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

[rjohnstone]

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.

Read the article... the app was updated.

Microsoft, TNW has learned, has a new version of the application ready to go, including a key bug fix that would rectify a crashing bug, but cannot get it through.

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.

What rules did MS break??? Amazon and DropBox offered subscriptions in their app. When Apple said they can't do that without paying a fee, they removed the subscription option from the app.
MS is saying they will do the same thing and pull the subscription option.
Apple is rejecting that option for MS.

 

[iamkarlp]

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).

The ratio of small indie developers making it big on their own website outside a digital store environment was/is much, much smaller than relatively small ratio currently making it in the app store. Relatively speaking, it didn't happen.

In essence, it is still a gamble, but it's actually a better one in the current system than it was in the old.

Also, if you happen to be a moderately successful company, selling through digital stores is enormously better for the developer than through brick and mortar stores.

 

[charlituna]

Microsoft acts the bigger man and Apple acts like a child

More like the other way around. Apple's rules are well known as is their practice of not making exceptions for big companies. they are standing by that, unlike Microsoft who is refusing to play by the rules and whining about how they aren't being treated special

 

[blackhand1001]

And you think that hosting space, update pushing, and bandwidth is free? Feel free to host MS's apps on your own equipment for free then.

Umm, this has nothing to do with a purchase of an app nor updating it. This has to do with someone paying subscription fees for online cloud storage. Apple has nothing to do with that at all. They just force developers to use there in app payment system. Its one thing to force people to use the app store, but if they want to offer in app purchases like signing up for a subscription they should be free to use their own payment system or atleast link to the webpage. Apple doesn't let them do either. This is the equivelent to using a comcast app to pay your bill to comcast and apple saying they want 30% of the money of your cable bill.

 

[Renzatic]

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. Technical costs are not the only costs.

Right, but what if a company doesn't want to rely on Apple for payment processing. That's the big issue here.

Running something like Netflix isn't cheap. They're already paying ISPs a goodly amount of money to transmit movies directly to you with as few jumps as possible. They have to maintain their servers. Have to handle their own customer support. Have to pay licensing fees. Apple forcing them to pay 30% for IAP subscriptions for the ability to have their app on iOS means they're getting less money to do their job and grow even more. To compensate, 3rd parties would either have to take a cut and make less gross and profits, raise prices for iOS subscriptions to compensate, or forego iOS altogether.

Now I know quite a few of you (rather frighteningly) believe these 3rd parties are trying to suck off the Apple teat for free, but you have to understand that 3rd party apps make iOS a more attractive platform. Apple pissing all these people off more money up front in the short term could potentially harm them in the long run if they all start bailing out for Android. Yeah, they have iTunes to compensate for the loss of Netflix or Spotify, but if someone can get the exact same thing for less elsewhere...

...and considering Android is becoming a more and more viable alternative to iOS every day that passes...

...and MS is firing full guns with Windows 8. Just because it had a lackluster start doesn't mean people will always ignore their mobile offerings...

...well, you do the math.

Pissing off your 3rd party support is about the worst thing a platform vendor can do.

 

[mw360]

Read the article... the app was updated.

You keep quoting the part where it says they offered to update it. Quote the part where they say the app was actually resubmitted with the subs feature removed.

 

[RickyB]

MacRumors is increasingly turning into FOX news. What a misleading article with no facts, just assumptions, and relentless Apple bashing.

For those who will respond with 'What's misleading?' Everything. Has Microsoft actually submitted an app update? We don't know. Is Apple not allowing an app update to be approved? We don't know. Is Microsoft upset with Apple? We don't know. Is Apple upset with Microsoft? We don't know. Just assumption after assumption is all this 'article' is.

Hence the site name MacRumors

 

[viacavour]

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).

Apple did feature apps in their events, best picks, and even their ads. But you have to be good first.

Web exposure can be initiated by them too even if you don't see them directly.

End users like us may not see the day to day activities. I only know some because my friend used to work in NetFlix.

 

[linuxcooldude]

Read the article... the app was updated.

Whether the app was updated to still comply with the terms of service remain to be seen.

 

[charlituna]

A retail store differs from a digital store, given your example.

Apple wanting a 30% cut for services that never touch their (Apple's ) servers is taking the p!ss.

Payment is via Apple's system. And if the app brings the customer to the service then a 'finders fee' is also fair.

Some folks, like my long standing Netflix account, pay online directly and no cut of our money goes to Apple because they neither process the payment nor were the reason we bought the service

 

[Judas1]

'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.

If only it was just commerce between two businesses. But we're caught in the middle. You really want developers to pay through the nose because that's just business, even if it hurts the us the consumers?

 

[paul4339]

I don't get it... whether the consumer subscribes via IOS or Windows it costs the consumer the same amount (at this time) for the service. So the only difference is how much of a cut each party (Apple/Microsoft) gets for the transactions and services provided.

Apple charges a referral fee to access their ecosystem and sell to iOS user base, that may or not be fair, but that's between MS and Apple isn't it? (the price doesn't change for the consumer at this time does it?)

.

 

[viacavour]

Right, but what if a company doesn't want to rely on Apple for payment processing. That's the big issue here.

Running something like Netflix isn't cheap. They're already paying ISPs a goodly amount of money to transmit movies directly to you with as few jumps as possible. They have to maintain their servers. Have to handle their own customer support. Have to pay licensing fees. Apple forcing them to pay 30% for IAP subscriptions for the ability to have their app on iOS means they're getting less money to do their job and grow even more. To compensate, 3rd parties would either have to take a cut and make less gross and profits, raise prices for iOS subscriptions to compensate, or forego iOS altogether.

Now I know quite a few of you (rather frighteningly) believe these 3rd parties are trying to suck off the Apple teat for free, but you have to understand that 3rd party apps make iOS a more attractive platform. Apple pissing all these people off more money up front in the short term could potentially harm them in the long run if they all start bailing out for Android. Yeah, they have iTunes to compensate for the loss of Netflix or Spotify, but if someone can get the exact same thing for less elsewhere...

...and considering Android is becoming a more and more viable alternative to iOS every day that passes...

...and MS is firing full guns with Windows 8. Just because it had a lackluster start doesn't mean people will always ignore their mobile offerings...

...well, you do the math.

Pissing off your 3rd party support is about the worst thing a platform vendor can do.

It is different because if you are talking about platform strategy, then the policies will affect everyone fairly. No doubt Apple will review their policies along the way.

In this case, MS broke the rule. Apple will piss off other developers if they let MS go.

At the end of the day, it's not about worrying. It's about how to work together for the long term. Even if Android rises, there are serious challenges there Apple has solved. There is no need to jump wholesale from one platform to the other.

The question should be how can MS and Apple work better to fully justify/exploit the 30% cut ? The moment a dev tries to skirt the payment before or in the middle (worse !), it usually means something's up.

 

[Renzatic]

I don't get it... whether the consumer subscribes via IOS or Windows it costs the consumer the same amount (at this time) for the service. So the only difference is how much of a cut each party (Apple/Microsoft) gets for the transactions and services provided.

Apple charges a referral fee to access their ecosystem and user base, that may or not be fair, but it doesn't *directly* impact the consumer price does it?

.

It doesn't cost us any more now, but it has the potential to do so later.

----------

In this case, MS broke the rule. Apple will piss off other developers if they let MS go.

Yeah, they did, and I guess from a purely pragmatic standpoint, it's good that no one played favorites at all.

But that still doesn't change my opinion that Apple forcing themselves as a payment processors for companies already capable of doing so themselves is a greedy move on their end. I can understand keeping the service available for little companies. It'd help them out tremendously. But for larger companies, it should be opt-in, not "screw you take it and like it gimme my money or do things the hard way".

 

[Intarweb]

Again, Apple isn't charging for hosting the file outside of the developer fee. What they are charging for is a referral fee for offering Microsoft's service through the App Store. Microsoft can either agree to this fee or not.

You're not getting it.

From the report, Apple, if we take the report at face value, is refusing to update the MS app that removes the subscribe button from the app. MS seems more than willing to have people sign up on their website exclusively for the service. Apple is now, again, according to the report, refusing to allow MS to change the app. This is nothing close to you selling good on a commission. MS is trying to do nothing more than to remove all of the subscribe through the app functionality, which is in compliance with Apple's developer agreement.

 

[charlituna]

Microsoft IS doing that with the app, but Apple is still refusing to push it through. .

Allegedly. We really have no facts on this. There could be a valid reason outside of the payment issue that is stopping the update. Like privacy issues.

 

[Judas1]

I don't get it... whether the consumer subscribes via IOS or Windows it costs the consumer the same amount (at this time) for the service. So the only difference is how much of a cut each party (Apple/Microsoft) gets for the transactions and services provided.

Apple charges a referral fee to access their ecosystem and sell to iOS user base, that may or not be fair, but that's between MS and Apple isn't it? (the price doesn't change for the consumer at this time does it?)

.

It affects the quality of the apps that consumers get. Like for the kindle app. It would be so nice and convenient to to be in the app, and go directly to the kindle store. But that can't happen because apple wants a cut if you're able to go to the kindle store from the app. Many other examples like this. That's why apple charging for services they don't help provide is bad for consumers.

 

[bumblebritches5]

I actually agree with Microsoft, it's ridiclous for Apple to take a 30% cut when that money goes to servers, like that's just wrong and Apple should exclude such things from an updated license.

 

[theluggage]

Say you work for Gamestop and someone bought a copy of World of Warcraft, should Blizzard have to pay 30% of each monthly subscription charge to Gamestop?

If someone buys a WoW game time card from Gamestop, Gamestop will take a cut of that. Last I looked, the WoW software and expansion packs cost nontrivial money, and Gamestop will get a cut of that too.

If the WoW software cost $0.00, and only sold game time directly from their website, do you think that Gamestop would, out of the goodness of their hearts, continue stocking, promoting and supporting the software without any income stream?*

The 30% cut Apple gets is not just a donation to the Steve Jobs Memorial Fund: it pays for Apple's online payment processing (clue: payment processing costs serious money) access to customer's iTunes gift cards, and avoids the need for customers who are already signed up to iTunes to re-enter their payment details (clue: having to faff around with credit card numbers could derail what was otherwise an 'impulse buy').

Of course, what it is also doing is subsidising the 'service' that Apple provides by offering free apps - or, to put it another way, the free apps are a loss-leader to pull in punters who might go on to buy paid apps. Wouldn't work for Gamestop because the overheads of giving away free stuff from a brick-and-mortar store are orders of magnitude higher than giving stuff away online. It wouldn't work online if everybody turned their paid app into a 'freemium' product that cut Apple out of the deal.

People who think Apple's cut is unreasonable don't seem to have much idea about commercial realities.

Google/Android are in a different game: Google are fundamentally in the advertising and data-mining business, and the whole Android project seems to be a loss-leader to ensure that people use their search and mail services.

*actually, in the specific case of WoW it might just work if people bought sufficient shedloads of toy^H^H^H collectables to make distributing the game a valid loss leader. I doubt that there's a big trade in Microsoft Skydrive action figures, though.

 

[mw360]

You're not getting it.

From the report, Apple, if we take the report at face value, is refusing to update the MS app that removes the subscribe button from the app. MS seems more than willing to have people sign up on their website exclusively for the service. Apple is now, again, according to the report, refusing to allow MS to change the app. This is nothing close to you selling good on a commission. MS is trying to do nothing more than to remove all of the subscribe through the app functionality, which is in compliance with Apple's developer agreement.

No, MS have offered to update it. They need to actually update it and resubmit it to get it approved. Nowhere in the article or the source does it say that MS have actually updated it. Until they do, it will keep getting knocked back.

 

[viacavour]

It doesn't cost us any more now, but it has the potential to do so later.

----------



Yeah, they did, and I guess from a purely pragmatic standpoint, it's good that no one played favorites at all.

But that still doesn't change my opinion that Apple forcing themselves as a payment processors for companies already capable of doing so themselves is a greedy move on their end. I can understand keeping the service available for little companies. It'd help them out tremendously. But for larger companies, it should be opt-in, not "screw you take it and like it gimme my money or do things the hard way".

Payment is important. Just ask eBay. They ended up acquiring PayPal at a premium after separating that part out. It is crucial to understanding your customers needs, and it strengthen relationships. It is also great for managing user and developer loyalty. It is the key mechanism to control a worldwide distribution channel (read: maintain order)

I just hope they continue to improve the environment and minimize piracy. IApps are cheap enough !

Apple is not into general payment otherwise. They let Square take Passbook transactions for example.


Also, I edited my last post to include more of my views from running other businesses.

 

[rmwebs]

I still think the 30% cut is audacious of Apple to ask, but I guess they aren't going to relent. Microsoft will have to do what Amazon did with their Kindle App.

Give it 2 years and the fees will cut back. Apple are milking it whilst the iPhone is still hot.

Interest in the iPhone has started to wain ever so slightly now that Android has been sorted out to be a lot more useful, and with the likes of the rather decent Samsung Galaxy S3 and Note, Apple finally have some healthy competition.

I wouldn't be at all surprised if the fees dropped to 20% within the next couple of years, as a way to keep new developers coming to the platform.

 

[paul4339]

It affects the quality of the apps that consumers get. Like for the kindle app. It would be so nice and convenient to to be in the app, and go directly to the kindle store. But that can't happen because apple wants a cut if you're able to go to the kindle store from the app. Many other examples like this. That's why apple charging for services they don't help provide is bad for consumers.

Interesting... because what I would like as consumer is a one-stop shop to manage all my subscription. That is, if I have 15 different subscriptions, I would to be charged via iTunes BUT also want to something to manage my subscriptions as well (so that for example if my credit card number or billing info changes I want to change it once).

If it gets really bad and I can find the subscription significantly cheaper somewhere else (such as directly from Microsoft), then I will change. If Microsoft can't provide a link via their app due to fee disagreements, its a loss of a potential sale to both MS and Apple. As long as I have some options I'm ok.

.

 

[astr0]

Google Drive offers storage subscriptions outside their app, but they don't seem to have a problem getting Apple to approve their iOS updates.

So why is MS and SkyDrive being targeted?

 

[gmanist1000]

I actually agree with Microsoft, it's ridiclous for Apple to take a 30% cut when that money goes to servers, like that's just wrong and Apple should exclude such things from an updated license.

30% may be a little too much, but it's Apple's product to do what they want.