A software update for the AppleTV promises to significantly revamp older models. *
Image: Jon Snyder * The MacBook Air is getting all the attention at Macworld, but some experts are more excited by Apple's willingness to improve old hardware with software upgrades, which some see as an exciting new model for the gadget industry.
On Tuesday, Apple added several big new features to the iPhone and the iPod Touch with software updates. Likewise, a forthcoming update for the AppleTV promises to significantly revamp older models with a new interface and the ability to rent movies via the internet.
"I think the most important message from Apple this year was to people who have already purchased its products," said Carl Howe, an analyst with the Yankee Group in Boston. "You've heard of the term 'software as service' in IT? Well, this is hardware as a service: hardware that changes over its lifetime."
The electronics industry has been updating products with firmware upgrades for years. Until recently, these upgrades were typically minor, fixing problems and glitches but not adding new features. Manufacturers saved new features for new models to provide an incentive for customers to purchase new hardware, replacing their now-outdated gear. But recently, several manufacturers have started adding features to products that customers already own.
Perhaps the biggest came from Microsoft, which in November provided first-generation Zune owners with a major software update while at the same time launching its second-generation Zune devices. The upgrade delighted 1.3 million Zune owners, but some wondered whether Microsoft was shooting itself in the foot.
The update "makes us ask why Microsoft would be so generous as to kill half the reasons why you'd ever upgrade to a new Zune," gadget blog Gizmodo wrote. "But as buyers, we'll just say thanks."
In the spring, Nintendo provided new internet features to the Wii, and Sony upgraded Blu-ray playback on the PlayStation 3.
Nikon added several new features found in its newer D70s SLR camera to the older D70, including a new menu design and better auto focus.
In a statement, Nikon said, "The rapid pace at which development of digital technologies is proceeding inevitably leads to a continual release of new products. In the face of this dynamic, Nikon is determined to demonstrate our respect for the many customers who purchased a D70 digital SLR camera by delivering, where possible, the latest technology that the digital world has to offer through firmware updates."
Earlier this month, Samsung released new software for its YP-P2 touch screen media player (which Time magazine named one of 2007's top gadgets), adding several new Bluetooth functions, including the ability to make and receive phone calls through a paired cellphone.
Yankee Group's Josh Martin says giving customers substantial device upgrades via software updates has gained momentum over the last few years and that companies increasingly have to do it to keep customers happy.
"You can't expect your customers to go out and spend $600 on an iPhone and then not update it," Martin said.
Martin also points out that the most popular consumer electronics devices are now networked devices with sophisticated processors, so it's become far easier to upgrade them. "The end of the dummy device is certainly making it much easier," he said.
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.
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.
It was a "good day for old products," said Daniel Jalkut, founder of Mac developer Red Sweater Software, after watching Steve Jobs unveil the updates during his keynote speech Tuesday.
Despite the updates, iPhone owners are still hoping for more new features. Many are hoping Apple will add the ability to cut and paste text and images and the ability to record video (the iPhone's camera currently only takes still shots). The iPhone has internal chips for video recording, and hackers have already been able to make the iPhone record video, so it seems a likely candidate for a future software upgrade.
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