Is Apple killing paid upgrades?

I had to reply to a recent MacWorld article “Is Apple killing paid upgrades?” since many look for reasons why Apple does something that seems so anti-competitive. Well, it is anti-competitive.

Many vendors support upgrade pricing. For example, Paradigma Software’s Valentina Studio Pro DB Admin & Reporting tool, and Mirye Software’s 3D modeling application Shade both have upgrade paths. Upgrades provide additional revenue to vendors in order to improve their products, while at the same time reward customer loyalty. You can stick with what you have and only pay a percentage of the full price.

Apple is incentivized by not providing upgrades and just lowering prices for a number of reasons, most of which lead back to the same source – owning its own channel. It can control the “street price”, keeping its profits high on every unit. Owning the platform and its built in store, it can identify trends and promote directly to its own customer base, reducing advertising costs and direct competition on the retail “floor” where customers can make some comparison of products. And lowering prices damages competition at the same time. None of these benefits are benefits for customers – they are benefits for Apple.

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