April 2007: When Apple stopped the rot

Some of Apple’s biggest enterprise advantages go back to a little-known change in its fiscal accounting over a decade ago.

Apple, iPhone, iOS, Mac, macOS, software upgrades, enterprise
Macworld UK

Enterprise users are catching onto something many already recognize — regular software updates and feature improvements mean Apple products get better with age.

This dependable future upgrade path is a huge advantage for Apple in the enterprise.

It all began in April 2007

Apple planned for this when it began to use subscription accounting in April 2007.

You see, while most of us were distracted by the iPhone launch, the company was already planning the next iPhone.

At the time, company CFO Peter Oppenheimer said the move to adopt this form of accounting was because Apple wanted to deliver free software updates for its devices.

Apple recognized that most users of existing mobile devices didn’t upgrade them regularly. It hoped that by delivering powerful updates for free, it would be able to motivate users to upgrade.

The company also knew that it wanted to commit to a path of regular hardware and free software updates for the device and may already have wanted to extend this largesse to its Mac product line. (MacOS upgrades eventually became free when OS X Mavericks shipped in 2013.)

Things weren’t always free

It’s important to note that operating system upgrades were not always free.

You had to pay for both Mac and Windows upgrades. Windows Mobile (at that time a threat) demanded a fee for its upgrades, but customers weren’t buying. Palm, RIM, and Nokia only seldom introduced OS upgrades, preferring a “built-in-obsolescence” model in which customers were driven to purchase new handsets to get hold of a new OS.

(That’s the same kind of model Android users still endure, given so many handset manufacturers don’t even try to push new OS upgrades out — meaning older Androids have nowhere to go but to the landfill.)

Apple wanted to do things differently. It knew it was offering the most powerful mobile device money could buy. (A recent Steve Jobs interview reveals the company may not have realized how powerful its solution would become.)

This is why in April 2007 — months before the first iPhone reached the public — Apple changed the way it accounted for devices. Some of the intial cost of a device goes toward paying for those future software improvements, which means ...

... Apple’s don’t rot

Look around, and you’ll find plenty who criticize the relatively high cost of Apple’s products in comparison to similar products on the market.

The problem with these criticisms is that without matching Apple’s commitment to future free and available software upgrades, those similar products aren’t similar at all, making this a false comparison.

Competing products may be good for some things now, but enterprise users are duty bound to look for reassurance around security enhancements, stability improvements, and long-term usability.

That’s something that’s already bought and paid for when they invest in an Apple product. It’s why the iPhone 8 will be a better smartphone when iOS 12 ships in fall, it’s why Apple Watch will be smarter; and it's why iPads will become even more productive.

It doesn't last forever, of course. There is a life cycle. Apple will declare products obsolete at some point, usually around 5-7 years. iOS 12 will run on iPhones all the way back to the 5-year-old iPhone 5s, for example.

This matters.

It means that for the extra subscription accounting cost, enterprises purchasing a new Apple device can safely predict a five-year usable life, regular software and security improvements, and look forward to additional (hopefully useful) features, too.

Developers also benefit

Enterprises focusing around digital transformation of their business also benefit.

These regular software upgrades are very popular.

iOS 11 runs on 81 percent of all actively used iOS devices, iOS 10 on 14 percent, and just 5 percent of iOS devices run older operating systems. This means 95 percent of all actively used iOS devices run an operating system that’s under 2 years old. No other platform has this.

This means all the latest security, software, graphics, and APIs are supported across the majority of all actively used devices, which itself means enterprises can safely develop B2B and B2C apps that can be used by almost every iOS user.

This lack of fragmentation isn’t accidental, but by design. You can go back to April 2007 to identify when the company began consciously planning for this — and look to the Sarbanes-Oxley Act to find out why it had to tell us it was doing so. Apples get better with age.

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