iPod Touch Fee May Be Eliminated Soon

According to Chris Foresman at Ars Technica, a potential change in accounting rules by the Financial Accounting Standards Board, which has been strongly advocated by Apple and other tech giants, could eliminate the fees iPod touch users currently pay for major software updates.

This accounting practice, known as “subscription accounting,” requires revenue from products that receive significant new features post-sale, like the iPhone, to be recognized over time rather than at the point of sale.

While this model suits the iPhone, which incurs subscription fees over two years, the iPod touch has been an outlier, necessitating a nominal charge for updates — initially $10 and lately $5.

However, if the proposed rule change is accepted, Apple could consolidate the sales figures for the iPod touch, simplifying their financial reporting and avoiding the need for update fees, along with the complexities of GAAP and non-GAAP figures mentioned during their earnings calls.

Foresman notes that this adjustment would not only likely enhance Apple’s stock value by consolidating iPhone revenues into a single report, but it would also benefit developers and users by encouraging immediate updates across all devices, including the iPod touch.

Richard

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