume an iPad user would have to pay $10 for an update in a couple years. We'll take a very generous analyst estimate for first year iPad sales of 4 million. Going by percentages of iPod touch users that pay for upgrades, about 30% might pay for the upgrade. So that might contribute $12 million in revenue—more than mere pocket change, but a drop in the bucket for a company that regularly pulls in billions in revenue per quarter. For comparison, Apple would make a minimum of $2 billion in revenue assuming Apple sells 4 million iPads in a year, and that all of them are the cheapest model.
iPod Touch update rates are low - but that is to be expected because the iPod Touch is not a compute device, I would also imagine the number of iPod Touches that have been used to purchase applications is much lower than on, say, iPhone. I don't think iPad would reach the same level of adoption as OSX on Mac, but it will be closer to OSX adoption rates than it would be to iPhone OS rates on iPT. Further, it's not a one-time-charge. Every time a major update is released, a new OS would need to be installed (after the proscribed update to iPhoneOS4).
And finally, you're comparing apples to oranges. According to the most recent public estimate, $12Mln represents as much as 13% of all App Store revenue in a quarter - on a single App! Adjust the adoption rates to a more rational number (60% - still much lower than Mac, but given that the update is something Apple is flogging and would add hypothethical new features, and the fact that it would be substantially less expensive than a full-point desktop OS update) and you get to a quarter of quarterly revenues. No, it's not impressive compared to a computers with an ASP in the $1,000's of dollars. It's also not impressive compared to the oil industry, but the two aren't really related. But it's *very* impressive compared to software.
If you're trying to imply that Apple is envisioning making tons of cash from paid OS updates, then I can say I have a hard time agreeing with that assertion. If that's not what you're trying to say, though, please explain exactly who is envision what from a possible future paid OS upgrade.
Which is why I don't think your estimates for App Store revenue aren't any good - because you don't appear to understand business and finance very well. As you yourself pointed out, any financial impact to users is more than a year away (which is why this is all quibble), but as a long-term business model it's great. Let's say iPad gets into videogame console-like usage numbers - 25-50Mln. Assuming annual OS updates - that's $250-$500Mln per year in extra revenue. Despite what you may think, that is a huge amount of money (for anyone, even Apple). Because the feature set is locked in, and Apple controls the ability to add/modify features, and they've already shown a willingness to exert that control to protect their revenue (either directly, or by protecting their financial relationship with the network operator) it's reasonable to assume that there will be compelling features in future updates. This all assumes your conservative price of $10 for an update - imagine if it was more like $15 or $20?
It's actually a really ingenious business model. While Apple's competitors will be giving away free updates, Apple will be selling them (just like they do now on the desktop).
Like I alluded to earlier, an iPad purchased today (well, this weekend) will function just fine even if it never receives any update at all. It may not have new features offered by an OS update, and it may not have features that new hardware revisions offer, but it will function just like it did the day it was purchased. (This same axiom applies to, say, G4-based Macs that can't upgrade to Snow Leopard.)
This doesn't have anything to do with revenue. You're basically saying "even when Apple does start charging for updates, they won't be mandatory." OK, but what's the only way to get GPU acceleration on a Mac? Not mandatory, but compelling.
Like I said once in the article itself, and twice already in comments, let's just wait and see what happens a year or more from now, when the first iPads might possibly be approaching the possibility of a possible paid upgrade, and see where things really stand.
Yes, and my point is - why not let Apple PR make that point instead of going on your own personal crusade which has no basis in fact (as you yourself say - there's no way any speculation is justified).
