"How do you manage the transition ..."
"How do you manage the transition from the subscription revenue model -
justified solely on the basis those OS upgrades, in my memory, to charging for iPhone OS upgrades?"
No transition to manage. The subscription model is attached to access to ATT's mobile wireless infrastructure and usage. Any charges for OS upgrades would be handled just like every other software purchase and upgrade -- via the new App Store.
If Apple worked up a deal with an internet access provider to sell you a PC for $300 or $400 less than it would cost straight up, in exchange for a 2-Yr broadband service agreement (with, say, ATT or Comcast), would anyone think it somehow unreasonable or unfair for Apple to charge for OS upgrades independently? Why would anyone who signed up for such a deal believe themselves entitled to the latest major OS upgrade for free, for the life of the PC?
If you buy a phone with iPhone Leopard OS X, and a year later Apple releases a new major upgrade, say iPhone Lynx OS X, which might contain new features, and Apple chose to charge for the upgrade, nobody would be forced to buy it. Just as a lot of people are happy to run Tiger on their current desktops, I would assume those who wouldn't want to shell out for that next upgrade would just keep on keepin' on with the old OS.
I, for one, wouldn't mind paying $79 or even $99 for a major OS upgrade to my (future) iPhone. Let's face it, if I'm looking at my costs for a 2-yr period, I've got $400 for the phone, $2,400 for the ATT service plan (assuming the $99/mo plan), so I start at $2,800 base. Allocating another $100 for tantalizing miscellaneous software and $100 for an OS upgrade (assuming equally tantalizing new features), hardly seems unreasonable to me.
Then again, I doubt what I find reasonable would match up with the average customer/user.
OTOH, if Apple is EVER going to be able to charge for the substantial software engineering resources it puts into future development of the iPhone OS, it will never get easier to make that announcement or invoke that plan.
Not saying they're going to do this, but I would be shocked if they haven't given serious deliberation to it. And I wouldn't be surprised in the least if that was one of the announcements coming next week.
It's also possible that Apple elects to make the upgrades free for iPhones, but charges for the iPod Touch. After all, it's already established a charge for a firmware upgrade for the Touch.
Then again ... Apple is in a bit of a Google box here, and that Google box looks fairly similar to the box Microsoft put Netscape in with the free Internet Explorer attack. Google uses its dominant market position in search to subsidize its phone OS costs and give that away for free, forcing Apple to choose between eating the entire cost of phone development, or facing a market disadvantage. Obviously, Apple can try and recover those costs by bundling them into the hardware pricing and raising that, rather than charging separately. But the result is the same. Either the iPhone pricing is disadvantaged relative to the gPhone licensed phones, or the iPhone OS is disadvantaged.
We are not that far away from serious engagement in an epic battle between Apple and Google in the mobile space. Let's see how Apple positions itself. Could Apple wind up one day in the future petitioning the Justice Department to help it level the playing field? That's not an unrealistic possibility, IMO.
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