Apple and Microsoft Reportedly Facing Off Over SkyDrive In-App Subscription Revenues

Renzatic · Dec 11, 2012

linuxcooldude said:
But Apple is hosting the application, advertising, webmasters, bandwidth in their store. All that costs money. The iTunes store should be self sustaining, not loosing money.

And what's it costing Apple to run Microsoft's servers? Or Netflix? Or Dropbox? The only thing they're responsible for is that initial 15-30 meg download. As has been stated previously, developers already pay Apple for that right.

If Apple wants more, they should demand an upfront charge for subscription services. Apple deserves the 30% for anything they host directly. Nothing beyond.

viacavour · Dec 11, 2012

ChazUK said:
And consumers? Will we be paying less for Apple's hardware once they shoe-horn more money from us/developers prividers via in app subscriptions?

I'll be totally honest with you, i care very little for Microsoft as they can pretty much afford whatever Apple tries to take from them.

Being an armchair CEO and all, I doubt I'd ever understand so it's best we leave this here.

Your caps lock may be broken by the way.

There are rumors that Apple is working on cheaper hardware.

linuxcooldude · Dec 11, 2012

gotluck said:
What leaves a bad taste in people's mouth is that there is no choice. Yes Apple deserves to earn money from their store. However, Apple is also strong arming developers/customers because there is no other option outside of their store. Apple's way or the highway. These analogies concerning Best Buy don't really fly because noone is ever forced to use Best Buy. There is always another choice/vendor.

It seems the developers & customers choice is clear. They choose Apple. If they weren't happy they would go elsewhere. Most developers really like making applications for iOS. A lot of money is to be made.

everything-i · Dec 11, 2012

ChazUK said:
No.

https://forums.macrumors.com/posts/16466788/

It says they have offered to removed the subscription stuff but what about the sign up screen, I believe that may well be the problem. That is if there even is a problem, who knows the article is all based on nothing more than supposition with no evidence or facts of any kind. As far as I can see no app has been rejected or even been submitted for that matter, just like Google and the maps app a couple of weeks back, no substance to the allegations at all.

This service operates like DropBox so following the same resolution that DropBox did should logically allow this app to proceed. If it didn't then I'm sure it would be down to the lawyers to sort out. Similarly if they allowed this app without applying all the rules as with everyone else again it would end up with more lawyers. Damned if you do, damned if you don't situation.

babyj · Dec 11, 2012

Think people complaining about Apple's 30% cut aren't looking at the big picture. Apple provide a simple and complete platform for apps on iOS devices, which works and is a big part of why it has been so successful where others haven't.

The deal is simple for everyone;
- Developers pay a flat fee to join the developers programme. They have the freedom to make the app free or paid for. Apple host the app, handle the payments and handle customer support (ie refunds). In return they get paid 30% of any sales.
- Customers have a single platform to buy apps from, with a simple payment system and a reliable customer support (ie refunds).

If Apple started changing any of that the whole thing would start falling apart and everybody would suffer as a result.

Besides, the 30% is misleading. If you take in to account card processing charges and commission for gift cards it's going to end up closer to 20%. Then you've got to add on the support and hosting costs which aren't cheap. It's easy to forget that Apple will be losing money on a lot of the popular free apps - $100 (or whatever the developer fee is) doesn't come close to covering the data traffic charges. The $100 would only buy you about 1.4Tb of traffic from a content delivery network.

gotluck · Dec 11, 2012

linuxcooldude said:
It seems the developers & customers choice is clear. They choose Apple. If they weren't happy they would go elsewhere. Most developers really like making applications for iOS. A lot of money is to be made.

Imagine how much more money could be made if a developer could create an app, host and promote on their own website - without Apple's forced "help", and reap all the profits resulting from it. You know, how traditional software sales worked before iOS (brick and mortar stores aside).

viacavour · Dec 11, 2012

Renzatic said:
And what's it costing Apple to run Microsoft's servers? Or Netflix? Or Dropbox? The only thing they're responsible for is that initial 15-30 meg download. As has been stated previously, developers already pay Apple for that right.

If Apple wants more, they should demand an upfront charge for subscription services. Apple deserves the 30% for anything they host directly. Nothing beyond.

Apple does marketing to bring in the crowd for AppStore. They also upkeep the client security to minimize piracy even for subscription service. They also bear some legal risks. And they add features to boost app downloads and usage, even for small things like Passbook. Plus of course maintenance of app update and downloads, running the Apple security servers, GameCenter, iMessage, notification services for the entire platform. Technical costs are not the only costs. Twitter doesn't get paid enough and so they are limiting the number of tweets per app.

Judas1 · Dec 11, 2012

HenryDJP said:
$99 is hardly an amount that will break MS and they certainly will make a million times over that amount. Apple also deals with the customer problems in terms of payment, refunds from dissatisfied customers from apps that didn't offer them what they expected and such along with the maintenance from POS transactions. Developers can just sit on their butts and collect revenue while somebody else does all the dirty work. Heck yeah, they should be paying 30% for every transaction initiated from the App Store or iOS.

If you add up all the man hours it took to create all the apps in the App Store, you'll see that the hosting that apple does is the side that sits on its butt collecting revenue.

Liquorpuki · Dec 11, 2012

I don't think Apple has much of a choice and part of it is their fault because they wanted to commoditize mobile software.

They've created a crowded ecosystem of cheap apps - that cheapness makes it desirable and pretty easy for devs to switch between pay apps, IAP, and subs to dodge that 30% distribution cut. If they didn't take a 30% cut off subs, the app store would be mostly sub by now.

Renzatic · Dec 11, 2012

babyj said:
Think people complaining about Apple's 30% cut aren't looking at the big picture. Apple provide a simple and complete platform for apps on iOS devices, which works and is a big part of why it has been so successful where others haven't.

The deal is simple for everyone;
- Developers pay a flat fee to join the developers programme. They have the freedom to make the app free or paid for. Apple host the app, handle the payments and handle customer support (ie refunds). In return they get paid 30% of any sales.
- Customers have a single platform to buy apps from, with a simple payment system and a reliable customer support (ie refunds).

Besides, the 30% is misleading. If you take in to account card processing charges and commission for gift cards it's going to end up closer to 20%. Then you've got to add on the support and hosting costs which aren't cheap. It's easy to forget that Apple will be losing money on the larger popular free apps - $100 (or whatever the developer fee is) doesn't cover hosting for say a million download of a 1Gb app (which would cost a small developer $100,000 in bandwidth charges through a content delivery network).

If Apple started changing any of that the whole thing would start falling apart and everybody would suffer as a result.

You're right...when it comes to apps hosted directly by Apple. That's not the issue here. We're talking about things usually handled beyond the app store, being forced to go through it so Apple can get a cut.

Do you all really think Netflix needs to pay Apple 30% of their fees for letting Apple handle their subscription charges? Despite the fact Netflix is already more than capable of handling payment processing, and has a service that works perfectly well outside of the Apple ecosystem?

rjohnstone · Dec 11, 2012

Apple is not letting MS have the same option Amazon and DropBox when it comes to subscriptions.

Source

Microsoft has persisted in trying to work out a compromise with Apple, but has thus far failed to come to an agreement. The company offered to remove all subscription options from its application, leaving it a non-revenue generating experience on iOS. The offer was rebuffed.

So Apple won't even allow MS to submit an updated app with the subscription option removed.

If a service has a subscription option, it seems, and it is not listed in the iOS store, the application cannot, and will not be allowed.

If this is the case, why is Amazon and DropBox allowed to have their apps in the App Store, but MS is not?
I can subscribe to both of those outside of the iOS app.

Sounds like a double standard if you ask me.

As for the Sign Up page, that is referring to third party devs using the Live SDK. It has nothing to do with the SkyDrive app itself.
The Live login page has a sign up link on it. The devs need to remove that bit of web code to avoid getting rejected.

FunkyELF · Dec 11, 2012

any web browser

Wouldn't any web browser violate this same thing because you can use a web browser to pay for subscriptions to anything?

Judas1 · Dec 11, 2012

gotluck said:
Imagine how much more money could be made if a developer could create an app, host and promote on their own website - without Apple's forced "help", and reap all the profits resulting from it. You know, how traditional software sales worked before iOS (brick and mortar stores aside).

I can set up my own server for very cheap. Hosting is nothing. And guess who does the advertising. It's the app customers in the form of a good review, all of which has nothing to do with apple.
Edit. Guess you're making the same argument I am. Detected sarcasm, when there wasn't one.

mw360 · Dec 11, 2012

rjohnstone said:
Apple is not letting MS have the same option Amazon and DropBox when it comes to subscriptions.

Source

So Apple won't even allow MS to submit an updated app with the subscription option removed.

If this is the case, why is Amazon and DropBox allowed to have their apps in the App Store, but MS is not?
I can subscribe to both of those outside of the iOS app.

Sounds like a double standard if you ask me.

I already told you why you were flat wrong about this. When MS actually updates their app, it will get through. Offers and promises don't count.

greatfx · Dec 11, 2012

babyj said:
Besides, the 30% is misleading. If you take in to account card processing charges and commission for gift cards it's going to end up closer to 20%. Then you've got to add on the support and hosting costs which aren't cheap. It's easy to forget that Apple will be losing money on the larger popular free apps - $100 (or whatever the developer fee is) doesn't cover hosting for say a million download of a 1Gb app (which would cost a small developer $100,000 in bandwidth charges through a content delivery network).

If Apple started changing any of that the whole thing would start falling apart and everybody would suffer as a result.

Holy Stockholm Syndrome.

Large and free=in app purchases or ads=apple takes a cut.

Poor Apple, they have to pay bandwidth costs for hosting the apps. If only the developer could sell apps from their own websites....oh wait.

Jeez, it's not like Apple offers anyone a choice. This is the model they chose and hosting costs is one of the drawbacks associated with it.

linuxcooldude · Dec 11, 2012

gotluck said:
Imagine how much more money could be made if a developer could create an app, host and promote on their own website - without Apple's forced "help", and reap all the profits resulting from it. You know, how traditional software sales worked before iOS (brick and mortar stores aside).

Not necessarily. If your a small developer what chances is your software going to be noticed, let alone sold. Sure, your going to get 100% of what you sell, but if you don't sell much, in the long run its not much profit.

iamkarlp · Dec 11, 2012

skaertus said:
The approach Apple is using only works for small companies that abide to its interests. Microsoft will not give its profits away to Apple. Nor will Google, or IBM, or Oracle. These companies are not subordinate to Apple, and some of them are competitors. This 30% charge is the reason why Microsoft will never release a full-featured, non-subscription version of Office for iOS. Nor will Adobe release full versions of Photoshop or Illustrator. These companies are not spending millions of dollars in development and marketing just to give 30% away. Apple must change its policy if it wants iOS devices to become more than just expensive toys.

While I think the argument here is interesting (that is, whether Apple is morally in the right to demand a 30% cut of not just the initial application price, but ongoing subscription revenue as well), it is also moot. Apple can do what they like and there is nothing illegal about it. If you don't like the thought process, better go get on Android before Google comes full circle and begins implementing the same controls.

That said, what I can not understand is your statement. You are, in affect, asserting that no large company would be willing to give up 30% on the sale price of a large item to a 3rd party.

That is comical in it's error, even by internet standards. Each and every major development company (Autodesk through Vmware) all give up far more than 30% every day on practically every sale. In fact unless you bought it right from their own web store on their own site (which many companies won't even do), then the reality is that 30~50% of your money did _not_ go to the people who wrote it.

It's the way the world works. Everyone needs to eat, and writing the software is no more or less important than any other portion of the chain to get it running in your environment.

Karl P

viacavour · Dec 11, 2012

Renzatic said:
You're right...when it comes to apps hosted directly by Apple. That's not the issue here. We're talking about things usually handled beyond the app store, being forced to go through it so Apple can get a cut.

Do you all really think Netflix needs to pay Apple 30% of their fees for letting Apple handle their subscription charges? Despite the fact Netflix is already more than capable of handling payment processing, and has a service that works perfectly well outside of the Apple ecosystem?

Apple does a lot more for NetFlix. They are close collaborators. NetFlix adopted HTML5 and HTTP Live streaming early in the days with Apple's help. Even today, they work closely with Apple to make sure their app runs well on iOS.

They are in it for the long term, and made it to AppleTV and iPad too.

mw360 · Dec 11, 2012

Renzatic said:
And what's it costing Apple to run Microsoft's servers? Or Netflix? Or Dropbox? The only thing they're responsible for is that initial 15-30 meg download. As has been stated previously, developers already pay Apple for that right.

If Apple wants more, they should demand an upfront charge for subscription services. Apple deserves the 30% for anything they host directly. Nothing beyond.

'Deserve'? What does that have to do with it? It's commerce. If somebody has something you want, you pay for it. If you want it a lot, you pay a lot.

If people only paid what they thought a vendor 'deserved', we'd pretty much all be destitute.

Stella · Dec 11, 2012

viacavour said:
99 bucks is the developer fee.

And the developer fee also allows software to be listed on the AppStore - no?

I suppose I should have said "includes"... $99 includes the listing of your apps on the app store.

mdelvecchio · Dec 11, 2012

FSMBP said:
I'd rather be on a site that would report all rumors, even that bash Apple when Apple is in the wrong, than a site that only posts positive articles on Apple (i.e. DaringFireball).

uhh, but that isnt true -- DF has no problems criticizing apple when theres merit. if you were an active reader of DF youd know this. try again.

viacavour · Dec 11, 2012

rjohnstone said:
Apple is not letting MS have the same option Amazon and DropBox when it comes to subscriptions.

Source

So Apple won't even allow MS to submit an updated app with the subscription option removed.

If this is the case, why is Amazon and DropBox allowed to have their apps in the App Store, but MS is not?
I can subscribe to both of those outside of the iOS app.

Sounds like a double standard if you ask me.

As for the Sign Up page, that is referring to third party devs using the Live SDK. It has nothing to do with the SkyDrive app itself.
The Live login page has a sign up link on it. The devs need to remove that bit of web code to avoid getting rejected.

Amazon and DropBox didn't break the rules. MS did and is getting reviewed by Apple now. They probably leaked the news to try to get away.

gotluck · Dec 11, 2012

linuxcooldude said:
Not necessarily. If your a small developer what chances is your software going to be noticed, let alone sold. Sure, your going to get 100% of what you sell, but if you don't sell much, in the long run its not much profit.

I would argue that same scenario is even worse for a developer in Apple's App store. Aside from the featured page, it is quite difficult to get your App noticed. Honestly, I read app reviews online and search for them specifically in the app store. I don't believe there is a single time where I discovered a new app through the store itself (aside from the featured page, which likely isn't a small developer).

viacavour · Dec 11, 2012

Stella said:
And the developer fee also allows software to be listed on the AppStore - no?

I suppose I should have said "includes"... $99 includes the listing of your apps on the app store.

No. Developers fee is for basic support and the ability to submit your app. App review dictates whether your app can be listed on AppStore. Naturally the review covers all aspects.

terraphantm · Dec 11, 2012

BaldiMac said:
When I ran a retail store, we charged a commission when we sold third-party services. Nobody thought this was strange or childish.

Yeah, but in a non-digital environment, if someone doesn't want to pay a commission, they're free to open their own store.

On iOS devices, that's not an option. I'm sure a few of the larger companies would gladly host their own applications if given the choice.

Apple and Microsoft Reportedly Facing Off Over SkyDrive In-App Subscription Revenues

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