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Undoubtedly, the most debatable announcement at Macworld yesterday was the iPod Touch upgrade. Apple released free major updates to the iPhone and the AppleTV, but when it came to updating the iPod Touch, users were asked to pay $20. The upgrade for the iPod Touch would make it more like the iPhone. It would add the Maps, Mail, Weather, Stocks, and Notes applications to the iPod Touch, which originally didn’t ship with the device. However, all new iPod Touches come with the new apps pre-installed. The question is, why didn’t Apple include these apps in the iPod Touch from the beginning?

I don’t think that Apple is perfect, and I believe they made a mistake about the vision of this device from the beginning. They first envisioned the iPhone as a “phone” and the iPod Touch as an “iPod”. The iPhone was meant to include and iPod, a phone, and an Internet communicator, while the iPod Touch was meant to focus music, photos, and videos like most traditional iPods had. However, when the iPhone and the iPod Touch were hacked, there was a clear message sent to Apple saying, “We want third-party apps”. I think Apple woke up and realized that these devices were not just a phone and an iPod. They were the beginnings of an entirely new computing platform.

Photo from Gizmodo

Finally, Apple caught on. Instead of working to differentiate their product lines, they should work to build them into a platform. They announced that they were working on an SDK (software development kit) that would allow developers to take advantage of the features of the iPhone and iPod Touch, and build third-party apps for them. They decided to give current iPod Touch users the ability to upgrade, and have all the apps that the iPhone has – for a price.

Why?

It’s the law. Unfortunately, there is a horrible little law called Sarbanes-Oxley, that legally doesn’t allow you to add features to products that you have already been paid for. Apple couldn’t add features for free. They had to charge something for them. Apple has gotten around this for the iPhone and AppleTV, by accounting for their payments over the course of 24 months. This means that they can keep adding new features to your iPhone or AppleTV for free for up to two years. They didn’t use this accounting method for the iPod Touch however. This means that legally, they can’t just add apps to the iPod Touch for free. Why charge $20 then? Why not just charge $1? The $20 for 5 apps comes out to about $4 per app. This is most likely the price that Apple will be selling third-party apps at, and wanted to keep their prices consistent.

I also believe that Apple chose to use this as a test of their system for purchasing and installing apps through iTunes. This could be a giant test, to see how a part of their SDK system works in the real world. I am sure that they are furiously working in Cupertino right now finalizing the SDK to get it out to developers as soon as possible.

But in the end, it really comes down to what you bought in the device. You bought the device for $300 or $400, and knew what it would do. Apple has now given you the option of upgrading your device to do a lot more, for only $20. You don’t have to do it. You can just stay with what you originally bought. I don’t own an iPod Touch, but I know that if I did, I would be grateful that they gave me the option, instead of doing nothing.