Microsoft and Apple Facing Off Over Office for iOS Subscription Revenues, Not SkyDrive

Exio said:

This whole post can be summed up by two words. "I'm a journalist."

Of course you don't have a use for office, your not part of the corporate world. What do you think journalists did pre-computer? Ah you guessed it! Paper and Pen!

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Hold up a sec. I never said I have no use for Office. Office is fine software that I wouldn't mind owning, but I can find plenty of alternatives that are cheaper and that give me generally the same results I need without having to lay down some money for the latest version of Microsoft's software.

Don't get me wrong, Microsoft Office works MUCH faster and with less lag than OpenOffice.org, and it has way more bells and whistles than TextEdit, but I'm still a little perplexed as to why Microsoft Office is in such high demand in the corporate world. Perhaps it has something to do with Notes being such an outrageously bare-bones text editing application?

mdelvecchio said:

what youre not grasping -- apple doesnt want a million apps w/ a million differnt payment gateways. while certainly technically feasible, it adds complexity to the iOS user experience. my senior father would find that much more complicated than simply tapping "BUY" on ANY app in the store and have it auto-magically charge the card he set up *once*.

thats apple's vision for their devices & ecosystem. its entirely possible that strategy is why theyve generated more app wealth than any other.

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I think that's an under-appreciated point.

There are two questions on this issue that I see pretty straightforward, non-"Apple is just greedy" answers to:

1) Why do the force apps to use IAP for purchases? As you pointed out, a significant answer is to improve the security and consistency of the iOS experience for users. It also helps developers by creating less friction when a user does decide to make a purchase.

2) Why does Apple charge 30% for subscriptions? The obvious answer to me is that it would be an easy loophole for developers if they didn't charge the same amount. Of course, "because they want to" is an equally valid guess.

Gordy said:

There are far more iPad's and iPhones in use than computers today.

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LOL.

No, its actually the reverse, still way more PCs being used than those two products combined.

This won't happen for a loooong while yet.

KnightWRX said:

In-app purchase is still a forced payment processor which takes larger than industry rates for the service.

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What are the industry rates?

dejo said:

What are the industry rates?

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A lot cheaper than Apple!!

For example, Kagi,which is tiered - who also offer bulk discounts!!
http://www.kagi.com/pricing/general

First $0 - $5000 7.99% + $0.75
For transactions through Kagi's in-application module, add three-quarters of one percent (0.75%)
Next $5,000.01 - $10,000 7.49% + $0.75
Next $10,000.01 - $25,000 6.99% + $0.75
Next $25,000.01 - $50,000 6.49% + $0.75
Next $50,000.01 - $75,000 5.99% + $0.75
Next $75,000.01 - $100,000 5.49% + $0.75
$100,000.01+ 4.99% + $0.75

KnightWRX said:

I'm sorry, the web says you lie.

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no, it doesnt. the iOS app store has generated more wealth than the competing ecosystem app stores.

We already have a million different ecommerce sites with a million different payment systems and the world still works

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now youve changed the topic to ecommerce on websites, when we were clearly discussing mobile app stores. off-topic. (but as an aside, theres a reason Amazon.com is becoming bigger & bigger -- people dont want to deal w/ all those other million different ecommerce sites when they can buy it all in one place)

Don't think this has anything to do with user experience, it's all about generating more money for Apple.

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incorrect. apple makes the vast, vast majority of its money from hardware sales profit. the iphone's hardware is what makes apple rich, not IAP. what drives this in no small part is the simplified user experience. apple strives to maintain this superior UX, which is why techno-nubes like my senior father can buy apps all day w/o worrying about external payment processors and logins for a million different apps.

thats it. thats the simple nut of it. sorry you cant see the forest from the trees.

Stella said:

A lot cheaper than Apple!!

For example, Kagi,which is tiered - who also offer bulk discounts!!
http://www.kagi.com/pricing/general

First $0 - $5000 7.99% + $0.75
For transactions through Kagi's in-application module, add three-quarters of one percent (0.75%)
Next $5,000.01 - $10,000 7.49% + $0.75
Next $10,000.01 - $25,000 6.99% + $0.75
Next $25,000.01 - $50,000 6.49% + $0.75
Next $50,000.01 - $75,000 5.99% + $0.75
Next $75,000.01 - $100,000 5.49% + $0.75
$100,000.01+ 4.99% + $0.75

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You realize those rates aren't necessarily cheaper than Apple, right?

BaldiMac said:

You realize those rates aren't necessarily cheaper than Apple, right?

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How are those rates quoted above not cheaper than 30% that Apple takes? The more sales you make on Kagi the less percentage you pay. Unlike Apple.

BaldiMac said:

I think that's an under-appreciated point.

There are two questions on this issue that I see pretty straightforward, non-"Apple is just greedy" answers to:

1) Why do the force apps to use IAP for purchases? As you pointed out, a significant answer is to improve the security and consistency of the iOS experience for users. It also helps developers by creating less friction when a user does decide to make a purchase.

2) Why does Apple charge 30% for subscriptions? The obvious answer to me is that it would be an easy loophole for developers if they didn't charge the same amount. Of course, "because they want to" is an equally valid guess.

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yep, you got it. #1 is the stone simple (and secure) UX that apple wants associated w/ it in order to sell more devices in order to rake in more profit on hardware. #2 is likely also correct -- if IAP were 5% but apps were 30%, all devs would shift their app price to $0 and charge via IAP. why wouldnt you? so pretty obvious that apple keeps them both at the same rate.

mdelvecchio said:

no, it doesnt. the iOS app store has generated more wealth than the competing ecosystem app stores.

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the iOS app store is tiny compared to the online eCommerce ecosystem.

mdelvecchio said:

now youve changed the topic to ecommerce on websites

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No, I drew a parallele. You just decided to ignore it because it dispells the myth you're trying to spread that multiple independant payment systems is complicated for users.

Stella said:

How are those rates quoted above not cheaper than 30% that Apple takes? The more sales you make on Kagi the less percentage you pay. Unlike Apple.

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Because of the "+ $0.75" per transaction. Most IAPs I come across are $.99 or $1.99. Both are more expensive at the rates you quoted. Up to $.84 for a $.99 IAP!

BaldiMac said:

Because of the "+ $0.75" per transaction. Most IAPs I come across are $.99 or $1.99. Both are more expensive at the rates you quoted. Up to $.84 for a $.99 IAP!

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ah, ok, I didn't see the $ sign... 0.75 - thought it was percentage.

KnightWRX said:

the iOS app store is tiny compared to the online eCommerce ecosystem.

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...which is not the topic of this conversation. we're talking about why Apple does things in its ecosystem, not what the wide open web does. you know this.

but as to the size of iOS apps vs web ecommerce...a non-starter. because as ive already pointed out, app sales and IAP is not apple's primary business model...at all. they make their fortune by selling hardware and enjoy serious margins on that hardware. everything else -- app stores, airplay, IAP, iOS itself, all serve to drive more hardware sales. thats their business.

how can you be an iOS dev and not realize this??

No, I drew a parallele. You just decided to ignore it because it dispells the myth you're trying to spread that multiple independant payment systems is complicated for users.

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no, i ignored it because it's off-topic. if i wanted to argue that off-topic point, id point out Amazon.com and make a parallel that theyve grown their business to king-web-retailer on the same foundation apple has -- by making things simpler for the consumer, not more complicated. amazon.com does this by selling anything, such that consumers need only go to one website rather than many. it works.

just keep that head in the sand, tho. meanwhile, their business marches on.

Stella said:

ah, ok, I didn't see the $ sign... 0.75 - thought it was percentage.

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It's probably because the site you quoted doesn't deal in micro-transactions, the way Apple does. Micro-transactions is an entirely different market.

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mdelvecchio said:

no, i ignored it because it's off-topic.

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It's not off topic, you said "different payment systems is confusing", I provided an example where they are not. It was on topic. You ignored it because it destroyed the whole basis of your argument.

Not much more reason to discuss with you if you're going to ignore arguments.

mdelvecchio said:

what youre not grasping -- apple doesnt want a million apps w/ a million differnt payment gateways. while certainly technically feasible, it adds complexity to the iOS user experience. my senior father would find that much more complicated than simply tapping "BUY" on ANY app in the store and have it auto-magically charge the card he set up *once*.

thats apple's vision for their devices & ecosystem. its entirely possible that strategy is why theyve generated more app wealth than any other.

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I agree with this as a consumer....it just works(as long as I don't have to remember a million different user names and passwords for different payment gateways )

I have a PayPal account, a sage account, an apple id - the consumer would surely rather have as little effort in buying stuff as possible and this should be treated no differently, in the respect that We need to keep re-entering our payment details when we want to buy anything. So if apple wants ms to play their way then I am all for it.

steve119 said:

I agree with this as a consumer....it just works(as long as I don't have to remember a million different user names and passwords for different payment gateways )

I have a PayPal account, a sage account, an apple id - the consumer would surely rather have as little effort in buying stuff as possible and this should be treated no differently, in the respect that We need to keep re-entering our payment details when we want to buy anything. So if apple wants ms to play their way then I am all for it.

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And as a user, I loathe that Apple is doing this, because instead of implementing IAP with Apple, people are dumbing down their apps, removing IAP for subscription services and hiding any links to where I can acquire these. It then forces me to either use Safari to go on the developer's site or my Mac to get the purchase done so I can access a service on my iOS app.

If anything, it hurts the user experience as developers are moving entirely away from IAP.

dejo said:

What are the industry rates?

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Also, KnightWRX, you should probably define what the "industry" is, just so we're clear. Seems to be some confusion around that.

KnightWRX said:

And as a user, I loathe that Apple is doing this, because instead of implementing IAP with Apple, people are dumbing down their apps, removing IAP for subscription services and hiding any links to where I can acquire these. It then forces me to either use Safari to go on the developer's site or my Mac to get the purchase done so I can access a service on my iOS app.

If anything, it hurts the user experience as developers are moving entirely away from IAP.

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I see your point but still, you must surely admit that it's easier to have one point of payment than a few for users?

KnightWRX said:

It's probably because the site you quoted doesn't deal in micro-transactions, the way Apple does. Micro-transactions is an entirely different market.

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Obviously, it's got to be entirely different if it doesn't fit your argument.

It's not off topic, you said "different payment systems is confusing", I provided an example where they are not.

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No, you provided an example where it was successful despite being confusing. I'm not sure why it's hard to acknowledge that dealing with one transaction system is less confusing than dealing with many transaction systems. Amazon is a shining example of this point.

dejo said:

Also, KnightWRX, you should probably define what the "industry" is, just so we're clear. Seems to be some confusion around that.

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Micropayments I should have said (this is what most IAPs are anyway). Paypal sets the price at 0,05$ + 5% :

http://www.paypalobjects.com/IntegrationCenter/ic_micropayments.html

For a 0.99$ IAP, that's 10%.

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steve119 said:

I see your point but still, you must surely admit that it's easier to have one point of payment than a few for users?

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Having a few is not so complicated (as we've witnessed for years with online eCommerce sites all presenting different "Shopping carts" and "Checkout" methods) that I would really say "simplification" was needed.

Apple should optionally sell their IAP with more reasonable rates as an added value proposal. Some developers would probably be on board simply so they don't have to collect and store user information and credit card numbers. People who already have payment infrastructure (like Amazon, Dropbox and other big players) already have systems setup for all of this and it's not a burden for them.

Just had to be the OFFICE

mdelvecchio said:

what youre not grasping -- apple doesnt want a million apps w/ a million differnt payment gateways. while certainly technically feasible, it adds complexity to the iOS user experience. my senior father would find that much more complicated than simply tapping "BUY" on ANY app in the store and have it auto-magically charge the card he set up *once*.

thats apple's vision for their devices & ecosystem. its entirely possible that strategy is why theyve generated more app wealth than any other.

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If this was all about the user, it wouldn't be tied to any specific platform such as iOS. You'd have credit card processing as its own thing handled by companies that don't care whose hardware you run.

thekev said:

If this was all about the user, it wouldn't be tied to any specific platform such as iOS. You'd have credit card processing as its own thing handled by companies that don't care whose hardware you run.

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Not sure what you are getting at here. I don't know how Apple could swing what you are proposing.

BaldiMac said:

Not sure what you are getting at here. I don't know how Apple could swing what you are proposing.

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My point was that the user doesn't necessarily benefit from Apple handling all of the billing, and it imposes a rather high cost per sale on the developer. They do handle certain things, but recouping credit card fees makes up a small percentage of that. Typical per transaction fees on credit cards are 2.5-3%. I'd rather billing wasn't tied to Apple, Microsoft, or Google. I'm not a fan of the walled garden mentality.

WhySoSerious said:

there is no need for MS Office for most people. most people can do just fine with Pages/Numbers/Keynotes.

just like most people can do just fine without rooting their phone/tablet. only the hardcore need Office or Android.

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Office and android are two different worlds ...
I agree with you on android for "hardcore", but Office, especially speaking about tablets, could be a good solution for a lot of people (depending on how good the app will be).