Wired Gadgets: Macworld Confirms Growing Trend of 'Hardware as a Service':
I don't fully understand the difference why MS and Apple are willing to write off ongoing software expenses (for "free" software at that), but do to an accounting perspective, have been previously unwilling to provide a similar experience to people who buy their gadgets.
Apple's iPhone update revamps the Google Maps application to give it a GPS-like "Where am I?" feature that uses cell towers and WiFi hotspots to triangulate the phone's location. It also includes the ability to add custom icons to the phone's "home" screen.That last paragraph really caught my eye; Apple was only able to rationalize adding value to existing hardware due to an unusual "subscription-like" means of handling their own accounting processes. This is really curious, because software doesn't entirely seem to follow this model; MS and Apple both will "add value" to their software such as Media Player and iTunes, respectively.
Apple is providing the iPhone and AppleTV updates for free, but is charging $20 for the iPod Touch upgrade.
Because of general accounting practices, Apple generally can't provide new features without charging for them. But last year, Apple adopted an unusual subscription-like accounting practice for the iPhone and AppleTV. Instead of recording revenue in the quarter the devices are sold, the company amortizes the revenue over 24 months, like a subscription. The change allows Apple to add new features for free without running afoul of accounting regulations.
I don't fully understand the difference why MS and Apple are willing to write off ongoing software expenses (for "free" software at that), but do to an accounting perspective, have been previously unwilling to provide a similar experience to people who buy their gadgets.