Wednesday
29Oct2008
Could Snow Leopard be free?
Wednesday, October 29, 2008 at 05:43PM
I was wondering aloud on Twitter today if, given Apple's cash on hand, the company might choose to make Snow Leopard either free or very low-cost.
Over the history of Mac OS X, the installed base has adopted new OS releases at a very impressive rate. From the data available from Omni Group, this appears to have dramatically slowed with Leopard: in nearly a year since Leopard's introduction, it is still not used by the majority of systems reporting data to Omni.
Given the improvements in Snow Leopard and the desirability for Apple and third-party developers of having the user base on the latest OS, the impact on the ecosystem of having a free Snow Leopard release would be very nice.
The question that looms over all Apple upgrades these days concerns whether the company's interpretation of the Sarbanes-Oxley act will allow them to do it. In what follows, bear in mind that I am neither American nor an accountant, just an active observer.
As I see it, Apple's take on Sarbanes-Oxley is that the company cannot ship software updates which add meaningful features without either spreading the revenue for that product over a number of quarters (as with iPhone) or charging for the update (as with iPod touch and the 802.11n Enabler). There may be some debate over this interpretation, but it appears that this is how Apple sees it. In any case, given the recent history of the Apple board and the SEC, a period of conservative accounting is probably quite wise.
My understanding is that the only products Apple accounts for on a subscription basis are iPhone and Apple TV. As far as I know, revenue from Mac OS X sales is booked in the relevant quarter.
The key question, then, is whether Snow Leopard is an enhancement to Leopard or a distinct product. The WWDC mantra of "no new features except Exchange" for Snow Leopard muddies the waters slightly, but it seems clear to me that any OS release that carries a new marketing code name is a new product. Puma, Cheetah, Jaguar, Tiger and Leopard are all distinct products. 10.5.5 is fairly clearly a maintenance enhancement to 10.5.0.
Will it happen? I have no idea but, as an investment in helping prevent the installed base from fragmenting over three OS versions, I can see a good technical argument for doing it.
Over the history of Mac OS X, the installed base has adopted new OS releases at a very impressive rate. From the data available from Omni Group, this appears to have dramatically slowed with Leopard: in nearly a year since Leopard's introduction, it is still not used by the majority of systems reporting data to Omni.
Given the improvements in Snow Leopard and the desirability for Apple and third-party developers of having the user base on the latest OS, the impact on the ecosystem of having a free Snow Leopard release would be very nice.
The question that looms over all Apple upgrades these days concerns whether the company's interpretation of the Sarbanes-Oxley act will allow them to do it. In what follows, bear in mind that I am neither American nor an accountant, just an active observer.
As I see it, Apple's take on Sarbanes-Oxley is that the company cannot ship software updates which add meaningful features without either spreading the revenue for that product over a number of quarters (as with iPhone) or charging for the update (as with iPod touch and the 802.11n Enabler). There may be some debate over this interpretation, but it appears that this is how Apple sees it. In any case, given the recent history of the Apple board and the SEC, a period of conservative accounting is probably quite wise.
My understanding is that the only products Apple accounts for on a subscription basis are iPhone and Apple TV. As far as I know, revenue from Mac OS X sales is booked in the relevant quarter.
The key question, then, is whether Snow Leopard is an enhancement to Leopard or a distinct product. The WWDC mantra of "no new features except Exchange" for Snow Leopard muddies the waters slightly, but it seems clear to me that any OS release that carries a new marketing code name is a new product. Puma, Cheetah, Jaguar, Tiger and Leopard are all distinct products. 10.5.5 is fairly clearly a maintenance enhancement to 10.5.0.
Will it happen? I have no idea but, as an investment in helping prevent the installed base from fragmenting over three OS versions, I can see a good technical argument for doing it.
Reader Comments (11)
I wish someone cleared up this whole Sarbanes-Oxley thing, because I can think of two examples where Apple has provided meaningful features for free:
First, OS X 10.1, which according to Wikipedia was a free update and “distributed to Macintosh users on October 25, 2001 at Apple Stores and other retail stores that carried Apple products.”
And second, even though iPod touch users had to pay for the 1.1.3 and 2.0 updates, 2.1 was a free update that contained at least one major new feature: Genius (at least major in the sense that Steve Jobs spent a good part of the “Let’s Rock” event talking about it.) The 2.1 update is $9.95 to pre-2.0 users, on the other hand, so maybe it was a free update to 2.0 users because that update was accounted on a subscription basis itself, so every 2.x update will be free. In other words, they’re updates to the 2.0 software, not to the iPod. At least that’s my completely uneducated, uninformed guess.
If that’s the case, maybe they did the same thing with Leopard. If Snow Leopard was planned as a maintenance update all along, perhaps they’ve accounted for Leopard on a subscription basis in preparation for it.
SOX wasn't enacted until July 2002.
The benefit of a large installed base using the latest OS is obvious. But giving Snow Leopard away for free or a very low nominal fee would send a wrong message to the market: 10.6 has a lower value than 10.5.
In fact I doubt that Snow Leopard is only a minor update. I guess Apple is very quite about the features of Snow Leopard because they are working out the best way to market the new features. I like the idea of highlighting only the mayor improvements instead of claiming some 300+ new features - with many of those being quite silly.
Thank you, Derrick, I didn’t know that. I should have looked it up.
you forgot Panther ;)
It remains to be seen. Is "Mac OS X" the product or is "10.5" the product? Companies are certainly allowed to give out free updates - or charge for them - as they see fit. But then again you could argue the same for the iPod Touch OS. The hardware didn't change, after all - a parallel situation to updating Mac OS X. And certainly some x.x.x releases of 10.5 (and others before it) have included new features, though not "significant," so at least Apple doesn't interpret it at THAT level.
The only possibility I foresee is that if Apple wishes to get the software out there free, they can charge $0.99 for it (and probably S&H) or bundle it free if you purchase iLife or literally anything from Apple. Flood the market with disks and let the natural "I have five Snow Leopard disks - you want one?" take over.
Unlikely, though, that.
I think you have misinterpreted;
The problem is usually one of "revenue recognition". You can't deliver new "features" in a service pack because that implies that the product wasn't complete when first received and therefore you have to redo your accounts so that the revenue for the sale is "recognised" only once the customer received the complete product. This would be an enormous problem. This is why the iPod Touch updates were sold (iPhone updates weren't because the customer was on a service plan, which already recognises revenue only for the period the current payment covers).
So, a brand new product can be given away for free - so long as it is really free and not a back-door update - i.e. there be no requirement that 10.6 can only upgrade 10.5 (or have any other OS pre-requisite).
I think it should befree if you have 10.5 but they should charge the full $129 if you are running 10.4 or earlier.
Guillermo: Apple didn't recognize the revenue for any iPod touch users that paid for 2.0 until after 2.1 was released. Technically, a company can offer free software updates to hardware, like Apple does for the touches, for as long as they want, but they can't recognize the full revenue from the hardware sale. As soon as they recognize it, they can't offer "substantial updates" without charging a nominal fee.
As for not charging for Snow Leopard: from my understanding of basic accounting rules, I see no reason it couldn't be done. I think, like Balrob said, as long as it stands on its own as a product, i.e. there's no software prerequisite for it, you're in the clear. I'm not sure why there's any question about what the product is: OS X 10.5 is the product that Apple is selling, not "OS X" with different versions being sold. That being said, it may be booked differently for accounting purposes, so who knows.
If Snow Leopard is not free, it had better, at least, come with a coupon to reimburse me for the crash-a-thon that has been "regular" Leopard. Having converted more than a dozen from PC to Mac, this has been pretty much embarrassing. Good thing Vista is such an unattractive "switch back" option!
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