Apple yesterday updated the software for the iPod Touch and its AppleTV. The Touch update adds five new applications; Mail, Maps, Weather, Notes, and Stocks. At least two of these, Mail and Notes should have been on the original, yet Apple is charging $20 for the update.

Meanwhile, the AppleTV software has been completely overhauled and been given a new interface and the ability to download content directly, without the need for a computer. That too is something it should have been able to do from the start. In this case, however, the upgrade is free for AppleTV owners.

There are two reasons that I can see for this.

Number one. The iPod Touch has been a huge success and has had excellent reviews. The AppleTV on the other hand is a dog. An embarrassment. Overhauling the software for free is Apple’s way of admitting it got it wrong. Jobs himself said in his keynote speech yesterday that forcing the AppleTV to connect to a Mac or PC was a mistake.

Number Two. The real income from the AppleTV will come from movie rentals. And the more users who have the ability to download movies directly to AppleTV, the more movies Apple will rent. In that context, making the update free makes much more sense economically than charging for it.

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