Along with the launch of iPhone 3GS, last week saw the release of the iPhone 3.0 firmware update. By Monday Apple announced that over 6 million customers had downloaded the update. That's roughly 15% of the iPhone/iPod Touch owning population. While a lot of Apple customers are downloading the update, very few iPod Touch owners seem interested in paying the $10 price tag.
A study released today by Admob shows that less than 1% of Touch users have the new software. The update is free for iPhone users, which probably explains why 44% of those studied were already running 3.0. By comparison, 78% of Touch users are still running the iPhone 2.0 software released a year ago.
Admob states that the $10 price tag is the reason for the slow adoption by Touch users. They warned Apple that having the app-buying community split between update versions would not be good for the app store. Most developers now are working on applications designed to work on devices with the 3.0 software. The fact that virtually no Touch users have it means that developers have a substantially smaller customer base than they did two weeks ago.
What this means is that, unless there is a sudden unexpected surge in 3.0 downloads for the Touch, Apple is going to have to make a very tough decision. The current status quo will not be allowed to stand. It isn't profitable for Apple, or the developer community. Eventually Apple's going to have to start offering the update for free. That's going to tick off those few customers that already paid the ten bucks, but it'll also get the entire app developing community off of their backs.