Microsoft Blog explains why people don’t upgrade things.
I know that it’s frustrating to want to upgrade and hear me say, “But no one upgrades.” Obviously you want to upgrade. You wouldn’t be reading this if you didn’t. And, I’ll bet you know a bunch of people who want to upgrade as well. Please understand, the companies involved do not say, “Hey, let’s not bother to upgrade the device. We won’t piss off too many people.” Everyone wants to upgrade your devices. There are a number of reasons for this, not the least of which is that we know that providing upgrades makes customers happy. And, yes, we all like happy customers.
It’s not about figuring out how many people we can get away with annoying. Upgrades don’t happen due to a much simpler calculation.
(Total cost of doing the upgrade) / (number of people who will use it) = (unreasonable price)
The value of “unreasonable price” varies from situation to situation. But there have been times where it was higher than the price of a new phone. Because there have been upgrades in the past, we know how many people do them. And, even though you know a bunch of people who want to upgrade, it’s still a tiny percentage of the owners of that device.
On another note, Macromedia changes their mind and offers Flash for PocketPC for free. (The cost for the player–I kid you not–was $499!).